Tim Gates has cooked up a recipe for success as head of Nestle University.
January 23, 2009
As head of Nestle University, Tim Gates has cooked up a recipe for success that combines his passion for food services with a focus on performance.
When Tim Gates planned out his career, learning wasn’t one of the initial ingredients. But thanks to a few well-timed opportunities and a passion for restaurants and food services, he’s cooked up a recipe for success as head of Nestle University.
“My goal in life as a kid growing up was to own a restaurant,” Gates said. “I had this passion for food. When I got out of college, I started looking at my opportunities and was really drawn to the quality of Nestle. But it was the aspect of working for the food services division and being able to go into restaurants and sell food — it was like, ‘I can’t believe they’re going to pay me to do this!’”
Gates began his career as a salesperson for the food services division of Nestle USA subsidiary Carnation. As Nestle grew through acquisition and consolidation of additional brands including Stouffers, MJB and Hills Bros., Gates saw the opportunity to move into training for a newly consolidated food services division.
“We had a really progressive HR head at the time who said, ‘If I’m going to build out HR, the function that would be most important would be training,’” he said. “They were wise enough to realize that food services sales was something unique. Rather than hire from the outside, they did a combination. They hired a manager of training and development from the outside, and then decided to look into the sales organization for somebody they thought they could train.”
Gates, already on a management development track, became that internal point person for food services training and development. He later was promoted to manager of the department. Even though he had no formal training background, the move was a positive one.
“As much as I thought I loved sales, I found something I loved even more,” Gates said.
While managing the unified food services training group for Nestle USA, Gates gained exposure to the parent company, Nestle SA. That exposure eventually led him into a rotational assignment at the global headquarters in Vevey, Switzerland. The move wouldn’t have happened without some creative thinking and flexibility in job roles. The food services division in Switzerland needed someone to work on key account management practices, but couldn’t justify the cost. In order to bring Gates over, it combined the account management role with an IT management project.
In Europe, Gates found himself at the vanguard of a move to integrate U.S. operations into the fabric of the global company. The U.S. division had grown largely by acquisitions, and the result was a hodgepodge of cultures and structures dominated by managers and systems from the various acquired companies.
“The U.S was always hesitant to send people overseas because they weren’t sure how they fit [into] the broader Nestle fabric,” Gates said. “In ’95, a perfect storm hit where we were looking in the U.S. to say, ‘Can we broaden our global perspective and understand the Nestle world better?’”
Gates was one of 23 expatriate employees who took on a rotational assignment. As part of the deal, they were guaranteed a job when they returned to the U.S., but they wouldn’t know what it would be. Tapping into his sales background and adaptability, the company placed Gates in a marketing role for the roast and ground coffee business, which included the Nescafe, Sarks, Hills Bros., MJB and Chase & Sanborn brands.
“Once we sold that business, it was time for me to rethink what I wanted to do,” Gates said. “It was natural to go back into training and development.”
Gates returned to where he started, taking on a role as director of training and development for Nestle USA’s food services group before moving into the corporate training and development group.
In the U.S., the corporate group oversees training and development for the 17,000 workers employed across all of Nestle USA’s brands. Gates said Nestle USA’s approach to development focuses on individual performance leading to business results.
“People have an inherent need to grow and develop,” he said. “Organizations thrive and perform when they succeed in creating an environment where people are encouraged to develop their potential.
“We’re a huge consumer products company that has these huge mega-brands. But behind the scenes, people at Nestle would say brands don’t create themselves. If you take away the people, all you’re left with is a bunch of stuff.
“Our goal is to ensure superior business results and future sustainable growth by maximizing the capability and performance of our people.”
The economic recession has made achieving those results more challenging, but Gates sees opportunities despite the downturn. He calls it thriving in an “and” world.
“We’re trying to have lean operations and innovation,” he said. “We’re trying to improve operating costs and increase customer value. You have to come up with creative solutions. As bad as this economic crisis is right now, true innovation comes out of that.”
Nestle has capitalized on crisis before. During the Great Depression, the Brazilian government found itself sitting on a mountain of unused coffee beans due to a steep drop in demand. It asked Nestle to help find a way to use the supply. The result: Nescafe. The soluble coffee is still one of the company’s global best-sellers. That’s the kind of story Gates hopes to repeat during the current recession.
“It’s an interesting time for companies in looking for new ways to break out of old patterns to address the economic challenges,” he said.
