Latest Entries »

If you are considering jumping into the craft beer business how do you know if you have what it takes to succeed? There are many attributes associated with being a successful entrepreneur such as having the energy and drive necessary to begin and sustain a new venture. So where do you start?

First, determine why you want to be in the craft beer industry. Some brewery professionals such as Kelly Taylor of the Kelso Brewing Company (www.kelsobeer.com) have stated they enjoy the “challenges, variety and sense of accomplishment that come with being a business owner”.

Second, take a self-inventory of your skill set. What skills do you have that are beneficial to becoming a craft beer entrepreneur? This also varies depending on whether the craft beer business you decide upon is a brewpub, brewery or distributor. Some skills identified with successful entrepreneurs are (Kaplan, & Warren, 2013):

– Ability to be resilient even in the face of failure by learning and moving on.

– Navigating in an uncertain environment by using critical thinking skills and knowing that not everything needs to be perfect or

you will not accomplish important tasks.

– Able to network, communicate, obtain consensus and lead (not micromanage).

– Risk taker, by taking action, however, this is moderated by being realistic and making changes as needed.

Besides entrepreneurial skills it is important to analyze what types of skills you will bring to the business. Are you a passionate home brewer with proven results? Beware!  Going from a five gallon to a 15 barrel (465 gallons) system requires new skills to craft quality beer and safely operate (Warner, 2010). So, obtaining training and hands-on experience, hiring a qualified brewer and finding a mentor are all options to carefully consider. I have experienced many brewery start-up’s in which the owners believed they could perform all the brewing activities and soon realized they were out of their depth. To read some first-hand accounts of some of the pitfalls others have experienced I recommend reading the forums at www.probrewer.com.

Finally, to aid in determining where your skills will fit best for your business the creation of a business plan is helpful and a critical part of ensuring success. Creating a business plan is essential to the initial and continued success of any business, provides guidance for long term planning and takes approximately 200 hours to complete (Kaplan, & Warren, 2013). While this may seem to be a considerable amount of time to invest, the investment is insignificant compared to the costs associated with a failed business venture such as loans, personal investment(s) and other liabilities. For example, the start-up costs for a brewery are capital intensive due to the high cost of purchasing brewery equipment. A useful tool for creating a business plan can be found at the U.S. Small Business Administration.

The next blog entry will discuss areas of opportunity for those considering becoming craft beer entrepreneurs.

Advertisements

If you have ever spilled a beer then you know and accept the amount of ridicule that is normally dispensed by friends or others nearby. At the end of the day it is not going to have an adverse impact on one’s mood, life goes on. However, what if the amount of beer “spilled” is increased to hundreds or thousands of gallons?

While working as a brewer on the day shift a few years back I came across a co-worker with an expression of shock and bewilderment with their back firmly pressed to a fermenter. To my fellow brewer’s left was a 100 barrel fermenter (approx. 3100 gallons) with cold beer rocketing out of the racking port, which was about four feet off the ground. As he proved to be immovable and thankfully uninjured I trudged through foam beginning to crest my boots in search of the missing racking arm, butterfly valve, clamp and gasket. Perhaps I should have been in shock as well; however, all I could think about was saving the beer! After enduring the near freezing temperature of the beer fountain I was able to secure all the needed items to the fermenter, close the valve and attend to my co-worker.

What came to mind later was how was I able overcome the dramatic nature of the situation to come up with a solution. It was not due to training since both of us had been trained in the same manner and had worked on teams to create standard operating procedures (SOP’s) for the brewery. However, it was determined that such a situation could repeat itself due to the design of the fermenter and the need to move brewery hoses to be used for transferring and filtering beer. So, how do you ensure that others know how to properly and quickly apply a solution? This is critical in a brewery as whole or partial batches of beer can be lost in moments by opening the wrong valve or equipment issues.

One method to ensuring employee’s know how to react in an unusual situation is to incorporate scenarios into their training. Although some knowledge is empirical in nature, as it is acquired it should be put into a trouble-shooting section for SOP’s and included in training. Also, refresher training helps employees remember the important lessons from their initial training that they may or may not ever experience. Refresher training can be accomplished as part of regular employee meetings.

A useful process for developing training may be found in the ADDIE model which is:

A – Needs Assessment. What knowledge and skills do employees need?

D – Program Design. What will the training consist of and how will it be delivered?

D – Program Development. Create SOP’s and other training materials.

I – Implementation of Program(s). Initial pilot program and ongoing training.

E – Evaluation. Obtain and track participant perspectives and monitor performance on the job.

