Why Culture Matters More Than Ever in CPG Organizations

Leadership StrategiesIndustry TrendsDiversity & CultureCulture RiskConsumerBoard and CEO AdvisoryCulture Analytics
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January 09, 2024
7 min read
Leadership StrategiesIndustry TrendsDiversity & CultureCulture RiskConsumerBoard and CEO AdvisoryCulture Analytics
Executive Summary
For CEOs of CPG organizations, understanding organizational culture is a non-negotiable for growth in today’s challenging market.
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When Muriel Lienau stepped into the role as Nestlé France’s CEO in early 2023, she had one goal in mind: ensure a strong alignment between the business strategy, company leadership, and culture. She believed that the organization could deliver even better performance through a higher level of engagement and motivation. To address this, Lienau placed cultural transformation at the top of her agenda.

 

Culture: The growth catalyst for CPG organizations

In times of uncertainty, culture has the power to pull people closer together or drive them further apart. According to our H2 2023 Global Leadership Monitor, seeking a different company culture was the top reason CPG leaders left their organizations in the past year, outranking career advancement and better pay.

In recent years, consumer packaged goods (CPG) organizations have been forced to navigate unprecedented environmental, geopolitical, supply chain, consumer, and competitive challenges. Building on the industry’s legacy of strong consumer-centricity, push for innovative solutions, and the need for organizational adaptability, successful CPG companies have responded with flexibility and agility. However, the volatility of the last few years shows no signs of slowing down and the risk of sluggish growth and a demoralized workforce is real. In the face of this continued change, CPG leaders need to leverage a key growth catalyst in their toolkit: their organization’s culture.

Understanding and cultivating a healthy culture is key to retention, consistency, and growth. By taking a disciplined approach to objectively understand their current culture, and systematically cultivating an environment that enables their aspirations, CPG leaders can harness the full potential of their organizations despite the realities of continued unrest.

Read on to learn more about how Nestlé France transformed their company culture, what other organizations can glean from their experience, and why culture should be at the top of every CPG leader’s agenda.

 

Culture change in action at Nestlé France

Culture transformation starts by “making the invisible visible” within an organization. For Lienau and Nestlé France, this began by honestly assessing their current culture—the good, the bad, and the undefined. This helped the organization leverage its strengths to create positive momentum and garner buy-in on how and where the culture needed to evolve to achieve sustainable and collective success.

How Nestlé France approached this culture assessment demonstrated discipline, objectivity and a desire to look within for solutions.  Nestlé France did not task the entire leadership team with taking full accountability for the transformation, nor did they select a group of “change agents” simply by asking people who wanted that recognition to raise their hands. Instead, Nestlé France used a thoughtful process to pick 50 key value driving leaders to take ownership of the initiative. They identified leaders in parts of the organization where the degree of change would be paramount—those in growing markets and highly influential roles. Through a day-long workshop, these 50 individuals worked together to articulate the Nestlé France culture in their own words, honing in on what was working and what needed to change. This level of ownership helped these leaders drive energy around the culture transformation initiative. The language they used to describe the company – both where it is today, and where it will go in the future – was their own, which helped build passion and commitment that continued long after the offsite was over.

The momentum these leaders carried forward helped Nestlé France define and communicate the organization’s desired future state. Leaders in key value driving roles were fully—and visibly— committed to the new ways of working required by this strategic shift. This visible commitment helped build trust throughout the organization, allowing Lienau to learn more about employee and leadership perceptions that she never would have accessed without these efforts. The culture transformation effort allowed Nestlé's leadership team to clarify and improve ways of working, ultimately driving higher performance. Again, this required complete buy-in from the entire leadership team.

There's much in the Nestlé France story that suggests that organizations should pay attention to the ways in which their culture is unique as they design and drive their transformation. Nevertheless, the areas where Lienau and Nestlé France decided to focus provide powerful lessons for all CPG leaders.

 

Focus areas for the future:

  • Promoting a culture focused on both product and brand centricity in large scale organizations that have a wide range of segments and products – In order to promote a collaborative culture, people within CPG organizations must have passion and pride at both the parent and brand levels. Recognizing individual and collective successes helps nurture a sense of pride and belonging.

