How Employee Engagement Turned Around Campbell's

An interview with Douglas Conant, CEO of Campbell Soup Co.

June 23, 2009
Forbes.com

by Terry Waghorn

When Douglas Conant was brought in from Nabisco to be chief executive officer of the Campbell Soup Co. in 2001, Campbell had devolved into what one magazine called "a beleaguered old brand." Sales for its largest product line, condensed soups, had declined amid intense competition, and the company was rumored to be near being taken over by one of the food industry's best performers. Eight years later, Conant is well on his way to fulfilling the mission he then set for himself, taking what he called a "bad" company and lifting its performance to "extraordinary." He has done it with cost-cutting, smart innovations, increased marketing and, especially, a concerted effort to reinvigorate the workforce.

The strategy isn't complicated. "To win in the marketplace," he has said, "we believe you must first win in the workplace. I'm obsessed with keeping employee engagement front and center and keeping up energy around it."

Gallup, the polling and research firm, studied the engagement levels of Campbell's ( CPB - news - people ) managers in 2002 and found that not only did 62% of them consider themselves not actively engaged in their jobs, a full 12% felt they were actively disengaged. Those numbers, Conant says, were the worst for any Fortune 500 firm ever polled. Today, the story is far different: 68% of all Campbell employees say they are actively engaged, and just 3% say they are actively disengaged. That's an engagement ratio of 23-to-1, and Gallup considers 12 to one to be world-class.

That massive shift has led to a dramatic turnaround in the firm's performance. In an industry that is known more for stability than for growth, Campbell has organically increased its earnings (exclusive of acquisitions, divestitures and the like) by up to 4% a year over the last eight years, with earnings per share growing 5% to 10% a year. Those figures put it near the top of its industry. Investors in Campbell have done quite well too. The total return on Campbell stock, assuming reinvested dividends, is more than 30% over that period, during which the Standard & Poor's 500 index has lost more than 10%.

Conant's use of employee engagement has been so successful that it is held up as a model in the book Closing the Engagement Gap--How Great Companies Unlock Employee Potential for Superior Results, by Julie Gebauer and Don Lowman.

Forbes: How did you know employee engagement could be so crucial?

Conant: I saw that of all the measurable elements related to culture building, engagement correlates closest to shareholder returns. We can use engagement as a tool to measure our progress in building a high-performance culture and to set higher standards for our leaders.

How did you begin the process of getting your employees more engaged?

One of the first things I did was make it clear I understood that Campbell as an organization needed to demonstrate its commitment to its people before they could be expected to demonstrate their own extraordinary commitment to it and its success. This understanding became the basis of what we call the Campbell Promise, which is summed up by the phrase, "Campbell valuing people, people valuing Campbell."

Recognizing that actions speak louder than words, I've never missed an opportunity to express that promise in tangible ways that everyone can touch and feel. When I first got to Camden, N.J., our facility there was surrounded by barbed wire. It looked and felt more like a minimum-security prison than a corporate headquarters. I didn't waste any time taking down the fences and replacing them. Even more effective was the act of replacing 300 of the company's 350 leaders within the first three years. Half of the new leaders were promoted from within the company. As you can imagine, that changed the culture and sent a message that few could ignore.

How have you hardwired engagement into the culture?

We have developed a continuous loop for closing the engagement gap. We survey all our 580 work groups at the same time every year. Managers then review the results with their managers. Finally, every manager meets with all their direct reports to update their progress on clearly articulated goals. We also evaluate our leaders, and the No. 1 criterion they're measured on is their ability to inspire trust in those around them.

The other thing we do is celebrate at a high level when people do things well. Learning to celebrate success is a key component of learning how to win in the market. On a personal level, I send out about 20 thank-you notes a day to staffers, on all levels. And every six weeks I have lunch with a group of a dozen or so employees, to get their perspective on the business, to address problems and to get feedback.

What is the biggest benefit that has come from increasing your engagement?

Besides our improved financial and market performance, the biggest benefit has been the revitalization of our whole culture. We're performing at a higher level, we've become more innovative and we've become more self-governing. That all contributes to our being on track to have one of our best years ever, despite the worst economy of our lifetimes.

Terry Waghorn is an adviser to senior executives. He is co-author of Mission Possible and author of The System.