Creating value from values – Simon Susman, Chairman, Woolworths

April 19, 2016
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Improving business leadership and ethical practices are key to running a sustainable and enterprising business in the 21st century. Companies need to not only deliver shareholder value in terms of revenue, but also have effective governance structures, and demonstrate societal and environmental value for clients, employees and communities. Millennials are also changing organisations as their expectations are for more transparency and understanding of their individual needs. In the US, 75% of the workforce will be millennials by 2025, so organisations need to consider how they demonstrate value.

To understand how business can create value from values, we hosted Simon Susman, Chairman of Woolworths Holdings Limited and instigator of Woolworth’s Good Business Journey, at our recent CEO Engagement. Launched in 2007, the Good Business Journey is a comprehensive way in which Woolworths addresses sustainable growth within the context of the changing social and environmental needs of South Africa. This fundamentally influences the programmes that Woolies creates to drive value from a deeply held system across all their stakeholders. With the aim to be the most sustainable retailer, how does Woolworths demonstrate their values through their Good Business Journey?

Employees: Woolworths has 40,000 employees and each person is incentivised. 60% of their middle to senior management in South Africa is black and Woolies believe that you need to identify talent and help people from disadvantaged backgrounds through training and development. Parachuting people into roles that they are not ready for is not helpful to the organisation or the individual. As a result, less than 10% of Woolies staff are unionised.

Suppliers: 95% of Woolies’ food and 35% of their clothing is purchased from South African suppliers; additionally 25% of their clothing is from SADEC countries. Simon’s belief is that you must develop relationships with suppliers as it is a lose/lose situation if you squeeze your suppliers to levels that are not sustainable.

Environment: Woolies has an extensive programme looking at sustainable practices. We highlight only a few, so please look at the Good Business Journey 2015 Report:

  • Energy saving – by turning off the hot water in the bathrooms at their head office, they saved R40,000/month.
  • Ethical sourcing – buying from ethical sources, such as fish that is responsibly sourced and honey that is badger-friendly.
  • Waste reduction – they have a target of 0% to landfill and are only 7% away from that.

Communities: Woolies give away R500 million of their food before it perishes. Their MySchool programme has provided R177 million to schools, and they work with 2400 schools on their EduPlant programme to help them grow vegetables for the schools and communities.

Woolworths is now a R6 billion business with operations in Africa and Australia following the purchase of David Jones in 2014. These different geographies allow Woolies to diversify risk where South Africa is high risk, but high growth, and Australasia is low risk, medium growth but much more competitive. During Simon’s 10 year period as CEO, the share price rose tenfold, strongly reinforcing his view that a business, deeply rooted in values and passionately delivering on sustainability, can bring real value to all stakeholders.

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