On 21 April, Statoil hosted the biannual Norwegian BBRT event, which once again was a great success. As the host, Bjarte Bogsnes facilitated the meeting, and he shared interesting insights about how Balanced Scorecards can work in a Beyond Budgeting setting such as Statoil’s. He also reviewed the recently updated 12 Beyond Budgeting principles.
Once again, we were fortunate to have Reitan Group’s CFO Kristin Genton attend this forum, and again she delivered a great presentation. This time the focus was on their very effective financial culture.
Reitan is one of the largest companies in Norway, with a turnover of close to EUR 10 billion and some 36,600 employees. The group operates in several business areas (brand names in brackets): Food Retail (REMA 1000), Kiosk/Convenience (Narvesen, Pressbyrån, R-Kioski, 7-Eleven), Energy & Fuel (Uno-X) and Real Estate (Reitan Eiendom).
Reitan’s goal is to be the most value-driven company. The company has a strong culture with the customer as the ultimate boss, and a working environment where authority is delegated to employees who are their own decision makers. Accordingly, we were not surprised when it was recently announced that Great Place to Work® awarded them the best large employer (>500 employees) in Norway in 2016 – Congratulations!
One striking resemblance between Beyond Budgeting and the Reitan Group is our common view on the importance of having a holistic and coherent management model. In Beyond Budgeting, we talk about coherence between Leadership Principles and Management Processes. Reitan uses slightly different words for the same; namely Culture and Structure – but the essence is the same.
The role of Reitan Group’s HQ is to give direction and support regarding values, and to provide standards for financial management. Other than this, there are no HQ functions or activities on group level. The HQ is thus very lean with only about 15 employees.
Here are the key elements of Reitan’s financial culture, which were presented and debated at the BBRT meeting:
- Avoid debt: Interest is seen as a fee on impatience
- Have fun and be profitable (and in that order! – passion is everything).
- Quality in everything we do (quality is an attitude)
- “Cuttism”: This is a word invented by CEO Odd Reitan, and it describes their mentality on costs. Cutting prices is a mantra in Reitan. But it is not only about cutting sales prices; it is also about cost efficiency and cost consciousness on every cent. “Kuttisme,” as it reads in Norwegian, has actually been formally endorsed in the Norwegian language!
- “Managing by percentages”: I.e. translating measures to meaningful percentages (or income/costs per unit). This is simple and self-regulating, and it helps the understanding of profitability (“Prosentuell Økonomisk Styring” or PØS in Norwegian)
- Rock solid understanding and insight (“Stålkontroll” in Norwegian): Every employee must have solid control over his/her area of responsibility; how are we doing and where are we heading. This requires a deep understanding of both details and the big picture.
- Effective coaching: Making sure that the receivers of financial information receive exactly what they need, when they need it (no more and no less).
- Apply common sense
It goes without saying that Reitan Group does not bother with annual budgets. Here is Odd Reitan on budgets: “Many companies have big departments only doing budgeting, sending numbers up and down the organization, before they are presented to the board to give them something to talk about. A waste of time and energy! A forecast, however, is something very different. It gives us a picture of how things might develop. If we don’t like what we see, it forces us to do something!”