Creating a successful training program can be a time and resource intensive project, however, the benefits of higher productivity and increased efficiencies tend to yield a favorable return on investment (ROI). Evaluating the training program should include ensuring objectives are being met, making changes as needed and calculating the ROI. Also, the loss avoided by saving 3000 gallons of beer could just pay for your training program!

Brewing Talent Shortage?

 

Note: The list of brewing industry educational opportunities has been updated. Thank you to everyone for your contributions!

As the number of breweries continues to grow and existing brands expand in the United States, so does the need for skilled workers to fill the jobs created. Recognizing this need educational institutions are responding by creating courses to fill the educational gap, however, will the amount of available workers be enough to fill the predicted talent shortage?

Talent Shortage

As more baby boomers begin to retire many developed countries such as the United States and Japan will experience labor shortages, in fact, “by 2020, for every five retiring workers, only four new workers will join the labor force” (Kapoor & Sherif, 2012, p.233). In the U.S. it is expected that an additional 26 million workers will be needed by 2030 in order to realize the same economic growth (Kapoor & Sherif, 2012).  This shortfall of labor is expected across numerous industries including education, health care, manufacturing and construction (Kapoor & Sherif, 2012). One solution to the labor shortage may come from emerging countries due to their inexpensive labor and with this will come an influx of workers from many different cultures. In fact, emerging countries had 33 million prospective workers as of 2005, which could help solve the labor shortage (Kapoor & Sherif, 2012).

Globally, it is predicted that in the long-term talent will be in short supply for employers whether in a developed or emerging economy (Kapoor & Sherif, 2012). Although there is a great supply of overall workers in emerging economies, only 13 – 19 percent of college graduates are deemed to have the proper skill set for multinational organizations despite the diversity they may offer (Kapoor & Sherif, 2012). Despite these challenges, human resources must strive to develop a diverse talent pool with the appropriate skill set, which can become a competitive advantage that provides improved business results such as “survival, profitability, customer satisfaction level and employee performance” (Kapoor & Sherif, 2012, p.235).

The following list of educational institutions offering brewery education is provided as a resource to develop current employees and recruit skilled brewery professionals.

Institutions in the U.S. with Brewery and/or Beer Education Courses

Note: courses vary in nature from formal degrees, technical, business and hands-on training.

American Brewers Guild http://www.abgbrew.com/

Appalachian State University http://fermentation.appstate.edu/

Blue Ridge Community College http://www.blueridge.edu/ncbacktowork/oskar_blues.php

Central Washington University http://www.cwu.edu/ce/craft-beer-certificate

Master Brewers Association of the Americas http://www.mbaa.com/education/courses/Pages/default.aspx

Oregon State University http://oregonstate.edu/dept/foodsci/undergrad/fermopt.htm

OSU Continuing Education ne.oregonstate.edu/beer

Portland State University http://www.pdx.edu/professional-development/bcb

Rice University https://gscscatalog.rice.edu/modules/shop/index.html?action=section&OfferingID=86&SectionID=102

Siebel Institute of Technology http://www.siebelinstitute.com/

University of California, Davis http://extension.ucdavis.edu/unit/brewing/

University of Houston http://www.hrm.uh.edu/ACADEMICS/Degree-Requirement/Elective-Courses/

How do you measure value added?

Most business professionals rely on return on investment (ROI) as a measure of successful business decisions. However, Kearn’s suggests that it is not Return on Investment (ROI) we should concern ourselves with initially, it is value added that is specific to a particular organization that needs to be identified early by managers (2005). Although the following is not specifically targeted for the brewing industry, it is relevant in a conceptual nature.

Evaluation Versus Value Added

According to Kearn’s, Kirkpatrick’s four-level evaluation model suggests that evaluation takes place after training at which point the effects of the training are determined (2005). What is missing from Kirkpatrick’s model is critical thinking and evaluation of a training program prior to implementation, which would help determine if the training is needed to achieve specific business results. Kearns offers a relevant example of how identifying value added helped a restaurant group (which could also apply to a brewpub) identify how management’s perception of a training need was not linked to value added (2005). For example, senior management determined that servers were required to know the ingredients used in every menu item. The issue with this training standard is it could not be attributed to any specific measurable improvement such as increased sales or repeat business (Kearns, 2005).

To achieve a measurable result that could be linked to the effect of training the restaurant group implemented customer service training in order to improve customer satisfaction which led to increased sales, repeat business and referred business (2005, Kearns). In fact, due to the companies robust point-of-sale system it was possible to determine the value added for an individual employee (Kearns, 2005). Therefore, customer service training leading to improved customer satisfaction was shown to have a measurable effect of increased sales, which is identified as value added. Of further interest is the effect customer service training and the associated metrics opened the eyes of management to other areas that could be measured such as employee retention.