  • Prioritizing and optimizing opportunities in organizations where new ideas are frequently brought to the table – In CPG organizations, where new ideas and innovations reign supreme, leaders need to be able to identify which opportunities are worth saying yes to—and which are not. Without the ability to prioritize, organizations will lose focus and productivity.

  • Fostering an environment of accountability within complex organizational structures – It’s important to foster an environment where everyone can take responsibility and work autonomously. Providing role clarity, clear decision rights, and effective delegation will help develop a culture of boldness and responsibility.

  • Keeping an agile entrepreneurial approach in a complex global organization – A culture that allows people to act and make decisions helps encourage an entrepreneurial approach and the ability to implement agile methods. It is key to take risks to innovate and demonstrate a culture that values experimentation to learn from both success and failure.

 

CPG leaders must embrace and amplify their organizations’ cultures

By being laser focused on creating and nurturing a culture that unleashes their team’s full potential—while supporting and enabling strategy—CPG leaders can ensure higher levels of empowerment, accountability and employee satisfaction, all of which will lead to higher levels of productivity and optimized company performance. This can be achieved by:

Assessing your culture with a disciplined approach: Culture transformation means having leaders take ownership of what defines the culture within your organization. However, not every leader takes the same role. Having the discipline to select a subset of leaders who have the authority to make change in areas where change is needed is key. Work with them to help articulate the culture change story—not by telling them what to do, but by listening to them and unlocking the story via their insights. This allows for flexibility and adaptability when perception gaps are identified. It also develops in leaders a personal motivation to keep carrying the change forward instead of a sense of obligation.

Examining your tone from the top: While culture change requires agreement at every level, meaningful transformation requires ownership from the top. Strong leaders are well equipped to support an evolving culture, but if the tone from existing leaders—especially the CEO—conflicts with organizational mandates, even world-class leaders are unlikely to make meaningful progress.

Hiring leaders with the right competencies: Focus on hiring people who align with your organization’s purpose and values. This will help create a sense of pride in working for the organization, centering around accountability, trust, and transparency. Related, a well-rounded, diverse leadership team is crucial, as diversity in thinking, problem solving, and leadership styles helps organizations achieve better results.

Managing culture as a material asset: The culture you have today is a complex operating system – you can’t expose every hidden truth at once. Explore whether your culture supports your strategic direction and, in doing so, apply the same discipline, resourcing, and focus as you did when setting said direction. Dedicate resources and effort to understanding your situation through focus groups, interviews, and less conventional data sources that might contain tough messages.

Asking the right people the right questions: Consider tapping into recent advancements in culture measurement that evaluate how leaders act and what people believe, utilize unique question formats that check for specific issues, and reveal hard truths about an organization.

Creating a feedback loop for continuous growth: Culture is constantly evolving, whether leaders want it to or not. The ability to regularly assess and refocus interventions is nearly as important as getting accurate information in the first place. Remove barriers that hinder collective success by streamlining internal processes, creating the psychological safety for people to speak up about issues, and promoting constructive exchange and challenges at all levels.

Driving innovation and growth in CPG organizations is more challenging than ever before.  In an environment of increased complexity and competition, external factors are becoming more and more difficult to predict and manage. CPG organizations have a unique opportunity to analyze, optimize and harness their culture in order to realize their full potential and maximize their business performance.

Authors

  • Gretchen Anderson leads Russell Reynolds Associates’ Culture capability. She is based in Baltimore.
  • Leah Christianson is a member of Russell Reynolds Associates’ Center for Leadership Insight. She is based in San Francisco.
  • Jennifer Flock leads Russell Reynolds Associates’ DE&I capability in Europe. She is based in Paris.
  • Andrew Hayes leads Russell Reynolds Associates’ global CPG practice. He is jointly based in New York and Houston.
  • Marie-Osmonde Le Roy de Lanauze-Molines is a senior member of Russell Reynolds Associates’ Culture capability. She is based in Paris. 
  • Sotiria Pericli is a member of Russell Reynolds Associates’ Consumer sector Knowledge team. She is based in New York.

 

 

 

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