Fruits of his labor Featured

7:00pm EDT February 23, 2009

Mohammad Abu-Ghazaleh had a tough story to sell. At the time that Abu-Ghazaleh led his company to the purchase of Fresh Del Monte Produce Inc. in 1996, the producer, marketer and distributor of fresh and fresh-cut produce had reaped some rotten returns. Not only did the purchase come with the assumption of $300 million in bad debt, but it also came with a criminal record — or, rather, two criminal records. First, the company, which had been a part of the Polly Peck International family, fell on hard times when that company’s chairman, Asil Nadir, fled as it folded under financial pressures. In the fallout, Fresh Del Monte was taken over by Carlos Cabal, a Mexican businessman with his hand in banking, hotels and insurance. Within two years, Cabal became a fugitive of the Mexican government, accused of embezzling $700 million from his own banks. To this day, charges hang over the heads of both men. Meanwhile, Abu-Ghazaleh was left with an internal and external mess.

“The company was like a ship without a captain in the middle of the ocean, and it was really a miracle the company had gone through these two dramatic episodes and was still floating,” Abu-Ghazaleh says.

And then, it’s only natural that everybody was a little suspicious of Abu-Ghazaleh, the company’s chairman and CEO, when he started to tell the story about how the company was planting seeds for brighter days.

But Abu-Ghazaleh, the son of a famed fruit importer and businessman, believed that if he could restore faith both internally and externally he could turn the company around. The story wouldn’t sell overnight, and maybe some people would never believe it, but he began healing the company one day at a time.

First, he established a new relationship between management and employees and external people by setting a new tone for ethical behavior and keeping promises. As he began to establish that credibility, he improved on it internally by taking his tale on the road, visiting all of Fresh Del Monte’s locations after doing his homework to understand where the company was headed.

Here’s what he learned along the way.

Set the example
Abu-Ghazaleh doesn’t have to think long about where the financial troubles that plagued many of the nation’s former powerhouse companies in late-2008 stemmed from. His own experience with Fresh Del Monte taught him how important leadership integrity is to long-term success.

“The whole thing transcends from the top down,” he says. “We see it now in the market today, this whole turmoil with many of the financial companies and other companies in things like the insurance industry. The problem is actually management and leadership, in my opinion. It’s greed in one aspect, it’s self-interest, it’s short-term vision, so many factors play into this.”

Abu-Ghazaleh had that in mind when he began digging Fresh Del Monte out from scandal. The basic first step you can take when people — be they internal or external — are having trouble trusting a company’s management has to do with reining in your promises. It’s easy to set high expectations and tell investors, employees and your customers that you are going to do several great things. It’s much harder to live up to that. Since he first took over, Abu-Ghazaleh has been obsessed with keeping his promises. Rather than promising people a full turnaround of the troubled company, he first promised that the faith of investors and employees would be rewarded with steady growth. While he could have promised an immediate turnaround to bring money to the company and fire up employees, he knows that would mean nothing two years down the road if the company didn’t follow through.

“If you go back to all of our statements and my conference calls over the last 12 years or so, you will see we have been very clear in our message,” he says. “I was always saying that I will never try to drive the stock myself through wishful thinking and through ambiguous maneuvers or misstatements. For me, with all due respect to all the analysts, the investors, to everybody, I will not do something just to please the analyst or investor by saying or doing things that will be counterproductive or not in the interest of the shareholders. If you can start with that, you’ll always be successful at the end of the day.”

Beyond being careful about people’s expectations, Abu-Ghazaleh believes you can be the internal motivation for your company by simply knocking out the idea that the boss is out of touch with reality. Television bosses always show senior executives as detached people who come down from corporate to dictate orders before going golfing. It’s a stereotype, but you may be helping to feed it. Remember that everyone is watching you, so if you just told someone to cut expenses, you better have your own expenses listed as No. 1-A on a public audit list.

“It’s the way you act, the way you behave, I mean your day-to-day transaction of business and how you conduct yourself, how you conduct your business,” he says. “You cannot tell people, ‘Save money, don’t waste, don’t do that,’ if you are not an example of this. This is just one thing. You cannot tell people to work hard, and they see you taking vacations throughout the year on the beach and different places in the world — you have to be an example. And you cannot tell them to be honest when you are trying unlawful things or doing things that are not ethical.”