Due to restaurant industry standards reflecting high employee turnover it was accepted by company restaurant managers, however, the companies new evaluation practice identified how increased retention could be linked to improved financial performance by more repeat customers, customer recommendations and overall increased sales (Kearns, 2005). So, after the company was able to demonstrate to restaurant managers how improving employee retention affected financial performance and restaurant managers began to devote more resources towards improving retention .

How HR Functions Impact Organizations

Keeping in mind the preceding example of the restaurant groups ability to measure the value added metric of an employee a logical progression would be to also know the overall impact HR functions have on business performance. Ulrich, Brockbank, Johnson, Sandholtz and Younger tell us proper focus and alignment of human resource (HR) functions has a direct effect of “27.9 percent of business performance” (2008). Further, organization (rewards, communication, organizational design, mentoring, work analysis) and talent practices (staffing, training, appraisals) are two areas in which a company should focus to be more effective in regards to the impact of the department on business performance (Ulrich, Brockbank, Johnson, Sandholtz & Younger, 2008).

Considering the amount of impact HR functions can have on business performance certain steps may be taken to help ensure HR’s contribution is considered to add value. First, HR strategy needs to be aligned with organizational strategies, which requires clear communication between HR, other departments and senior management (Ulrich, Brockbank, Johnson, Sandholtz & Younger, 2008). Next, HR’s role needs to be defined to meet organizational needs such as managing HR functions including responsibilities of HRIS, senior level HR professionals, administrative tasks (i.e. benefits, record-keeping), strategy and staffing (Ulrich, Brockbank, Johnson, Sandholtz & Younger, 2008). Finally, developing an organizational mindset that leads to questioning the operating norms and encourages questioning the status quo as in double-loop learning creates more opportunities to add value (Morgan, 1998).

In response to an article about Budweiser watering down their beer, I uncovered several reasons why consumers may have noticed a difference (http://www.forbes.com/sites/rogerdooley/2013/02/27/water-budweiser/)

. I also discovered the incentive for the changes in AB InBev’s Budweiser products appear to be linked to executive compensation.

Consumer perceptions concerning AB InBev’s Budweiser beers may be due to cost cutting measures impacting raw ingredients. If you read the article “The Plot to Destroy America’s Beer” http://www.businessweek.com/articles/2012-10-25/the-plot-to-destroy-americas-beer, it indicates that Beck’s is now made domestically in the U.S. Ingredients used in their Budweiser products such as the rice, hops and beech wood have all been changed. In fact, a former executive at InBev said, “the company saved about $55 million a year substituting cheaper hops in Budweiser and other U.S. beers for more expensive ones like Hallertauer Mittelfrüh”.

I know that changing one ingredient in a beer can have a profound impact and “Bud and Stella” have also had their alcohol content reduced. It is not too surprising that consumers are beginning to notice a difference! It is interesting amid so many flavorful beers in the craft market that InBev has decided go in the other direction with their flagship brands. It will be interesting to see if their exports continue to grow while the U.S. market shrinks for them.

Take a look at http://www.reuters.com/article/2012/03/28/abinbev-pay-idUSL6E8ES2GU20120328. This article reveals that AB InBev’s CEO (Brito) will receive 144 million Euros from his bonus package which is based on reducing company debt. Also, about 40 other executives will receive bonuses as well for a total of 1 billion Euros.

This is a problem many companies create by linking executive compensation to stock performance instead of key performance indicators (KPI) inline with a strategic company vision. KPI would give a more balanced approach to assessing performance. Also interesting to note is that the chairman for the remuneration committee is Brazilian and has worked for AmBev for years with Brito so it is reasonable to question whether there is a conflict of interest!

Evaluating Training Programs

The following is an excerpt about evaluating training programs from a paper I wrote on training and advancement issues. It’s important to properly evaluate programs to ensure time and money spent is in line with organizational goals and is perceived as valuable by employees.

“To address the issue of providing professional development and training opportunities it is essential to ensure the training is of value to both the organization and the employee. Elliot and Edwards indicate that the Kirkpatrick training evaluation model is a simple system to evaluate both value and impact of training and consists of (2009, p. 658):

1. success of the training is assessed in terms of satisfaction and planned action

2. requires the measurement of improved skills of knowledge

3. captures the application of skills and knowledge “back-on-the-job”

4. measures the resulting changes or improvements in the business from this applied

knowledge

Using Kirkpatricks’s model I recommend the following steps for improving the quality and increasing the quantity of training opportunities. First, senior management, production department managers and the human resource department need to collaborate to determine the type(s) of training to offer, the value the training will provide to the organization and the cost of the proposed training. Second, after the training program has been designed and an initial pilot program completed, measurements need to be taken to assess employee satisfaction, if the training has an affect on the job, and ultimately how it affects the organization. The impact the training has on the organization in the form of financial gains/losses, organizational culture changes, and employee satisfaction need to be measured and assessed by the production department and the human resource department. Measurement could be conducted via anonymous survey’s to help ensure employee’s feel comfortable being candid and to alleviate fear of retaliation.

