More Info →Case Study - Turk's Poultry Farm Ltd

Description

Business Kapiti Horowhenua Inc
Organisers of the Electra Business Awards

Case Study:
Turk’s Poultry Farm Ltd

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Turk’s Poultry Farm Ltd
Winner of the 2009 Electra Business of the Year Award

Synopsis
This is a case study of Turk’s Poultry Farm Ltd, winner of the 2009 Electra Business of the
Year Award. It offers many learnings for every business regardless of the sector they
operate in.

Turk’s entered the Awards with the deliberate intention of winning. Their previous effort in
2006 taught them a lot about their businesses strengths and weaknesses and where they
stood against the best in Kapiti - Horowhenua. They realised they had some way to go to
match the standards of the overall winners but the lessons they learnt from entering the
Award and the feedback that followed it were successfully applied to their business and were
one of the main reasons why they entered in 2009.

Winning the Business of the Year Award was the result of sound business standards applied
to many aspects of their operations – governance, employment and training through to
research and development, customer service and strategies for the future.
Their challenge was similar to those facing many businesses today: transferring
management from one generation to another; managing contentious environmental issues;
getting buy in to changes from management, staff and customers and creating a sustainable
and financially viable business.

Their strategy was based on a “total performance package”. Over time they realised that a
single strategy seldom produced the desired result. They found it took a number of
integrated strategies to achieve sustained results and to set the business on a long term
growth path.

Introduction

In 2009 Turk’s Poultry Farm Ltd was judged Winner of the Electra Business of the Year
Award1. This case study2 is about why Turk’s entered the Electra Business of the Year
Awards and what they did over a period of time that culminated in winning the Award. It
offers a series of illuminating lessons to other businesses. The important lesson to be drawn
from their experience is success is no great mystery. Rather, it is based on sound business
practices, a positive attitude and a commitment to succeed.

Although it may have helped them prepare for the Awards, Turk’s did not win the Award
because of their category wins (in 2009 they won Operational Capability and Health and
Safety categories). They won it because they scored consistently high across all categories.
However, it is worth noting that Turk’s believe if a business can be good in some categories
then there ought to be no reason why it shouldn’t be good in all of them.

Background: Turk’s Poultry Farm Ltd

Turk’s Poultry Farm Ltd (Turks) is a family owned and operated poultry producer and
processing business. It has been in business in the Kapiti - Horowhenua area since 1966,
initially as an egg producer and since 1996 as a broiler chicken production business. Turk’s

1 In winning the 2009 Awards Turks were Assessed and Judged on their Chicken Business only.
2 According to the Concise Oxford Dictionary a case study is “The use of a particular instance as an exemplar of
general principles.”

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was founded by Mr John Turk (senior) but is now headed by the Company Manager, Mr
Ron Turk, with a five person Management Team and a staff of 150.

Turk’s currently deals in products and services that include eggs, poultry products, small
goods and an engineering firm. It is also involved in a subsidiary business (offal rendering –
Kakariki Proteins Ltd) that complements its core business. As part of Turk’s involvement in
the sector Ron Turk is on a number of related business committees such as the Egg
Producers Federation.

Turk's market is approximately 66% lower North Island and 33% Auckland. Its main
competitors are New Zealand's two biggest chicken suppliers: Tegal and Ingham's for
chicken products and Mainland Eggs for egg products.

Commercial sensitivity

It should be noted that as Turk’s Poultry Farm Ltd is a family company there is a level of
commercially sensitive information that cannot be included in this case study. Some of this
information was made available in confidence to the Electra Business Award assessors and
judges as part of the Award evaluation process.
The information in this case study has been provided by Turk’s firstly to illustrate the points
referred to in the case study and secondly to encourage other businesses to appreciate that
sound businesses practice is the bedrock to sustainable growth.

The decision to enter the Electra Business of the Year Awards
2009 was the second time Turk’s had entered the Electra Business of the Year Awards. It
was seen by its management as a logical extension of its previous category win in the Food
Business of the Year in 2006.

