Ted Gardner talks about what this organization has done to go from a break-even point to record sales in just one year.

XAuthentic Specialty Foods, known in the market for its Mexican food brands Embasa and La Victoria, is enjoying its third year of record EBITDA and sales. In fact, 2005 and 2006 were record years for the company, according to Ted Gardner, president.

But when Gardner came to Chino, Calif.-based Authentic Specialty Foods (ASF) at the end of 2003, he was faced with a different situation. At that time, the company was basically operating at a break-even point. “One word could describe the situation when I came here—messy,” said Gardner. “When sales and profits are down, it’s usually not a great environment to be in for anyone; shareholders, suppliers, customers, and the employees.”

Employees weren’t interacting or communicating with each other, and each operating area behaved as if there were no other operating areas in the company. “Sales employees were selling X, but manufacturing employees were producing Y, which led to some pretty sad people dynamics. There was a lot of complexity that got built into the system to accommodate the shortcomings associated with this lack of communication,” Gardner said. But it didn’t take too long for Gardner and his team to re-engage employees and point the company in the right direction.

Brain trust
To help the company get back on track, Gardner initiated semi-annual strategic sessions with his leadership team. The first meeting, held in May 2004, defined the company’s objectives and outlined four strategies: reduce costs and improve quality; profitably drive sales and share; improve internal operations; and improve external relationships with customers, suppliers, and vendors.

Ted Gardner

Not only does the company benefit from the different perspectives in getting a more holistic look at issues, it also gets a lot of buy in because managers are more involved. “There’s typically a theme or specific initiatives we focus on over a three-day period,” Gardner said. “When you can get one-sixth of the organization to buy in from the get-go, it makes execution a lot easier and smoother.”

Gardner and his team have been working feverishly over the last year and a half to build the top line by introducing four new line extensions as well as new products. “We’ve been looking at new distribution or channel opportunities in the marketplace and have gone down the mass merchandiser channel as opposed to relying solely on food service and traditional grocery retail,” Gardner said.

For instance, up until a few years ago, ASF had no business with Wal-Mart; today, it’s about 4% of its business. “We’re at a 3% to 5% business level in this area, but we want to take that up to 10% of our total business,” Gardner said.

Fourth dimension
To help gain back the trust of employees and motivate them, Gardner developed an award system that recognizes employees for going above and beyond. The Back to the Future movie trilogy inspired the Fourth Dimension System, as Doc Brown frequently told Marty that he wasn’t thinking fourth dimensionally, Gardner explained.

The first dimension involves employees noticing an issue and fixing it themselves. The second dimension involves an employee getting a coworker to help him or her solve an issue. The third dimension is when an employee brings a supervisor into play. “If an employee is involved fourth dimensionally, they’ll cross functions to get something resolved,” said Gardner.

The awards are handed out quarterly, and employees can be nominated by anyone in the company. “We can give out anywhere between none and a dozen awards in any given quarter,” Gardner said. At the end of the year, the quarterly winners vie for the annual Fourth Dimension Award as the person who epitomizes adding value to the company through using all four of the dimensions.

“This award has given us a lot of credibility with our employees because we’ve done it for 14 quarters and have had three annual award winners. It adds a lot of meaning and value when an employee wins an award because these are given in front of the whole organization,” Gardner said.

Gardner said it’s his firm belief in accountability as well as setting and managing objectives that have helped employees get back into gear to take the company to the next level. “I don’t believe in setting flavor-of-the-month objectives. Our organization is about a continuity of effort. Come December, we’ll still be striving for the same objectives that we established the previous January,” he concluded.