Rick Eastes last wrote for us when he was working with Sunkist, and you can see his letter here. Now he is out on his own and ready to share some perspective on our piece Tim York Points Out Buyer Commitment To Food Safety.
In this piece, we discussed why buyers were hesitant to constrain their supply chain and commit to only buy from those with high food safety standards, and we discussed the cultural preconditions of food safety.
Like many things, in concept, everyone knows and wants to do the right thing, especially with food safety and security. However, there is always the fear of, “what happens if one acts rationally and those who do not, end up with the advantage?”
Like many corporate policies, many are made in the rarified atmosphere of the ‘executive level’ and are handed down like dictates. What many management teams and companies fail to address are the incentives that go along with assuring that a well conceived policy will be embraced and followed by the employees who ultimately must carry out the proposed policies.
Many times the policy is ‘ok’, but the incentives to make the policy effective do not match or may be diametrically opposed to the concept being promulgated, and management cannot ‘figure out’ why thing are not progressing as ‘planned’.
Like beginning to address the underlying issues of ‘global warming’, until the incentives begin to match the stated policy, substantive progress simply will not happen. By the way, in my experience ‘incentives’ work best when they are positive, but sometimes, the reciprocal may be just as effective.
— Richard A. Eastes
Rixx Intl. Marketing Co.Inc.
Yes, Rick is astute in his analysis. We’ve highlighted a piece we wrote about the Cheesecake Factory, which you can read here. What impressed us about this is not just that they did monthly audits of each restaurant’s conformance to food safety standards, but also that they actually tied bonuses of restaurant managers to their scores on those audits. That is a way of telling the managers what management really wants as opposed to what management wants to talk about.
And Rick is also right that sticks work along with carrots. How many buyers really fear that they will lose their job if they buy from a processor who, next year, has an E. coli 0157:H7 outbreak?
Years ago, Domino’s Pizza had to drop their 30-minute delivery guarantee as we mentioned here. Why? Because no matter how many times top executives said don’t speed, the whole economics of the business revolved around not giving away free pizzas. To be sincere, they would have had to pay managers not based on the sales or profits of the unit but on every staff member staying without a ticket or accident all year long.
There is a fundamental problem. If we don’t promote higher food safety standards to consumers, then they won’t pay for it — and if they don’t pay for it, who will?