There was a feeling by Ron Turk and its senior management that if Turk’s was capable of
winning a category then it was equally capable of winning the Business of the Year Award.
The first time they entered was time consuming and difficult. They had no idea what was
required nor had any benchmark standards to compare themselves against. However the
process of entering the Awards made them take a hard look at their business:
“Although we felt we were in good shape we found we were not as competitive as we
thought”.

As a result they learnt more about their own business and where it stood compared to
previous winners and they benefited from the feedback from the Award assessors, all of
which gave them further impetus for the 2009 Awards.
“The preparation requires you to take a hard look yourself, your strengths and your
weaknesses, your strategies, operations and decision making which in turn helps to
make the business more successful”.

Turk’s advice to new entrants is to talk to previous winners about the standard required to be
competitive with the aim of winning a category and ultimately to win the Business of the Year
Award. This advice applies as much to the more experienced entrants as it does to new
ones. Implicit in this advice is that for businesses like Turk’s the Awards are part of their
business improvement strategy. They do not enter to merely make up the numbers: they
enter with a purpose in mind – to continue to improve. This is something all entrants ought
to think about.

From the organisers perspective there is a case for Business Kapiti - Horowhenua to
consider Turk’s comment in terms of its advice/assistance to new entrants. This could
include a simple manual (not the same as an entry form) to “educate/inform” entrants about
the standard required which could be supported by basic information about key benchmark

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performance indicators such as simple financial ratios as a means of quantifying the entry
level standard. It would certainly help to raise the standard of entry and thus lift the standard
of the category and ultimately the Award winners to a higher level. It would also reinforce
the Award’s philosophy of “Promoting and Rewarding Business Excellence”.

It should be noted that as part of winning the Business of the Year Award Turk’s was given
the opportunity to discuss its business strategy with PricewaterhouseCoopers (PwC).
Although their business strategy was developed prior to entering the Awards discussing it
with PwC was a high value opportunity. They felt the meeting with PwC was most
productive and resulted in positive reaffirmation of their overarching strategy and their
business expansion objective (as noted later in this case study Turk’s has set a high revenue
growth target which they feel is attainable).

Further, PwC conducted a series of benchmarks exercises that showed how Turk’s
performance measured against its competitors. For any business the ability to benchmark is
a valuable tool for their board and management.

The next sections deal with the factors that helped to make Turk’s the winner of the 2009
Electra Business of the Year Award. In summary, it was a “total performance package”
based on a combination of sound business practices that were well executed. In other
words, it was “a thousand little things done well” – Sir Peter Blake.

Evolution of the family business and the transition of its management from one
generation to the next

One of the major issues that confronted Turk’s as it grew and developed over the years was
the transference of decision making and operational management from its founder, John
Turk, to his son, Ron Turk.

Typical of most family businesses the founder was reluctant to hand over the reins to
another member of the family, in this case to his son. This caused considerable friction due
in part to age - generational difference - and in part to different thinking - traditional vs. new.

Efforts were made in 2004 to solve the impasse including setting up a governance board of
family members and the use of an external advisor. This made some progress but it was
mainly limited to improved management and operational capability through creating a group
of “management teams”. It did not solve the crux of the issue which still revolved around
board governance, in particular its transfer from the founder to the “new generation”.

A big challenge for many SMEs, especially family owned ones, is succession planning. In
theory it is easy to talk about succession planning and the handing over control from the
founder to other members of the family and/or to an “outsider” in a seamless and planned
manner, but in reality it is often extremely difficult. Turk’s managed to do this by establishing
a formal governance board.

Benefits of establishing a formal governance board

In 2007/8 a second and successful attempt was made to establish a board but this time it
was done with the addition of an independent external appointment who was made the chair
of the board.

