Refer Case Study “Family Feeling Faces Challenges at Smucker’s” in Certo, Modern Management, 10e, pg. 46-47.
Question: Does the human relations movement offer any insights for the co-CEOs as they move ahead with their expansion plans?
Human relations movement refers to a group of people who do study and research on the behavior of people at the workplace in groups. This study is a part of their research in organisational development. It started with the Hawthorne study which was conducted between 1924 and 1930 (Certo & Certo, 2006).
According to Elton Mayo (1933), human relations movement is defined as informal organisation, social norms, acceptance and sentiments of a group that will determine the individual work behavior in achieving organisational success.
Smucker’s history is a success story. It started in 1897 with a small horse-drawn wagon of selling apple butter, continued by his sons and grandsons into a major multinational corporation with more than $2 billion USD in annual sales in 2006.
The tradition of Smucker’s is all about family and people, just as the CEO and the co-CEOs are all from family members, they also foster family feeling among its workers where feeling of belonging is fostered. Having this as their key tenet, it is unquestionable how the Smucker’s feeling for human relations is very deep.
When Smucker’s co-CEOs Tim and Richard, the founder’s great-grandsons is going for the expansion plan, human relations movement was key. Tim Smucker was quoted saying “Our growth basic beliefs are not just about growing the company. It’s about individual growth and respect for the individual ideas”.
This lead to Smucker’s listed at the top of Fortune magazine’s list of 100 best companies to work for in 2004. For five years from 1999 to 2004, Smucker had a total return of 100% over and never had layoffs. Thanks to a gimmick-free management with the co-CEOs, Tim and Richard Smucker who took the reins in 2001.
According to the co-CEOs this is simply because they adhered to a simple code of conduct established by their father and former CEO, Paul Smucker. “The play-well-with-others approach, as precious as it comes across to an outsider, has clearly won over employees,” says FORTUNE writer Julia Boorstin.
Plant supervisors have been known to have barbecues when celebrating new records and success, managers always have congratulation lunches and gifts. Every year Smucker will have big celebration for Chrimas and New Year which invites this family feel. Director of operations Brian Kinsey, who spent ten years at P&G, one of the companies that is acquisitied by Smucker commented that. “At first I was skeptical, but this family feel in Smucker is for real.”
This however doesn’t come without obstacles. In 1994, Smucker’s bought frozen pie business from Kellog in order to expand their product beside its mainstream jams and jellies. Smucker is strongly knitted by its family value which is deep and have been cultivated over the years. CEO after CEO in Smucker has been continuously building in its human relations movement. When the acquisition materialized, the family feeling and bonding does not occur over night.
Decision making is no longer a consensus between workers and managers and the message does not spread across as it used to be. The company is becoming bigger very fast. Compounded by this, the timing was also not right and in two years, they had to sell back the newly acquired business.
Smucker did not stop at this but still continuously looking for new ventures and acquisition as Tim believes that there will be limitations if you are only in one category of business. From time to time they had to lay off managers and employees as new acquisition is finalized. This was not easy for Smucker as they are deeply rooted with the family bonding in the company.
An acquisition with The Multifoods for USD 840 million alone has brought in additional 2,300 employees alone in 2004. With this big expansion, the co-CEO knows they have an uphill task to execute. By expanding their product line and business, Smucker will need to optimize their workforce and manpower. This is such a difficult decision for the Smucker. Being a company that is so deep in people’s relation all lay off was done fair and they do follow-up to all laid off employees.
They even released a public statement when they lay off employees in California reassuring that they will do their level best to assist and offer aid to all effected employees. Smucker have been talking to the government to ensure that all laid off employees will get benefit in some form that will aid their grievances. Smucker also assisted in helping these employees by giving good recommendations and testimonials which will assist the employees when looking for another job. They also even helped looked for new job for the employees.
Quoting the co-CEOs Richard and Tim Smucker “A shared set of values keeps the family-owned business running smoothly.” The co-CEOs concept where two CEO shares power is an arrangement that is doom to fail implemented elsewhere. But for the Smuckers this has been for five generation already and might continue. Most Smuckers are already rising in the management ranks and looking ahead the co-CEOs might out-perform their late father Paul Smucker, previous CEO of Smucker. In human relations movement study, perhaps the Smuckers know best.