When a small-town family bakery grew into a national food giant, everyone’s roles - from the CEO down - had to change and grow. That was hard.
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Entrepreneur: Richard Rijs
Company: Patties Foods
Business type: Pie makers
Founded: 1966
Employees: 400
Turnover: (2004 - 2005) About $110M
Head office: Bairnsdale, VIC; Sales offices: Melbourne, Sydney, Adelaide and Perth
Contact details: 1800 650 069
The Patties Foods Story
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Key learning points:
- Family members - Select managers and directors for their skills not their blood relation to the founders.
- CEO workload - Keep delegating until you have leisure and family time that you want and need.
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In 1985, Richard Rijs was at breaking point. The Managing Director of Patties Foods says: “I’d reached the point where I couldn’t do any more and I’d started to lose control.” Rijs was running his family’s food company, a 24/7 operation that was then producing fresh bread and turning over about $10 million a year. As the boss, Rijs felt compelled to be there 16 hours a day, six or seven days a week. The father-of-four says he was about to fall in a “screaming heap”.
One reason for Rijs’ obsessive devotion was family. Patties Foods was started in 1966 by his parents, Dutch immigrants Peter and Annie, when they bought a bakery in Lakes Entrance, Victoria. Over the next two decades, their six sons helped turn the business from a regional acorn into a national oak tree. Patties Foods’ brands now include Four’N Twenty, Herbert Adams, Nanna’s and Snowy River.
Richard realised he couldn’t do it all. But his brothers either couldn’t or didn’t want to fill all the management gaps: five of the six brothers had not completed high school and four had no experience outside the family business. Rijs, who left school at 16, realised he needed to fill those gaps from outside. When he handed over responsibility for production to a senior baker, Rijs learnt a crucial lesson - the importance of delegating.
The Challenge
With the company’s rapid growth, Rijs’ biggest challenge was to find and fill management gaps. He also needed to do this with sensitivity towards the feelings of family members and long-term staffers who might feel displaced.
The Solution
In 1994, the family company appointed its first non-executive director, Ernest Barr, the retired CEO of Heinz Australasia. It was a difficult situation. Because the business was run by six brothers, Rijs says that everyone felt they knew as much as the next person: “You don’t have the professional approach that you get when you are dealing with non-family members. Problems can turn into arguments. Getting an outside person involved in that structure was a good circuit breaker.”
By providing an objective and unemotional perspective, Barr enabled the brothers to look at the business from a distance. Rijs says: “In a family business, you sometimes make decisions based on emotion rather than common sense.” Barr got the brothers to focus on new product development rather than just working out ways of doing things more cheaply and efficiently.
Rijs says it was difficult for the family to relinquish some control of the business. “It’s hard when someone from outside comes in and is better at the job than one of the original family members. That can be pretty tough and sometimes it takes a while to accept.” All six brothers still play important roles in Patties. Their experience is invaluable in key areas such as plant development, quality and product development - the foundations on which the business was built.
As Patties grew, Rijs realised that he needed specialised managers in almost every area: sales, marketing, maintenance and IT. For example, a full-time production planner was hired to do work previously done by the plant manager on a part-time basis. The new planner eventually reduced Patties’ inventory by 60% in dollar value because of a more sophisticated approach. Another employee was hired solely to help supermarkets display Patties’ products in their freezers.
Rijs says such specialised appointments require sensitivity as existing staff can lose some of their roles, making their jobs appear less important. But Rijs reframes the changes for concerned staff in a new perspective. In fact, their jobs have become more specialised. “People’s feathers do get ruffled. You really do need to spend a lot of time working with staff, letting them know that by allowing them to focus on a narrower part of the business it helps us become more competitive.”
The Results
Patties Foods total turnover between 1966 and 1976 was $1 million. Last year, it turned over about $110 million with a staff of 400. It now has four non-executive directors. In 2005, Richard Rijs - who joined the company in 1972 as a 19-year-old - was a finalist in Ernst & Young’s Entrepreneur of the Year.