Steep learning curve valued at commodities firm

As A fresh-faced young man all of 26 years old, Mr Sunny Verghese was sent to a village in north-east Nigeria to negotiate the long-term lease of a 10,000ha plantation with the government there.

"It was my first experience working overseas ... and I had never dealt with government officials in my life. And this was a military government," recalls Mr Verghese, chief executive of commodities trader Olam International.

After several months of negotiations, he secured approval for the lease and went to the village to take possession of the plantation.

But that was not the end of his trials.

"The traditional ruler of the area said, 'I don't recognise any government piece of paper. You have to get a licence from me'. He wanted to make sure that his people were not exploited by a foreign company."

During those years from around 1986 to 1989, Mr Verghese lived in a mobile camp with his wife and eldest child.

He also had to deal with hiring and paying workers to manually harvest the cotton grown on the plantation, fending off potential robbers and leading a multinational team.

"If I was in a very large multinational company I would have depended on a centralised HR (human resources) or risk function to help me. But when I'm in a small bootstrapped start-up ... I am the HR manager, production manager, finance manager all rolled into one."

The various problems he faced were eventually resolved, but more than two decades later Mr Verghese still aims to recreate the steep learning curve for new hires at Olam.

"It was one of the best experiences I've had. All those are things that I thought I'd never have to do, but having done it you learn so much more. As a result of being thrown in the deep end, you develop in a more accelerated way," he said.

"You become very entrepreneurial because you have to do a lot of things on your own and therefore can't rely on big support systems to help you."

After a rough patch, in the wake of an attack on the company by US short seller Muddy Waters late last year over its financial and debt strategy, Olam is bouncing back - and a key plank of its success is the HR strategy.

Out of its more than 18,000 employees across the globe, Olam has about 730 of them in a Global Assignee Talent Pool (GATP), and sends them through what Mr Verghese calls a "rite of passage" similar to his experience in Nigeria.

The GATP programme began around two decades ago.

GATP managers are recruited, hired and deployed on a centralised basis and are rotated across various segments and locations for three to five years, to provide them with critical exposure to the various parts of Olam's business and help them develop a "global mindset". They are often sent to rural areas in emerging markets.

About 60 per cent of those in the GATP are Indians. A "very limited number" of Singaporeans take part.

After their training, successful GATP managers are better positioned to help Olam internationalise, Mr Verghese said.

"Whenever we go into a new product... or into a new country, we will need people who understand our business model inside out, who understand our risk management systems, who understand our control systems, and above all who share our values and culture.

"We try to first make sure we've got this core group of people who share our DNA... if you do not have that you will find it difficult to internationalise."

Olam, which was set up in 1989, is in 65 countries and supplies various commodities including edible nuts, dairy and cocoa.

"We internationalise to find new platforms for growth. Growth is the objective, it can be new sources of supply, new markets, within existing markets new customers, or within existing customers a higher share of the wallet," he said.

But for the first 14 years of Olam's existence, it did not have an HR department.

"We competed on the basis of people as our organisational advantage. The only way we could achieve that is if every line manager became an HR manager... you have to take care of your people," said Mr Verghese.

Olam waited until that culture was fully institutionalised then brought in an HR team, he added. It now has about 11 HR managers for its entire workforce.

The company hires about 70 to 100 people every year because it has an attrition rate of 11 per cent.

Putting all this effort into finding and keeping the right people and training them for global exposure has been one way Olam has set itself apart, he noted.

And that differentiation has been integral to the company's expansion, he stressed.

"You can only scale and grow if you have built something that's distinctive and unique, you have to differentiate yourself. If you haven't created a different angle, a different edge, you can't scale your business and compete globally. We don't allow any of our businesses to scale unless they can show that they have differentiation."

But unlike the practice at most other firms, the HR department in Olam does not handle mostly administrative tasks.

"For any other company, they'll say HR does selection, recruitment, hiring, development, training. That's not relevant for us."

Instead, one of HR's main objectives at Olam is to create a "high ownership mentality and engagement", Mr Verghese said.

The firm measures employee engagement scores every 18 months. HR will then assess why employees might be dissatisfied or unmotivated and fix those issues, he said.

To encourage an ownership mentality among GATP employees, some are given shares in the company after they work there for a certain amount of time. Mr Verghese reckons that 450 to 500 GATP managers are shareholders.

Olam's emphasis on nurturing its employees carries over to its succession planning as well.

The board meets twice a year to talk about succession plans for crucial roles such as chief executive.

"I would see it as a failure if we had to finally choose a successor from outside because it means your internal talent development processes have failed. There should be more than just one successor," Mr Verghese added.

melissat@sph.com.sg

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