In addition to the economic challenges, Gates said Nestle USA is faced with more competition and the increasing sophistication of the company’s customers.
“Consumers are those people who ultimately buy and use our products,” Gates said. “But the customers are those people who make the choices to stock them on the shelves. They’re becoming more sophisticated, and that’s causing us to step it up. Their buyers are not just merchandisers. They are marketing people. Their insights into their customers and their customer needs are very sophisticated and we need to match that sophistication.”
The goal of Nestle University is to rapidly prepare the company’s leaders to address these challenges on a global scale. “We’re coming on a time where leadership skills are more demanding than ever,” Gates said.
With that need in mind, the learning curriculum is divided into three broad focus areas — people, innovation and execution — and includes a strong focus on leadership development, business development and performance management.
Performance management has been an ongoing focus for a decade and has involved implementing and standardizing processes across the various Nestle companies, applying accountability and consistency, and rolling out automated performance management forms and 360-degree reviews. It hasn’t come about without some discomfort, but the efforts are paying off.
“We’re a very nice culture,” Gates said. “It’s not always easy to bring in really strong principles around performance management. The last 10 years have seen us really radically improve our focus on performance management and the manager’s and employee’s role in that.”
The company has also integrated succession planning with performance management. In the past, Nestle USA had a top-down approach to succession, identifying the top 130 positions and a list of available successors.
“We’ve implemented this year a whole process to do assessment of potential of every single employee,” Gates said. “Then they’re discussed in a talent discussion where we categorize these people against different categories of potential. What we’ve created is this robust, deep view of our talent pool that we can then match up to the demands of our succession plan.”
To gauge the success of its efforts, Nestle University tracks the separation rate of employees across the different performance ratings. Gates said he saw less than 1 percent separation among the highest performers in 2007. Seventy percent of the separation came from the lowest performers.
“There’s a lot of resistance to all the work that goes into performance management, especially when you apply targeted distributions to it,” Gates said. “But in the end, people are seeing [that] we’re retaining the highest performers. That’s a key measure for us and a key way we’re able to assess our impact.”
Gates said it’s one of the most exciting things he’s seen. “We’ve gone from performance management to now we’re calling it talent management,” he said. “And we’re not just using that title in HR; we’re using it across the organization.”
Achieving that kind of broad impact and distributed ownership is key to the university’s success. Gates credits his sales background, business experience and management skills as key reasons he’s been able to forge the kind of strong relationships with business partners that make it all possible.
“What I like about the relationship is it doesn’t just go back to, ‘Here’s a guy who’s been in HR his whole career,’” he said. “It’s, ‘Here’s a guy who’s been in IT, sales, HR and [has] been overseas.”
That credibility with business partners is especially critical because of Nestle USA’s structure. While Chairman and CEO Brad Alford leads the unified organization, the company is made up of individual operating companies, each with its own president or leader who reports to Alford.
“You can’t just have the support of the CEO,” Gates said. “You have to have a coalition of these individual leaders. Each one of these people has very strong opinions of how it should be done, and they tend to be very protective of their divisions.”
The prepared foods division alone generates $2.5 billion and the beverage division brings in $2 billion.
“These people are running huge businesses,” Gates said. “When I want to come and bring a new approach to talent management, I’m not convincing department heads. I’m convincing presidents of divisions to not only see that this is the way they should do it, but that they’ll agree to do it the same way prepared foods is doing it.”
It helps that the CEO is a strong advocate for the university’s work. When Alford took over three years ago, he focused the company on people, innovation and execution, and for the past year and a half, has made people the primary focus of the company’s Performance Leadership Team, composed of the top 160 executives.
“The sole focus in on people: what we’re doing in the area of recruiting, what we’re doing in the area of training and what we’re doing in the area of retaining,” Gates said. “He’s really put his money where his mouth is on that.”
That backing from the executive team has cleared the way for Gates and Nestle University to carry out their development initiatives. “As tough as it is economically out there, this has been the easiest year I’ve ever had for putting forward my budget,” Gates said.
Sometimes the tastiest recipes are created by mixing seemingly incongruous ingredients. The same holds true for Tim Gates and Nestle University. His broad business background adds a dash of flavor that makes for a successful recipe for training and development.
“Although half of my time at Nestle has been in training and development, a significant amount of time has not,” Gates said. “That really is something that makes training fun to do, because I have those stories that come from real life.”