And Abu-Ghazaleh says his rules are there for businesses of every size. Big or small, you have to know that everything you do is documented by your employees and weighed against what you ask them to do.

“These are simple basic examples of conducting business or even a lifestyle,” he says. “It’s simple. I believe that regardless of how big, be it $10 billion or $50 billion or $1 billion or a $100 million operation, it’s just translates to the same way of conducting the business.”

Expand your credibility
Building credibility begins with basic trust, but if you want to dig out of a hole like the one Abu-Ghazaleh was facing, you also need to make a personal impact with every level of your company.

“I personally don’t have any problem meeting with the high-level executives as well as the middle-level management as well as the people in the field, which I do regularly,” he says. “I have to have these relationships with the top people in the business as well as in the field. An employee has to see your face and know that you exist. You have to transmit confidence; this gives them a kind of association or identification. They identify with this company, they feel they are part of this company, we are one team, and there’s not a big boss sitting at the top not even close to the people in the field. These are very important issues that one has to take in to consideration.”

The first part is taking the time to regularly be in front of your people. If you have two locations, you can obviously do more of this than if you have 200, but the point is you have to make the visits and meet with every level of employee.

“I do make visits every year, at least once, to visit these operations, and I meet with the people in the back office or the field and do have dialogue with them and look at the operation in the field,” Abu-Ghazaleh says.

Each visit isn’t just shaking hands. Restoring employee faith in leadership means that you have to show employees that you know your stuff. Abu-Ghazaleh makes sure he has real conversations with people about what their group is doing and how it measures up with similar groups in the company. Creating that type of conversation comes from doing your homework ahead of time. Abu-Ghazaleh has each of his centers send a weekly report on where production is, how that meets with its goals and what problems, if any, have slowed production. You don’t have to get every detail of every day’s work, he says, but you have to have a basis for where that group is headed.

“If there is a problem today, we have to correct it by tomorrow,” he says. “Our business cannot wait six months. We are in a business where everything is perishable, and you have to make decisions on a daily basis.

“I’m not just reading reports. From my background, which is in agriculture and farming, I do know more or less the obstacles, the challenges and the solutions that can be found for our operation, and that helps. When you know the business, it’s easier to speak with people.”

Abu-Ghazaleh says the more you can make these types of visits, the more you’ll have to take to the next meeting. In fact, if you can have these engaging conversations with employees, you will build up a knowledge that creates a benefit for both ends.

“It’s a mutual benefit,” he says. “It’s not only that (employees) take something from me or from the COO, which we are often on these trips together, but we learn from them. We learn that if we see something wrong we can rectify it immediately, and the only way you can really learn if the business is going right is by being on the spot, by being in the field. And when I say field, it doesn’t mean you have to be at a farm, it means you have to be at a distribution center or a factory. When you are there, with the knowledge one builds, you can even read behind the lines, you can tell if things are right and if something is not right.”

But if you’re looking to turn a company around, you can’t just go through this process once. You have to stay on top of each unit’s reports and continue to make visits. Building up confidence in the short term will quickly be forgotten if employees no longer have a touch point with you the instant the company starts to improve.

“You are not coming every six months to look at this report, you are reading it every week, and you are watching the macro environment,” Abu-Ghazaleh says. “You have to be aware of what’s going on around the world, what’s going on with the raw materials, fuel, so many factors, and you have to put this picture all together ... so it takes time, it takes effort, but if that’s what it needs, then that’s what you have to put in.”

It’s been more than a decade since Abu- Ghazaleh took on the challenge of changing Fresh Del Monte’s story. But from a company with $300 million in bad debt, Fresh Del Monte has been able to see solid fruits to its labor, pushing beyond $3.36 billion in sales in 2007, along with $179.8 million in net income. To Abu-Ghazaleh, a majority of the company’s resurgence is about rekindled faith in management.

“I think at least 50 percent comes from that because all the players adapt to that kind of mold and you have to build respect between the top management and the middle management and the lower management,” he says. “Big company, small company, middle-size company, news spreads around very quickly. If there is something wrong, it spreads even faster. So it’s very important the image and the attitude you portray to people at the end of the day. In one word, ethics in everything in life, that is the most important thing.”

HOW TO REACH: Fresh Del Monte Produce Inc., (800) 950-3683 or www.freshdelmonte.com