Performance Management at Heineken USAPerformance Management at Heineken USAPerformance Management at Heineken USAPerformance Management at Heineken USAFP&A for CPG Summit

Federico ReyesSenior Director, FinanceMay 22, 2013

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2Source:understandinguncertainty.org

Nightingale’s RoseNightingale’s RoseNightingale’s RoseNightingale’s Rose

♦ Share how we changed the systemhow we changed the systemhow we changed the systemhow we changed the system and ideas you can take away for a ideas you can take away for a ideas you can take away for a ideas you can take away for a similar implementationsimilar implementationsimilar implementationsimilar implementation

■ Who is Heineken USA?

■ Why did we start on the journey?

■ What is the new process?

■ How did we implement it?

■ What were the main enablers?

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ObjectiveObjectiveObjectiveObjective

Brand PortfolioBrand PortfolioBrand PortfolioBrand Portfolio

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5

ON

Premise

Grocery

Liquor

C-Store

Other OFF

OFF

ON

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600

Breweries Points of EntryDemand

PointsDistributors Retailers

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Heineken USAHeineken USAHeineken USAHeineken USA

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Industry ChangeIndustry ChangeIndustry ChangeIndustry Change

FROM TO

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Starting PointStarting PointStarting PointStarting Point

•Qualitative plans

•Not grounded to metrics

Link to

planning

•Different metrics for every function & level

•Bonus metrics not linked to plan objectivesMetrics

•260-page company results deck

•Prepared manually each monthScorecards

•Discussions on results, not actions

•No follow-upMeetings

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2. Develop 2. Develop 2. Develop 2. Develop and Automate and Automate and Automate and Automate ScorecardsScorecardsScorecardsScorecards

1.1.1.1. Develop Initiatives Develop Initiatives Develop Initiatives Develop Initiatives and Metricsand Metricsand Metricsand Metrics

3. Hold Monthly3. Hold Monthly3. Hold Monthly3. Hold MonthlyMeeting DrumbeatMeeting DrumbeatMeeting DrumbeatMeeting Drumbeat

• CEO develops Initiatives and Metrics

• Shares with MT; they develop theirs

• MT aligns cross-functionally

• MT shares theirs with their teams (MT-1); they develop theirs

• Process continues to MT-2 for some functions (mostly Sales & Marketing)

• MT-2 teams discuss progress vs plan

• Team leader prepares for own meeting with peers

• MT-1 teams discuss progress vs plan

• Process rolls up to the MT meeting. CEO prepares for own discussion.

Reprioritize initiatives if necessary

Performance Management ProcessPerformance Management ProcessPerformance Management ProcessPerformance Management Process

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1. Develop Initiatives and Metrics1. Develop Initiatives and Metrics1. Develop Initiatives and Metrics1. Develop Initiatives and Metrics

InitiativesInitiativesInitiativesInitiatives MetricsMetricsMetricsMetrics

Subset of initiatives;

merit & career discussions

Subset of metrics; bonus

purposes

Inputs Outputs

BusinessPerformance Management

PeoplePerformance Management

Eg: Restructure the financial close process (1Q)

Eg: % OTIFNE

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2. Develop and Automate Scorecards2. Develop and Automate Scorecards2. Develop and Automate Scorecards2. Develop and Automate Scorecards

• Focused on plan Metrics

• Every level looking at the same KPIs

• Consistent calculations

• Prepared automatically each month

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3. Hold Monthly Meeting Drumbeat3. Hold Monthly Meeting Drumbeat3. Hold Monthly Meeting Drumbeat3. Hold Monthly Meeting Drumbeat

a. What?

•Peeling

the onion

•Tool: heat

maps

•Peeling

the onion

•Tool: heat

maps

b. Why?

•Why? Why?

Why? Why?

Why?

•Tool:

drivers

fishbone

•Why? Why?

Why? Why?

Why?

•Tool:

drivers

fishbone

c. Actions?

•Flow from

the Why

•Tool: DAL

•Flow from

the Why

•Tool: DAL

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Above National Premise TrendModerately Below National Premise TrendSignificantly Below National Premise Trend

YTD Volume Growth vs. TargetYTD Volume Growth vs. TargetYTD Volume Growth vs. TargetYTD Volume Growth vs. Target(Brand/Region/Premise Illustration)(Brand/Region/Premise Illustration)(Brand/Region/Premise Illustration)(Brand/Region/Premise Illustration)

ONONONON

West

OFFOFFOFFOFF

Central Southeast Northeast

3%3%3%3%

3%3%3%3%

3333%%%%

14%14%14%14%

3%3%3%3%

20%20%20%20%

4%4%4%4%

20%20%20%20%

National Trend National Trend National Trend National Trend (10%)(10%)(10%)(10%)

5%5%5%5%

15%15%15%15%

3.a. Heat Maps3.a. Heat Maps3.a. Heat Maps3.a. Heat Maps

Keep peeling!Keep peeling!Keep peeling!Keep peeling!

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3.b. Drivers Fishbone3.b. Drivers Fishbone3.b. Drivers Fishbone3.b. Drivers Fishbone

Quantify!Quantify!Quantify!Quantify!

WhyWhyWhyWhy are we behind target for the brand / pack/ region / zone /premise / channel ?Pricing?

Margins?

Visibility?Sampling?

Features? Ads?

Displays?

People?Brand health?

Distributor or retailer issues?

Competitor actions?

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3.c. Decisions and Actions List3.c. Decisions and Actions List3.c. Decisions and Actions List3.c. Decisions and Actions List

Discipline, not rocket science!Discipline, not rocket science!Discipline, not rocket science!Discipline, not rocket science!

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♦ Co-develop with stakeholders

♦ Develop effective but simple tools

♦ Spend the time on training sessions

♦ Model with example in communications

♦ Complement with HPT dynamics

ImplementationImplementationImplementationImplementation

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♦ Lock the commitment from the top

♦ Staff and define champions

♦ Analyze if consultants are needed

♦ Evaluate repository tools

EnablersEnablersEnablersEnablers

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♦ Start rightStart rightStart rightStart right: Lock the support from the top and co-develop with stakeholders

♦ Make it airtightMake it airtightMake it airtightMake it airtight: Cascade effectively

♦ Make everyone’s life easyMake everyone’s life easyMake everyone’s life easyMake everyone’s life easy: Automate

♦ Don’t cut cornersDon’t cut cornersDon’t cut cornersDon’t cut corners: Invest the time to train

♦ Remember the roseRemember the roseRemember the roseRemember the rose: Why?????

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Key TakeawaysKey TakeawaysKey TakeawaysKey Takeaways

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