Nature’s sway

by 21 Jul 2009

After an uphill battle to garner recognition for naturopathy in Australia, Blackmores has cemented its position as Australia’s leading natural healthcare company, and a key driver behind that success has been its innovative approach to people management. Sarah O’Carroll and Zoe Lyon speak to CEO Christine Holgate, chairman Marcus Blackmore and director of people and strategy Richard Henfrey.

When a candidate is being interviewed for a leadership position at Blackmores, the first thing they are asked is “Can you tell us what nat ural health means in your life?” It’s not your typical interview opening, but a pas sion for natural healthcare is such an intrin sic part of Blackmores’ heritage and culture, that it’s not surprising it’s the number one prerequisite for potential employees.

The building blocks

Natural healthcare is far more than a rev enue generator for Blackmores, it’s a value that has been embedded in the fabric of the company since it was started by Australia’s pioneer of naturopathy, Maurice Black more, in the 1930s.

An English immigrant, he was intro duced to naturopathy while he was look ing for ways of alleviating his own health problems, and from his Queensland base, he grew the Blackmores business from the ground up.

Building a business based on alterna tive medicine during the 1930s and 40s was no mean feat. A passionate believer in natural health, he strongly advocated the values of naturopathy in the face of hostile opposition from the medical pro fession, and in the 1950s he successively lobbied against the Queensland Gov ernment’s attempts to ban it. Maurice’s aim, which he worked diligently to achieve, was to bring naturopathy within the consciousness and reach of the main stream population.

According to Maurice’s son, Marcus Black more, who grew up around his father’s com pany and is now the company Chairman, his father’s dream was that Blackmores would be the launchpad for naturopathy as a profes sion – a dream that wasn’t realised within Maurice’s lifetime. “He didn’t achieve his vision in life, and on his deathbed in 1977 he said to me that the sad thing about his life was that he’d never seen naturopathy [recognised] as a true profession,” Marcus says.

If Maurice were still around today, he’d have reason to be proud of what has been achieved. Over the last 60-odd years, Blackmores has grown to become Aus tralia’s largest natural healthcare company and can be confidently described as a house hold name. It holds more than 20 per cent market share in chemists and supermar kets, generates about $195 million in rev enue annually, and pulls in after-tax profits of nearly $20 million every year. It also has a sizeable market presence in Asia, with about 15 per cent of the business comprising exports to countries such as Thailand, Malaysia and Taiwan.

Despite the company’s steady expansion, Marcus says that his father’s passion for natural health is as strong in the company today as it ever was. “The very roots of this business are built in naturopathic philoso phy and that still guides me and the people in this place about the sorts of things we do,” he says.

The happiness factor

When it comes to managing the company’s 400-strong work force, Marcus says the company’s philosophy is simple.

“You’ve just got to make people happy,” he says. “I know in my own mind and in my own heart that happy people are more productive, they’re more innovative, they’re more creative. I say to my HR manager: ‘Who did you make happy today?’ That’s your job.”

To bring this philosophy to life, the company has imple mented a number of innovative strategies – some dating back to the days when Maurice was still steering the ship – one being a Christmas bonus for all staff.

“My father used to give people a week’s pay at Christ mas-time and it’s a tradition that we uphold today. He said: ‘You must pay them the bonus before Christmas because that’s when they need their money’.”

Though the concept remains similar, the Christmas bonus system has become a little more sophisticated, with Marcus converting it to a profit-share scheme involving all employees and 10 per cent of the firm’s after-tax prof its divided among the staff twice a year.

“I did that for a very deliberate reason,” Marcus explains. “If we don’t make a profit, we don’t pay our dividends, and we won’t be in business. I wanted people to really understand the notion that we have to make a profit in this business and the one way of doing that was to share the profit with them.”

Another of the company’s more unusual traditions is to give each employee a ham at Christmas time – a relatively low-cost perk which boosts staff morale.

“The ham doesn’t cost that much. If you went around to the staff and said ‘I’m going to give you a salary rise of $1.20 per week,’ I know what they’d tell me to do with it. But if you give them a ham for Christmas, and they sit down to Christmas dinner and someone says ‘That’s a nice ham – where did you get that?’ and they reply ‘We get that at work; we get that every year,’ it really says something nice about the place you work,” he says.