The benefits of doing this were essentially twofold. The first was better control over
meetings which resulted in reduced family conflict. For instance, the board developed a job
description for every board member including the founder that set out their roles and
responsibilities. Thus, for example the founder had no operational responsibilities but he still
remained a member of the board.

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The second was that it not only made more effective use of the meeting time but it brought a
fresh, focused and more external perspective to board discussions and decision making
which was important because the inward nature of the former family board was seen as a
major inhibiter to progress.

It also led to a more strategic and structured approach to doing business. This does not
mean that Turk’s did not plan or that it had no structures, systems and processes previously.
They did, otherwise they would not have stayed in business and grown to the extent they
had, but the new planning process became formalised with structured meetings that led to
the development of a coherent business strategy with emphasis on longer as well as shorter
term goals backed by quantitative (i.e. numbers e.g. turnover) and qualitative (i.e. quality e.g.
product and service) performance measures. They started to operate in a manner that Bill
Gates once famously put it – “what gets measured gets done”.

In terms of seeking external independent advice Ron Turk stressed it is important to do this
early rather than waste time and effort struggling with issues that can more easily be
resolved by bringing in and utilising external advice.

The lesson to be drawn from Turk’s experience is that their maturity and subsequent growth
as a business has been enhanced through the establishment of a formal governance board
with an external, independent member. Some businesses may feel they are not yet ready
for this. This should be tested with the owner but as an interim strategy there are a number
of resources available to businesses in the Kapiti - Horowhenua area that enable a high level
of external input/advice on governance and associated matters at relatively little cost.

Employing quality people: training is a key ingredient to improving staff and the
company’s performance

Training is an important element of Turk’s business practices. This ranges from governance
training through to skills training for every member of staff, regardless of their job.
In terms of governance training this is done through the NZ Institute of Directors on how to
be a director. Ron Turk is a member of the IoD which means he can attend their courses
and various other sessions, receive up to date information about best practice standards
plus information about a raft of governance related topics.

Staff training has created a better understanding about the job being done and a better
understanding about safety, health and hygiene. For example over the last two years Turk’s
has had the lowest campylobacter levels in the country. They also believe training has
created a more multi skilled work force.

As part of its training strategy Turk’s use an ITO as its training provider to ensure training is
ongoing, current and knowledge is being passed on. The net result is a sense of pride
among staff of caring about and being responsible for what they do, improved confidence
and attitude and greater leadership. At the end of each course a recognised qualification is
gained. For some staff this is the first time they have had any form of formal recognition of
their achievement.

Even so it is acknowledged that training is not the silver bullet that, when introduced, means
everything will be sweet. But the overwhelming feeling is training, along with the initiatives
outlined in this case study, have made a big difference to Turk’s productivity, quality of
product and bottom line performance. Evidence in support of this is seen in the following
statistics:
 Staff numbers have grown over the last 4 years by 25%
 Average monthly poultry sales have increase by 53% from 2007 to 2010.
 Average monthly egg sales have increased by 16% for same period.
 Overall sales have increase by 40% again for same period.

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 Return on Equity has grown 18.5% over the past 4 years.

Turk’s have dedicated people in the roles of human resources, information technology and in
their accounting and administration functions. They have increased the number of people in
merchandising, dispatch and across the production line. All of these people bring specific
expertise and up to date practices to the business.

It is worth noting that for the reasons outlined above, training at every level – board through
to staff – is seen by leading businesses worldwide as a fundamental part of their growth
strategy. In New Zealand many SMEs training is seen as an expense whereas Turk’s see it
as an investment.

Training and other initiatives (such as introducing effective governance) reflects an attitude
by the board and management about achieving business excellence that in turn becomes
ingrained as part of the organisation’s culture. This is a higher level and longer term strategy
that international studies have shown is the hall mark of successful businesses.

