It shouldn’t be surprising that the best-managed companies have something to teach Canadian businesses about HR. After all, recruiting great people is how any company becomes the best.
Consider Westech Industrial—its major barrier to momentum isn’t a lack of client demand or challenges making its industrial fire arresters. It’s finding top talent, says Jason Lapp, CEO of the Calgary-based firm.
“We have so much opportunity in front of us, our biggest challenge is to get more employees like we have,” he notes. Without adding the right people, it’s unlikely Westech can keep pace with recent growth, up 536% in the past decade.
The ability to become an employee magnet with company-wide engagement is as essential to success as having a great product, disruptive thinking and brilliant execution. Many of Canada’s managers understand this instinctively and the top performers—like many of those on Canada’s Best Managed Companies list for 2018—have built their businesses around that reality. “When I was starting the business, I never looked at HR as a revenue-generating department,” says Jay Klein, founder of the aspartame-free gum maker the Pur Company. Today he sees a tight connection between finding great employees and bottom-line growth, and calls HR one of the “larger” sources of cash within the company.
A strong talent pipeline is an especially urgent challenge for fast-growing companies. Geotab’s staff grew by 30% last year, and Neil Cawse, CEO of the internet-of-things for vehicles firm, has elevated HR to the top of his priority list. Cawse felt he needed to shift his focus away from product and into hiring people—and making sure they didn’t want to leave once they got there.
“If you’re hiring poorly, you’re not hiring the right person, you’re not putting them in the right job or you’re hiring somebody and you don’t look after them … that is a reflection on us as leaders of the company,” says Cawse.
We heard variations of the same priorities from many of our latest crop of Canada’s Best Managed Companies. They represent what Deloitte’s Peter Brown calls a “Canadian way” of treating employees that aligns perfectly with macro-level social and cultural trends. “People want to be treated with respect and they want to be treated like their opinions count,” says Brown, a co-leader on Deloitte’s program to pick the best managed. “They want to be engaged. They want to live a life with purpose.”
The Best Managed Companies program celebrates the top private businesses in Canada with revenue over $15 million. A new panel of judges evaluates the applicants in four areas: strategy (a vision and how that vision is communicated and managed); capability (does the company have the ability—the people, processes and systems—to execute); commitment (the engagement and alignment, the culture to execute); and financials, the numbers that prove the first three are driving results.
The program turns 25 in 2018 and has grown stronger with each passing year. “It is giving us a very unique insight into what makes for an absolute dynamo of a private company in this country,” Brown says.
Deloitte has been aggressively expanding the program. “Increasingly now, we are able to say we are studying the best private companies on the planet as we globalize this,” he adds. “We’ll have more than 20 countries running this by 2020.”
Lorrie King, Brown’s co-lead partner on Best Managed Companies, was one of the founders of the program at Arthur Andersen (which merged with Deloitte in 2002).
“We wanted to celebrate great companies in the private space. So we built a framework and a series of questions around what makes companies great,” she says. Those questions focused on how companies treated their employees and their customers, how they set strategy and how they used technology. “And then we started to build that body of knowledge.”
What was exceptional 25 years ago becomes standard, performances improve and best practices get better and better. “In the last five years, I’ve really noticed just how good these companies are getting on a lot of different fronts,” Brown says.
These are companies that spend disproportionate amounts of time and money on people. They’re investing in systems, processes, technology, robotics and R&D to enhance capabilities. They are driven by collaboration and leadership development rather than domineering CEOs, and often they bring in experts and boards of advisers to guide them. “That is consistent with the theme of being less insular, reaching out, finding the best in class to make their company best in class,” King says.
Best Managed Companies value diversity and inclusion, and care about the community and sustainability, and those ideals are embedded in the business model. “I think they are performing because people are engaged, and one of the reasons why people are engaged is that they figured out the higher purpose,” Brown says. “If you get that right, it is amazing what can follow.”
And because they do so much of this well, in almost every instance these are stories of innovation.
Some are disrupters in the truest sense. But innovation does not have to be earth-shaking. “I call it incremental innovation,” King explains. “It’s not ‘we’re going to turn around tomorrow and do something completely different.’ But they are constantly innovating to become more competitive.”
This is innovation through hard work, a commitment to continual improvement and responding to change more effectively—and more quickly—than the competition.
These are just some of the best practices, adapted appropriately for each company, that build a culture of high performance, breed innovation and, most importantly, produce a significant impact on bottom-line performance.
“There is absolutely no doubt in my mind,” Brown says, pointing out that the average company on the Best Managed Companies list grew sales by 14% and the bottom line by 21%. “That is the not the average story in Canada… That is pretty amazing performance.” That is what it means to be one of the best.