“I just think it’s about looking after your staff. It’s part of doing the unexpected little things that other companies don’t.”

Managing workplace reforms

The incoming workplace relations reforms have many HR managers spinning plates. However, Blackmores’ director of people and strategy, Richard Henfrey, believes the com pany, which employs all staff under a collective agreement, is well positioned for the changes.

“The philosophy we have here has led us to err on the side of being more, rather than less, generous in pretty much everything we do,” he says. “Clearly one of the challenges most HR departments face at the moment is the new legis lation, but our view is that there’s not actually very much that needs to change with our collective agreement because … we’re already well inside the new conditions.”

Marcus adds that the company’s philosophy in forming the agreement was to develop an employment package that all staff would be genuinely satisfied with.

“The regulatory requirement for collective agreements is you have to have 50 per cent agreement from your staff plus one. What that suggests is that you put in place a set of criteria which people are bound by and you’re going to accept it if only half the people vote for it. I think that’s silly.

“It can’t be a collective agreement if half the people don’t like it,” he says.

“We have a totally different attitude here. We feel is that our collective agreement is not an agreement that those outside the company – namely regulators or government – foist upon us. It’s a document that we as … individuals that work for the company choose to be bound by.”

Marcus explains that the company actively sought staff input when establishing its agreement, and, as a result, it received a 97.5 per cent acceptance rate. “That’s unheard of,” he says. “It’s unheard of in companies but it’s because we approached it from a different perspective.”

Building a high performance workplace

While staff might be getting a seemingly good deal at Black mores, Marcus is quick to point out that he also expects a high performance from them.

“The basic principle is that you pay them more than they would expect elsewhere, but then you also justified to expect more performance. Yes, we’re generous, but we also expect that that generosity is reflected in the work place and that people will go that extra little mile for the business,” he says.

Marcus believes that treating employees well and setting high performance expectations is important, because many companies fail to measure – and recognise – the enormous potential value that employees can bring to a business.

“The great failure of business, not just in Australia but in the world … is that there is great repetition in chair men’s reports of companies saying ‘Our people are our greatest assets’, then, when you look through the finan cial statements, nowhere can you find any value on peo ple in the organisation,” he says.

“What happens in organisations is that if I want to go out and buy a forklift, you’ll need pages and pages of jus tifications, but then they’ll go and put on an extra person in a flash. It’s just amazing, because we really don’t appre ciate how much people are worth to us. What we do inter nally here – and what I ask people to really think about – is how do we put a real value on the people that work in the organisation?”

Weathering the storm

According to CEO Christine Holgate, the economic down turn hasn’t broken Blackmores’ stride, and she says the company, and the natural healthcare industry as a whole, is continuing to grow strongly.

She believes one of the reasons is that in a downturn people are more likely to go to a chemist rather than a doctor and that phramacists are more likely to consider alternative medicines.

“Pharmacists are trained to give advice on comple mentary medicines, so they’re more likely to recommend complementary medicines than a doctor. And when you get into a chemist you’re more likely to see Blackmores. We have 30 per cent of shelf space in a pharmacy,” she says.

She also believes Blackmores’ strong brand has been a benefit as the economy has slowed. “People do switch to strong brands – both retailers and consumers – in tougher times because they want to make sure [that] what they’re buying works and they can trust it, rather than perhaps something they don’t know about.”

Henfrey adds that the company has actually used the downturn to recruit to top talent, particularly at the sen ior management level. “If anything, the economic down turn has been an opportunity for us – particularly on the people front – because it allows us to bring new skills into the business,” he says.

“We’re undergoing a changed management program that’s seen us do a bit of a restructure ... and bring new, experienced people in. It’s been a good time to do that, rather than, say, 18 months ago, when talent was very, very scarce in the market.”

Moving forward

Maurice Blackmore faced an uphill battle when he launched Blackmores back in the 1930s, but his hard work has paid dividends and Blackmores has played a key role in bringing alternative medicines to the consciousness of the masses.

Having secured the position of Australia’s number one natural healthcare company, and boasting a product line that appears relatively unaffected by the economic down turn, the future for Blackmores looks healthy.