It’s been a wild ride for Mondelez International over the last few years: operational transformations, the sale of the company’s coffee business, steep cost cutting, determined pricing discipline, an almost-deal to acquire Hershey, talk of being acquired by Kraft Heinz, and, this year, a series of top-executive departures.
The $26 billion snacks company is having a good 2017, considering the food industry’s doldrums. Operating profits are up, and most analysts rate its stock as a “buy,” despite a pullback in share price after years of increases.
Many factors are driving the company’s results, but perhaps overlooked are some internal employee-education efforts. Among them, F1, a multifaceted program designed to open up broader career opportunities for finance professionals and bolster retention, stands out.
The centerpiece of F1 is the Financial Acumen Skills Training (FAST) program, a 12-week educational experience for high-potential junior and senior finance managers. FAST is built around a computerized business simulation in which teams of participants compete with one another to turn around a fictitious, failing company and set it on a path to growth and profits.
A key goal of FAST is to encourage collaboration among the company’s finance managers, who are dispersed among more than 160 countries. Teams, which are purposely constructed with geographically far-flung members, communicate via teleconferencing and virtual networks. “It’s tough,” says CFO Brian Gladden. “They have to get together late at night or early in the morning, which is what I also have to do to deal with a global business.”
FAST is operated by TRI, a finance education company that has worked with many of America’s biggest corporations to accelerate the development of finance professionals. But in some respects the program at Mondelez is unique, according to Paul Bueker, a TRI consultant who serves as its facilitator and is a former leader of General Electric’s acclaimed Financial Management Program.
“[Mondelez’s] finance leaders are much more involved than those at other companies,” says Bueker, who has handled dozens of such simulations for TRI clients since his retirement from GE at the end of 2011. “This is not an outsource situation, where TRI comes in and runs a program for them. Since we started talking to Mondelez in 2015, they’ve wanted to own the program. They also provide a coach for each team, and nobody else does that. They are very hands-on.”
Gladden was himself a longtime GE executive and later the finance chief of Dell (where he also worked with TRI) at the time the technology company went private in 2013. At Mondelez, where he arrived in early 2014, he says he “demands” that senior finance leaders be engaged in providing mentorship and coaching for FAST teams. In fact, it’s a component of their annual performance discussions.
“When we made a commitment as a leadership team to reinvest in talent,” Gladden tells CFO, “I said, ‘Look, it’s got to start with us. The best development programs always have senior leaders right in the middle of them.’ We’re making sure the teams understand that we have a commitment to their development and careers for the long term.”
Mondelez — whose brands include Oreo, Chips Ahoy!, BelVita, Toblerone, Trident, Dentyne, Clorets, and Halls, among others — held its first FAST program in late 2015 and just kicked off its fourth on Oct. 2. Each one includes 36 participants from around the world. They’re divided into two sub-groups, dubbed College 1, whose participants are at the analyst level, and College 2, populated by more experienced managers. Both have three six-member teams; at the end of the competition there are two winners, one from College 1 and one from College 2.
The scenario is that each team takes on the role of an incoming management team, replacing one that failed, for one of three companies competing against each other in the medical-device field. “You never want it to be the [client] company’s actual industry, because then the participants have all kinds of preconceived notions,” says Bueker. “You want them to have a blank slate and have to think about it outside their normal comfort zones.”
The teams are provided with about 40 pages of financial and operational information on their companies and industry. All three begin in the same financial position using the same model. The 12-week program, which requires several weekly hours of participants’ time, spans six fiscal quarters of the fictional companies. Teams start in the second half of a fiscal year, during which they analyze results and plan the next year. They then put their plans into action over the next four quarters.
Each team has many decisions to make, such as what products to develop and at what pace, as well as the allocation of resources to sales, marketing, hiring, quality control, research, and raw materials ordering. The simulation program factors in all of the decisions to keep a running tab of financial results for the fictional companies. There are no arbitrary outcomes; all are determined only by the companies’ actions. Any action can affect not only the company taking it, but its competitors as well.
For example, with regard to pricing, one team may decide to increase price to extract value for a product enhancement it just invested in and introduced, while another team introduces a similar feature at the same time but does not change price. Maybe the third team forgoes the enhancement and instead drops its price to become the basic product supplier in the market. Based on these decisions, the model determines the companies’ respective market shares.
Through role play, teams learn to deal with uncertainty, reacting to market, operational, external, and other real-life opportunities and challenges that Bueker introduces for each quarter covered in the simulation. Bueker also takes on the roles of various stakeholders — customers, suppliers, and others — with whom teams can interact. Teams must plan carefully, as they are allowed only a limited number of conversations with stakeholders each quarter.
“The emphasis is on team dynamics and in-depth problem solving,” says Barbara Stohlmann, HR business lead for global finance at Mondelez. “We want people to experience the idea of a fully integrated business plan, connecting with peers around the globe and making a virtual environment work.”
While the simulation takes place in a different industry, it works in some elements that are specific to Mondelez. For example, given the company’s geographic dispersion, it buys materials and snack ingredients in many different currencies. So Bueker throws in a challenge to the participants: their fictional company is thinking about outsourcing from a new supplier, and there are candidates in multiple countries. Foreign exchange will likely be a key component of that decision.
The winning teams are determined by a weighted average of four financial metrics: total revenue (40%), net income (35%), cash flow (15%), and absolute variance (10%). The winners present to Gladden via videoconference, detailing their strategies and decisions — which can be a big deal, for both the participants and the CFO.
“There are specific individuals that have impressed me so much, that I wouldn’t have known about otherwise, that they’ve gotten opportunities they wouldn’t otherwise have had,” Gladden says. “Some unbelievable talent may be sitting in pretty remote locations that we sell into. We don’t always get exposure to them, and this is a way to see that talent.”
While College 2 is made up of Mondelez finance professionals with more experience than those in College 1, the results of the two groups tend not to differ, Bueker notes. That gives Gladden hope that people can be moved faster through the organization. “If the junior ones are just as capable in this kind of program, then I think they’re capable of doing bigger jobs sooner,” he says.
Feedback from the first few FAST programs has led to refinements, in particular the introduction of a one-day, pre-simulation boot camp to help participants better grasp what the challenge ahead will entail. Also under development is an alumni program that will facilitate further networking among participants after the FAST program ends.
Mondelez has experienced a 92% retention rate among FAST participants, which Gladden characterizes as “above average.” But a better measure of the program’s results will develop over time, he adds: “We should see these folks as our future generation of finance leadership. That’s the real gauge of success here.”