The Leadership Edge at Maple Leaf Foods: How Michael McCain Wrote The Book On Values-Based Leadership

I continue to be both humbled and amazed by Maple Leaf Foods.

As most of you know, the Toronto-based company returned to profitability this year after spending much of 2008 dealing with the perfect storm: rising commodity prices, an economic downturn and the fallout from the listeria crisis. Despite all of this, at the end of October 2009, they reported a net income of $22.5-million compared to a net loss of $12.9-million a year ago.

What amazing numbers. So how did that happen exactly?

In the case of Maple Leaf Foods, it’s for two reasons:

First: Michael McCain’s exceptional leadership skills. The fact that he was named CEO of the year by the Canadian Press for 2008 should come as no surprise – his approach to the listeria scare was both honest and personal. The CEO mention by CP was more for being a newsmaker than it was for being “CEO of the Year” in the more traditional award sense (McCain received many congratulatory notes on this and was always quick to point out the distinction).

Regardless, as the leader, McCain put himself at the centre of the crisis and took complete ownership over what was happening. A cynical person might look at all of this as well-played PR. But in my view, McCain has too much integrity: he acted in a way that’s consistent with his own values, as well as with the stated values of the organization (the first of which is “do what’s right”).

Secondly, the reason Maple Leaf Foods is turning the corner so successfully is because of the alignment of their corporate culture. The entire organization is built on 21 core values, written by McCain himself. Called the “Leadership Edge” (and in addition to “do what’s right” referred to above) the values fall under headings that include: “be performance driven”, “have a bias for action”, and, my personal favourite, “dare to be transparent”. In their annual performance review, which is directly related to compensation, all employees are measured on their adherence to these stated values.

And look how it’s paying off: despite the kind of year Maple Leaf Foods had in 2008 – the most difficult in their history – the organization still scored in the 96th percentile in employee engagement.

With such a strong corporate culture, and given their third quarter results – and with Michael McCain at the helm – Maple Leaf Foods is well on its way to recovery.

It comes down to this: great leaders build great organizational culture, and the behaviour that supports that culture drives performance. Michael McCain and the Leadership Edge are way above the waterline in this observer’s view.

Culture as Competitive Advantage

It was a busy week here at Waterstone, and we couldn’t be happier about it.

Yesterday, we publicly announced Canada’s 10 Most Admired Corporate Cultures of 2009.

This is the fifth year of our program, and to be frank we were a little concerned about what impact the recession would have on the willingness of our nominees to move forward with their formal submissions. We also weren’t entirely sure what impact the market correction of a year ago would have on our main thesis: that is, that corporate culture impacts performance.

What would this mean, for our 2009 nominees?

Well, three things happened this year:

First, we had a record number of nominations – over 400.

Secondly, we had double the number of organizations that went through with the formal submission process, and became finalists, over the previous year.

And third, our main thesis – that corporate culture drives performance – took on even more resonance. In fact, what we discovered from Canada’s 10 Most Admired Corporate Cultures of 2009 is that they are outperforming their peers, despite the economic downturn.

In terms of three-year compounded annual revenue growth, the performance of Canada’s 10 has significantly outpaced the S&P/TSX by an average of over 300 per cent – or, three times. This proves that an outstanding corporate culture has a significant impact on performance, and that culture is an incredibly valuable asset – perhaps the most valuable asset an organization can have.

This year’s data reflects the market correction of 2008. What this tells us is that if an organization’s culture is strong, even with a major downturn, it outperforms the majority of its peers. In effect, many of these organizations understand that their corporate culture represents a strategic competitive advantage.

Canada’s 10 Most Admired Corporate Cultures, in alphabetical order, are:

Acklands-Grainger Inc.
Aviva Insurance Company of Canada
Ceridian Canada Ltd.
Corus Entertainment
Fairmont Hotels and Resorts
GoodLife Fitness
Medavie Blue Cross
Starbucks Coffee Canada
Telus
Walmart Canada

We also announced four special category awards this year, for organizations that achieved exceptional performance in their respective sectors:

Mount Sinai Hospital (Most Admired Corporate Culture – Public Sector)
Enbridge Inc. (Most Admired Corporate Culture – Energy and Natural Resources)
Workopolis (Most Admired Corporate Culture – Best Emerging Organization)
Whole Foods Market (Most Admired Corporate Culture – The Green Award)

I hope you will join me in congratulating this year’s winners. They will be feted at our awards gala on February 1st, 2010, at Four Seasons Hotel Toronto.

As Canadians, we don't recognize greatness with the same zeal as some other nations. But this year, at Waterstone, we felt – like I’m sure many of you do – that we could all benefit from a night of fun, celebration and perhaps even a laugh or two. And that’s what’s on the agenda for the first night of February, 2010 – please come and join us!