One example of what type and how training would be valuable to a company may be found in proper raw material evaluation. For example, if a batch of raw materials becomes compromised due to becoming damaged during storage or transport, proper identification by a production worker could result in the suspect material being pulled and prevent product from being contaminated. By inhibiting the use of contaminated raw materials, product quality is maintained and customer satisfaction issues avoided, both of which can have financial impact on the company (no returned product or dissatisfied customers). Of course this is just one type of training and the organizations needs may be better served by providing education in areas such as sensory evaluation, product formulation, leadership, team-building and management skills.”

The following post is an excerpt from a paper I wrote about training and advancement issues. This addresses how to create internal opportunity through job enrichment and communication.

Creating Opportunity

“To create more opportunities for employees to advance it would be possible to move laterally within the company, however, this presents issues of KSA (knowledge, skills, abilities) compatibility. The unique KSA’s of a brewery production worker do not easily translate into a job in the sales department, marketing department, or administration and employees may not be interested in these types of jobs. Also, employee motivation is a factor since brewers tend to be intrinsically motivated. According to Johnson, intrinsic motivation can be external in nature such as work-life balance or internal as in how an employee enjoys their job and associated tasks (2005). Some veteran brewer’s describe the reason brewers do their work as a passion, which may be because they can readily identify their part in creating the product since they experience the progression of beer produced from raw materials to the glass. So, with advancement opportunities for production workers often being limited, another method to obtain employee satisfaction may be met by implementing job enrichment.

Greenburg describes job enrichment as performing additional tasks, including tasks requiring increased knowledge, skills, and accountability (2010). Job enlargement was ruled out as a method due to it being deemed more of a short term fix since job enlargement focuses on completing more of the same tasks, which does not include increased responsibility (Greenburg, 2010). Special care would need to be taken in redesigning jobs to be enriching to ensure job tasks were aligned with company and departmental strategies, which can have the added benefit of enhancing employee performance (Garg and Rastogi, 2006). Also important to job enrichment is a channel for employees to provide feedback about job enrichment.

Thomas, Wells, & Willard discussed a program endorsed by British Petrol Exploration (BPX) utilizing upward feedback to promote communication between employees and managers, promote team work, and as an added benefit help managers enhance their management skills (1992). The first year of the upward feedback program at BPX was so successful that the company increased the amount of staff participation in the second year (Thomas, Wells, & Willard, 1992). So, this would be another instrument besides surveys to obtain valuable information from employees to monitor satisfaction levels concerning not only job enrichment, but other business related issues as well.

Some examples of how job enrichment for production workers could be achieved would be through the formation of teams or assignment of individuals to perform functions such as interviewing, safety, preventative maintenance system management, and production planning. These types of tasks would increase responsibility and potentially make the job more interesting. Also, production workers could take part in marketing activities where interaction with the public is needed and is generally well received and expected by customers of the brewing industry. “

Are you “Brewtrinsic”?

The following is an excerpt from a paper I wrote  titled “Changing Mechanistic Manufacturing”, which focuses on the culture metaphor inherent in many breweries. Of particular interest is the intrinsic (motivated by the nature of the work) characteristic of brewery workers.

“The culture of the organization consists of a shared passion of employees for providing consumers with high quality full flavored beer. More specifically, the brewer’s passion for their work is such that their intrinsic needs tend to outweigh their extrinsic. For example, although compensation is relatively low upon entry into the brewing field, workers are motivated by the nature of the work and the prestige associated with working for a brewery. This is further verified by Fahrendorf who indicates that brewing provides a way to identify yourself with your work through the creation of a product from the beginning to the final product (n.d.). Brewers also tend to maintain strong social relationships with brewers within the organization and from other brewing companies.

Beer festivals are essentially marketing events that allow breweries to showcase a select amount of their products to the general public. Brewery workers also attend these events due to platonic relationships with other brewers, to evaluate products from other breweries and generally enjoy the festivities at festivals. This is not a required part of the job for each employee, however, many brewery employees still choose to attend. This demonstrates a unique cultural element and the author has coined the term “brewtrinisic” as a play-on-words to describe the intrinsic nature of brewers, which even tends to be a bit eccentric.”