Training needs to be underpinned by other complementary strategies

Training is seen by Turk’s as an ongoing process that has to be underpinned by
complementary strategies based around:

 Employing and/or dealing with the right people with the right attitude (staff and
suppliers)
 Conducting continuous audits to ensure consistency in quality
 Setting clear performance/measurement targets
 Having good systems e.g. IT, and knowing how to get the most from them (a case of
working smarter)
 Team work and from this succession planning to ensure continuity of knowledge
(teams have a leader and a 2 I/C)
 An attitude of taking control of their key operating functions (e.g. transporting fresh
product to customers – Turk’s have bought two large trucks to freight their fresh
products to customers as external freight providers were too unreliable)
 A willingness to help/mentor other businesses/people when appropriate.

Competitors, point of difference and identifying, targeting and servicing customers

One of Turk’s strategies is to target their customer base. This is done by identifying who
they want to work with/sell to and areas they have in common, for example, quality and
promotion of product, and business values/like mindedness.

They know their limitations. For instance, in terms of volume they cannot compete against
large competitors such as Tegal, Ingham’s and Mainland. To counter this they are focusing
on their key points of difference, for example, producing quality products for the high end of
the market such as gourmet stores, hotels and airlines while at the same time continuing to
supply their current customers. This dual strategy is work in progress. Time will tell if this
focus continues or whether it will be redirected to one end of the market or the other.
Turk’s place a premium on high quality customer service. For instance they conduct six
monthly Customer Perception Surveys that provides feedback on how customers see them,
areas for improvement and so forth. This is one of their critical performance indicators.

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There is nothing unusual about this as customer service ought to be paramount to all
businesses. The difference is Turks is prepared to go the “extra mile” as seen by the
purchase of two expensive freight trucks at a cost of $1million.

Role and benefits of R & D and IT

Research and development is an important part of Turk’s longer term growth strategy as
evidenced by the development of a machine that bones chicken breasts. Until recently this
work was done manually. This not only required a high level of knife skills (thus time and
training) but once acquired it resulted in many staff being poached by other boning
processors like the meat industry. The boning machine has reduced their reliance on
manual boners and it has increased output.

IT is applied as part of a continuous improvement strategy (vertical and horizontal i.e. across
the whole business and into every department). The aim is to create greater efficiencies and
reduce wastage and time loss.

For example, increasing production initially resulted in bottlenecks in the production line.
This caused a rethink about the best way to use new technology and IT as a means of
introducing new processes and systems. The result is better forward planning where “down
the line” bottle necks are identified and solved beforehand rather than reactively as in the
past. Turk’s feel the upfront cost of doing this pays for itself.

Today IT is used for processing, stock inventory, environmental control, health and safety –
all backed by training.

Business is about taking calculated risks but risk needs to be assessed and managed

Al business is about risk but Turk’s have assessed it judiciously. For instance R & D is an
investment and a risk. Turk’s assess both aspects. With the latter its impact is measured
and once implemented its consequences are monitored.

An example of risk is Turk’s investment in Kakariki Proteins Ltd. This is not part of its core
business but it is part of its production process. Currently the arrangement is working well
and their initial involvement is being reduced in favour of the Kakariti’s own management
with its administration functions being managed by Turk’s.

For most SMEs it is not difficult to develop a simple risk assessment matrix based on the
likelihood and impact of a decision or event on the business. Thus for example, astute
businesses steer away from situation of high likelihood and high risk whereas they may be
wil ing to accept a situation of lower likelihood and medium risk. Turk’s point is that it is up to
each business to assess their level of acceptable risk.

Turk’s remain focused on the company’s core business

The definition of Turk’s core business is interesting: the obvious one is processing chickens
for its market. Understanding and applying this is fundamental for the business, board,
management and staff.

A less obvious but critical y important one is “anything that affects its customers” - meaning
anything Turk’s does (or in some instances not do) that might impact on its customers is
seen as part of its core business.

A third aspect is controlling its own destiny. By this they mean not being dependent on
external parties. This does not preclude joint venture and stake holdings in other businesses
but it is done in the knowledge that Turk’s is not reliant on them and they do not distract it
from its core business.

