Ecolab: leading from the inside

by 11 Jun 2009

In 2004, after several years of stagnant growth and revenue shrinkage, Ecolab developed a new HR strategic plan. This resulted not only in a 2008 Australian HR Award, but a turnaround in the company's revenue, retention rate and profitability. Sarah O'Carroll speaks to the current MD Darrell Brown and HR director Jann Gray about the success of Ecolab’s strategies

In 2004, Ecolab had been experiencing several years of stagnant growth and revenue shrinkage. Staff turnover had reached 30 per cent, morale was low and customer expectations were changing. Talent retention, acquisition and employee engagement required stronger and sustained focus.

Following the appointment of a new managing direc tor, John Rowley, (who has since left Ecolab) the management team was tasked with turning the business around to deliver sustainable profitable growth. A key part of this task was a major revamp of the HR strategy.

The two main components of the new HR strategy were the development of a new recruitment strategy and a refocused vision of where the company was going.

“In aligning the HR strategy to support the business strategy, it was important that the senior leadership team acknowledged that to turn the business around to deliver on our objectives required us to engage our staff and gain their commitment to a vision of a more successful Eco lab,” says HR director Jann Gray.

The recruitment strategy – leadership ability versus technical ability

Up until this point, Ecolab had a recruitment strategy of taking candidates based on the basis of their technical experience, knowledge of the industry and years of expe rience on their CV. However, according to Darrell Brown, who took over as managing director in December 2008, the company came to realise this strategy was not the most effective and that the recruitment policy should be changed to looking for employees who demonstrated leadership potential.

“The major challenge for us at the moment is to make sure that the new people who are brought into the organ isation are recruited predominantly on their leadership capability instead of their technical strengths, which was typically they way we had been recruiting,” says Brown.

Naturally, in an industry such as Ecolab’s, there are roles that demand a certain level of technical skill. How ever, according to Brown, this was no longer going to be the main focus of the interview process.

“In the past the company looked more towards the technical skills and degree qualifications of candidates – but now we are measured globally on how we recruit people based on their future leadership potential,” he says. “We look very carefully at the future leadership skill-set of people we are bringing into the company; we’re now much more attuned to that.”

This assessment is largely done through psychometric testing and second interviews by higher levels of man agement. Also, as part of the new strategy, Ecolab estab lished their own Ecolab university internally to train people. This enabled it to hire people who may not have as much technical knowledge as desired, but who demon strated the leadership characteristics the company was aiming for.

“With Ecolab’s virtual university we can hire people who have a terrific leadership style and then we can cer tainly teach them everything they need to know to do the job,” says Brown.

Brown, who has been with the organisation for seven years, believes that this hiring practice has made a huge difference, because employees now feel they have good solid leadership rather than people who are just technically competent.

He also explains that the main drive for this change came from meeting the customers’ needs. “It made sense; we had a lot of very technically competent people in our organisation, but as the procurement dynamic has changed, in our customers predominantly, we’ve had to make sure that we matched the skill-set of our customers so that we can negotiate at the same level. Therefore we need to find people who can negotiate, present and deliver information and manage our teams.”

Changing the vision

A new referral program has also had a big impact on changing the face and feel of the organisation, says Gray. The company’s vision has shifted focus so that employ ees know where they stand and that their contribution has been essential to the turnaround.

“Focusing people on the right things, creating a vision of a more successful Ecolab and then linking what each employee needs to do – outline how their job makes a difference, and how they make a difference – was extremely important,” says Gray. “We needed to get people to focus on doing those things that added value.”

According to Gray, Ecolab has reaped the rewards of a revamped recruitment strategy. “Prior to 2004, our turnover rate was 30 per cent, we were in negative growth and we hadn’t grown the business for the pre vious ten years. So the business was stagnant and lan guishing. People were focused on doing things that weren’t really adding value to our customers, such as … compliance. These processes were getting in the way of people doing a good job and providing the service that we needed them to provide to the customers.”

