De Beers vs. the Turkeys: Who Won?
October 28, 09A turkey is much more than just a bird. At De Beers, the turkey has become a symbol – since time immemorial, employees in
Recently, though, rumors had been circulating around De Beers that the annual Christmas turkey gift may be discontinued this year as a cost-saving measure. The rather courageous global communications manager Lesley Coldham e-mailed senior managers that there won’t be any turkeys this year. “We will not be issuing a formal statement to staff about the turkeys (given the effectiveness of the rumor mill), but I have prepared a statement for you to use either in response to comments and questions from your staff, or proactively as part of a team briefing/email,” she wrote
Lesley’s astute advice to managers is to give the following reason: “As we approach the end of the year the question of the company's traditional Christmas turkey gift is a talking point for many employees. Unfortunately, as a result of the action we took earlier in the year to dramatically reduce our operating costs, there is no budget to provide turkeys this Christmas. While this decision may come as a disappointment to many of you, we hope you will understand that it was made purely as part of our response to the economic downturn earlier in the year, and is consistent with our effort to lower our cost-base wherever possible during unprecedented times.”
This is not a story for the birds. One cheerful employee that I talked to laughed it off saying this was a great humanitarian act on behalf of De Beers. “A few hundred turkeys will have another year to live,” this employee reasoned. Others find it incomprehensible that a company like De Beers could not find £6,000 at Christmas to buy something like 300 turkeys that may cost £20 each.
So, in London, in a year that started with an announcement of a 25 percent staff cut, where many staff members were for a few months “employees at risk” (of being made redundant), those who survived it all will now be denied their turkeys.
The Pendulum Comes Full Swing
I find the turkey story intriguing from an entirely different perspective. There are many comments about how De Beers has changed and even more comments about how the company hasn’t changed all that much, even while shedding its custodian role of industry leadership. Many changes have not been as profound as the company would like to believe, others were truly revolutionary. One thing is for sure – in some areas, its crucial change has been going from one extreme to the other. Nothing is more telling than this turkey story.
Ten years ago, I was interviewed by Bain & Co., which was conducting the strategic review for De Beers that ultimately transformed the company. Gareth Penny, just having arrived from South Africa, was in charge of the review. I was interviewed (in the presence of a De Beers official who took notes) and, almost in passing, I remarked that I would measure Bain & Co.’s success by their ability to get rid of the Christmas gift tradition by which De Beers’ clients were told by their brokers (with the exception of one broker) that they must bestow upon De Beers’ managers boxes of their favorite wines.
This gift-giving tradition worked as follows: the client would send a nice Christmas card to his favorite De Beers executive wishing him the very best for the next year and informing him that a box of wine had been reserved for him at his favorite winery. (There were some four or five wineries involved). Some De Beers managers amassed credits in their wine accounts in five- or six-digit figures.
Later that year, the De Beers Executive Committee briefly pondered the wisdom of that policy – and it was decided to leave it in place. Clients were eager to have an opportunity to express their appreciation to managers and therefore they should not be denied such an opportunity, it was argued. Moreover, it was tradition.
Eventually, with the implementation of the Bain & Co.’s recommended strategic plan, yet still before the launch of Supplier of Choice, the wine-giving practice was discontinued. (Personally, I believe it was done more for tax reasons than for anything else, but that is not relevant today.) The cancellation of this practice was part of an enormous change in attitude of the company and its employees. A cultural transformation was beginning.
De Beers then became a marketing and service company. Its clients became far more important as stakeholders, coming second only to shareholders. Enormous funds were invested in getting employees to accept and internalize a different environment. No details were missed. For example, in
Throughout the years, employees were sent to courses where they were fully taught – some say indoctrinated with – the new values that the company embraced to instill competitiveness, personal responsibility and other ideals. Today, these values are called “Living Up to Diamonds,” which are the principles, “that define the way we do business, inform our understanding of what is right and wrong, and describe what is important to us,” to quote a company publication.
The Price of Cost Cutting
The cost cutting forced on De Beers and on each and every one of us by the global financial crisis is part of the overall transformation that has been taking place in De Beers over the better part of the second half of this decade. Cost cutting can also be taken to the extreme. One might possibly argue whether sacrificing the company turkeys means that De Beers has swung the pendulum too far to the other extreme.
From our vantage point, I don’t know at what level this cost-saving decision was made. I assume it wasn’t done lightly and must have been agreed upon by De Beers’ top management. If it was a multi-level decision, the official deserves to be saluted. He or she has shown that all these training courses did not fall on deaf ears.
To me, however, it underscores the massive changes that are taking place in the company within less than a decade. Normally, when the pendulum swings from one extreme to the other, ultimately, it will slow down and end up somewhere in the middle. The turkey message, however, will not be lost on anyone.
In the final analysis, it won’t be a bad bet to assume that though the birds won this year’s battle of the turkeys, it won’t happen again next year.