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The saying “stick to your knitting” is sound. Many businesses do but many also go beyond
this, especially when times are good and there is an abundance of cash and credit. Turk’s is
clear about this. They are focused on their core business and anything that is non core e.g.
rendering plants, they leave to others (albeit they may have a strategic stake holding in them
but they leave its operating functions to others).

Increase productivity and savings through effective use of systems and processes

Considerable emphasis is placed on its systems. The attitude “we have always done it this
way” is frequently chal enged by management and staff. The attitude is that for a modest
upfront cost most businesses can streamline their current systems/practices, reduce errors,
save time and improve their productivity.

An example cited was Turk’s ordering system. Initially they managed a two diary ordering
system but it was time consuming and error prone (and thus costly). A new IT ordering
system was installed and the results have more than paid the cost of its hard and soft ware
and training.

This is an example of Turk’s practice of “working smarter, not harder”. It is also an example
of continually looking for ways to improve how they operate – a process known as
“continuous quality improvement” – a process that all successful businesses employ.

Environmental and community awareness: to be a good corporate citizen

Turk’s does not claim to be a paragon of virtue. Because of the nature of its business it will
always be subject to many environmental, health and safety regulations, community and
environmental concerns.

It is aware it is part of the local and business communities and that it has a responsibility to
be a “good corporate citizen” (to this extent management and staff are involved in
community events and the company provides various sponsorship support). It
acknowledges that in earlier days there was insufficient regulatory control but this has
changed and the company, staff and the community have benefited as a result.
They have had their setbacks such as the recent court case by its grain growers; effluent
issues and industrial issues. Their attitude is that all businesses have their setbacks and
their ones reflect the nature of the business they are in and as such have to be/can be
resolved.

All businesses operate in different types of environment, some of them are not always
helpful to their business but most of them recognise this and act accordingly. What is unique
about Turk’s is that operating in a sensitive environmental area has required a considerable
investment in quality controls that could have disadvantaged them as challengers for any
category of Award but through investment in time and money and their own resourcefulness
they have managed to overcome this disadvantage. The point they would stress is that
other businesses can overcome their disadvantages if they apply themselves.

Ambitious but attainable future goals and aspirations

Looking to the future, Turk’s has several highly ambitious goals which they believe are
achievable.

One of them is to achieve $100 million turnover within five years. To do this they will have to
increase capacity threefold; increase market share from 4% to 10%+; create high value
markets; gear up and professionalise their marketing; continue to add value to their product
and customer service; continue to invest in market research, food technology and R & D;
continually improve their quality standards; continue to encourage and share knowledge and

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continue to invest time and money in employing/developing (training) the “right” i.e. high
quality, people.

Conclusion

There are two aspects of Turk’s win that stand out.

The first is that they entered the 2009 Electra Business of the Year Awards with the
deliberate intention of winning. This was their second attempt from which they learnt many
valuable lessons, one of them being it enabled them to stand back and objectively evaluate
what they did well and identify areas for improvement.

This case study suggests other businesses entering the Awards should do so with the same
attitude: namely to learn from it and go for a category win and then go for the ultimate
accolade – the Business of the Year Award.

The second aspect is that Turk’s applied a holistic and strategic approach based on sound
business practices and continuous quality improvement that encompasses every aspect of
its operations. Other businesses can learn from Turk’s experience.
These two strategies - entering and using the Awards to improve their business and applying
sound businesses practices – have paid dividends for Turk’s Poultry Farm Ltd.

Appreciation

Finally, BKH appreciates the time given to the case study by Ron Turk (Manager, Turk’s
Poultry Farm Ltd) and Mike Williamson (Technical Manager, Turk’s Poultry Farm Ltd).

This case study was compiled by Chris Ineson of DrivingForces
Contact –Email: chris.ineson@drivingforces.co.nz. Phone: 06 364 2225
Web: www.drivingforces.co.nz
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Identification

Date

May 13, 2010