In the January edition of Ottawa Life Magazine, Michael Pinkus prosecutes the LCBO for a litany of sins and transgressions going back more than a decade.
Although I think that the LCBO does a lot of things right, I’m not here to defend the LCBO. Despite its successes, the LCBO does some very fundamental things wrong in how it treats suppliers, employees, and customers.
In his article, Mr Pinkus does a good job of describing the LCBO’s treatment of wine producers (particularly small Ontario producers), consignment agents, and consumers. The LCBO has a lot of power; it’s the largest buyer of spirits and wine in the world. From the stories that Mr Pinkus tells, and stories that I myself have heard from wine producers and consignment agents, it seems to take its supplier management lessons from Wal-Mart. It’s not win/win, it’s squeeze, squeeze.
What about the LCBO employees? As a consumer, I’ve shopped in many different LCBO stores in Ottawa and here’s what really gets me. Pick any LCBO store: why do the employees, from the white-shirts (Product Consultants) to the blue-shirts, all look so darn unhappy? They’re selling booze, for goodness sakes! They should be in high spirits (ahem). It’s obvious that morale is terrible; the work environment is toxic. How you treat your employees says a lot about leadership in any organization. More importantly, unhappy employees are deadly for good customer relations. I’ve lost count of the number of times I’ve heard people complain about “the bad attitude” of LCBO employees, how they avoid customers if they can and are discourteous if they can’t. I don't blame the employees...the buck stops with senior management. But there are courteous people working at the LCBO, and when I find them, I almost want to give them hug!
Another puzzle to me is why the LCBO is flatfooted so often on issues regarding its operations. If you’re running a government-controlled monopoly, you know you’re going to get scrutinised and criticised. Yet, they seem surprised and unprepared when someone takes a run at them.
Of all the problems with the LCBO, it seems that, for Mr Pinkus, the straw that breaks the camel’s back is the Ontario liquor monopoly’s payment of more than $6 million in management bonuses in 2008 while the province’s economy was in a deep recession. Performance bonuses for the public sector managers, or government-controlled entities like the LCBO, aren’t new anymore. And $ 6 million in bonuses for a retail operation with $4.3 billion in revenue and a $1.4 billion dividend to the Ontario government? Not sure that’s necessarily a problem, even in a monopoly.
So, what’s the solution? Many, including Mr Pinkus, think that one solution to the LCBO is to smash it. They say, “The role for government in alcohol is regulation. Why is the government still operating retail and wholesale liquor stores?” Fair enough. But that’s a policy decision: the government is considering whether the time has come to get out of the liquor business. But simply privatizing the LCBO won’t fix the problems that Mr Pinkus describes so well. What’s really needed is far more difficult and complex: a complete re-working of the corporate culture of the LCBO (or whatever succeeds it), with leadership that sets a better example by how it treats suppliers, employees, and customers.
[UPDATE #1]
[UPDATE #2]
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