However, since the implementation of the new HR strate gies, Ecolab has halved their turnover rate from 30 per cent to 15 per cent. Their profitability has doubled and their revenues have increased by more than 20 per cent. Their productivity per person has also increased by more than 30 per cent and their product innovation has doubled.

“We built the foundation and turned the company around and we’re now on our next three-year plan, which is all about accelerating the growth over the next three years,” says Gray. “While the global economic crisis has hit everyone, and our targets have had to be moderated, we still do have accelerated growth plans.

“Like most people we’ve had to look closely at each of our processes, and the things that add value, and we have looked to consolidate some processes, but we certainly have not looked to large-scale redundancies at all.”

Brown on weathering the recession

Brown, who is responsible for Ecolab Australia, New Zealand, Fiji and the South Pacific Islands, says that from a regional perspective Ecolab is holding its own.

“While we are growing in certain areas, we are flat in the hospitality sector because of the lack of people travelling. However, overall we are on track for budget, sales and profitability targets.

“The food hygiene business is going well in Australia and New Zealand, the farm business is going well par ticularly in New Zealand; the water care business is a little bit back, based on the downturn in the mining sector; the pest and washroom business is a little bit back, based on discretionary spend. But overall, across the whole business, we are doing well.

“ We haven’t been immune to rising costs and so have had to tighten our belts and focus on minimizing that impact. Maintaining our investment in our employees is a priority for me and so we have implemented a series of reviews of our processes and major spend areas to drive further efficiency and address the cost impacts. We had a fair amount of discretionary spend for entertainment and travel, so we’ve concentrated on cutting that first. We are also under budget head-count, so there are some areas where we simply haven’t made investment in addi tional head-count, purely because those certain markets are in recession. And in some cases employees are being deployed in stronger areas of the business.

“On the HR side, making sure we can identify the talent we have in the organisation a lot earlier is going to be a challenge for us.

“ It’s important to us that we identify young talented people in the organisation early in their career so that we can provide them with a career path and appropriate development opportunities. In taking action early we fuel our talent pipeline for the future.

“Also, we need to develop a more diverse workgroup. Our organisation and the markets we operate in tend to be more male-orientated. So working on achieving a diverse workforce is also a priority for us.”

Applicants on the bench

One of the high-impact initiatives introduced by Ecolab was an employee referral system, which rewards existing employees for referring successful candidates. Their "Applicant on the Bench" program utilises each employee as potential talent scouts and provides the company with a steady stream of candidates who are put though their selection processes to provide them with pre-qualified candidates awaiting vacancies.

As a result of the program, 25 per cent of vacancies in 2007, which included two senior appointments, were filled by employee referrals, and time taken to fill vacancies has reduced from 74 days to 41 days on a company basis. Within the sales divisions, the improvement has been more dramatic, reduced to 29 days. In 2008, 30 per cent of vacancies were filled by this program.

The bottom line impact in recruitment fee savings alone was more than $200,000 in 2007.

What is Ecolab?

Ecolab is a wholly owned subsidiary of Ecolab Inc, a US-based company. It is the leading provider of cleaning, food safety and health protection products and services. In Australia, Ecolab reaches more than 8000 customers nationally and employs 430 staff. Its customers include hotels and restaurants, food service, healthcare and educational facilities, fast food restaurants, commercial laundries, light industries, dairy plants, farms, food and beverage processors and retail and commercial facilities.

The Adaps Award for Best HR Strategic Plan - judges' comments

Ecolab has linked business matrices and deliverables to employee participation and involvement. Following the policy of "People Pride & Performance" the results are in quantitative figures with good explanations. The way Ecolab has planned and implemented changes is impressive. This approach has assisted with internal and external branding as well as effective corporate communication, which has led to business success. Ecolab has used a very good approach to recruit and retain staff. Most of the decisions are based on employee feedback, which gives the impression that employees are doing their work and rating it themselves to get the rewards. The whole system is very transparent, which is a requirement of today's HR.