Marketer to Seed Ad Budget with Healthcare Savings
By George Anderson
Scotts Miracle-Gro Co. plans to boost its ad spending from 5.6 percent of company sales to seven percent and it has a unique strategy for funding the increase. The dollars will come from an efficiency and cost-cutting program known internally as Project Excellence. Among other things, the program requires employees to quit smoking or lose their jobs, reports Ad Age.
Bob Bernstock, president and chief operating officer of Scotts Miracle-Gro, said the company would offer smoking cessation programs to the approximately one-third of its workforce who smoke. Those who are unable to quit, will be fired.
Scotts is looking to boost its ad spending to push its competitive advantage in the market. The company already holds a 54 percent share in the retail lawn and garden category business where it competes against companies such as Spectrum Brands.
“Advertising is a key competitive advantage of Scotts, whose competitors cannot match [its spending] levels,” wrote Joseph Norton, an analyst with Bank of America Securities, in a research note.
Scott’s Chairman and CEO Jim Hagedorn has high aspirations for his company. “We want to be the Procter & Gamble of lawn and garden,” he said.
Moderator’s Comment: What is your reaction to Scotts Miracle-Gro’s plans to fund increases to its ad budget?
We wonder how the company plans to deal with relapses for those joining its smoking cessation program. As many who have had a nicotine addiction know, it
is not unusual to go through numerous attempts before kicking the habit for good. –
George Anderson – Moderator
This move seems a bizarre way to boost health status and one that I would definitely say is “hitting below the belt.” While no one can dispute the staggering cost of smoking both to the individual and family as well as to society and the economy, such a move comes across as high-handed. Also, the stated object of improving health is almost diminished when the rest of the plan by way of boosting advertising dollars to gain competitive advantage is revealed. This move can hurt the company, by way of its goodwill with employees in the long run. If they are serious about doing something about their employees’ health, or even to boost productivity, there are first-rate disease management vendors and plans that can give them an edge in this area.
To my understanding, this is a legal, although poor, example of incentivizing a workforce. Scott’s inability to compete shouldn’t be blamed on the poor health habits of their workers. However, they can establish their insurance programs to better embrace those workers who do not smoke and discourage those who smoke. The savings from this can be applied to increasing the ad budget, and it will have a more positive effect on incentivizing the employees. It is a shame that a modern, American corporation is trying to use poor health decisions as the reason why they are not more competitive in the marketplace. This is clearly a misguided approach, which needs to be corrected to inspire corporate loyalty. What if they changed this to apply it to their employee’s eating habits? Are we going to blame french fries for causing heart attacks?
This is wrong on many levels. As we’ve discussed before, this is an intrusion into the personal lives of workers that is outside the scope of the employer. Charge smokers more for insurance if you want, but requiring them to stop is an unwarranted intrusion. On another level, pegging ad spending to sales is a 1950s idea (that didn’t work back then either). They should be spending what they need to spend to achieve their objectives, taking into account advertising elasticity and profit considerations. Finally, on a third level, P&G keeps on having to divest itself of brands because of monopoly concerns. Being the P&G of lawn care may not be the best strategy.
Stephen’s right, on all points. What would they do if their star sales rep, bringing in huge revenue, kept smoking? Fire the person, or wink at it and look the other way? Well, if they fire the person, they’re damfools, and they’ll give away some of their top salespeople to the competition. But if they wink at it and enforce this unevenly, you’ll have a lot of happy lawyers. I understand where this came from, but it wasn’t thought through very well. I think it was a knee-jerk, emotional response, with the idea that it would do something good. Nice thought, wrong solution.
The number 1 goal of every CEO should be the same: get the best people you can find, and then help them do the best job they possibly can. If someone is the best possible (fill in the job title) and you fire them because they (fill in the behavior you don’t like that isn’t related to job performance), then you, as the CEO, don’t know your job. For example, if someone drinks a lot, but remains sober on the job, if they’re the best at (doing whatever they are supposed to do on the job), you can try to counsel them, but it’s just dumb to fire them. Here’s a question for the CEO: if you had a salesman who consistently beat quota more than anyone else, how would you feel about firing her/him and having her/him start work at your #1 competitor?
WOW! Everyone has an opinion and has taken the time to put it in writing. So I’ll weigh in as an EX-SMOKER. Yes, I was wedded to the weed for over 30 years and never would have quit had public pressure and the spread of information not lead me to the conclusion that smoking damages you health. Luckily, I had the support of my family, who suffered greatly as my laid back, narcotic induced personality transformed itself into a raging maniac. I am glad I quit; I wish I had never started. If employers ban smokers, it may keep some from ever starting. It may force/encourage some to stop. It may force some to look for other places to work. If one wants to smoke, it’s a personal choice. However, a smoker doesn’t have the right to pollute the air I breathe, increase my health insurance premiums, or increase my employer’s overhead in any way.
It’s tough and all you bleeding hearts aren’t gonna like this, but a little tough love has been long overdue. I don’t think Scotts is saying you can’t smoke. They are saying that you can’t smoke and work at Scotts!
I would hope that the reduced cost of health insurance would be used to reduce employee health insurance costs, but if Scotts wants to use the dough to advertise and help insure that all will have a place to work, then that is their prerogative.
I don’t care what Scotts wants to do with the money they save. That’s their business. And it should also be their choice to hire and fire people at will who do not have an employment contract. People get fired all the time for all kinds of legal activities, such as drinking the wrong brand of beer in public. Being an employee is like being a guest in someone’s home. If they don’t like you, they have the right to ask you to leave. I don’t let smokers in my house; why should Scotts? Scotts wants to improve the overall health of its employees and probably also wants employees who have a bit more class.
Fire employees for smoking? In their own home? On their own time? That move will make some very happy lawyers. What world does this guy live in?
I was hooked on cigarettes, 2 to 3 packs a day. Only took me 10 years of trying to finally quit. I dreamed about them, a total cigarette junkie. But I was my own motivation. Don’t think an employer could’ve made me stop. The more he pushed, the more I’d have resisted one way or another and none of it would have been positive. I suspect his employees will react similarly. Remember, there aren’t too many Phi Beta Kappa’s in a fertilizer manufacturing plant.
Offer incentives; give them whatever help, encouragement and programs they need to quit. I am an employer and I do not allow smoking in my business by anybody. However, what employees do on their time is their business.
Let normal attrition take its course; hire only nonsmokers, etc. Build the workforce you want, but to summarily fire smokers is asking for trouble.
It’s really not worth commenting. Not a smoker myself, but I strongly believe that no company has the right to enforce standards on my way of life. What next? Are companies going to hire or fire people based on the way they drive, what they eat – low fat, cholesterol free or vegetarian – or how much they sleep? My company gets 8-10 hours of my life each day, but that’s it. It starts at the gate and it ends there. Any such behavior towards employees is not just illegal, it’s immoral.
So Scott’s is prepared to fire up to 1/3 of their employees or suffer a large exodus of employees at a time when the CEO says he wants to “be the P&G of lawn and garden”? He obviously doesn’t believe that it’s the people who make a company successful.
As much as I hate smoking and being around people smoking, you can’t restrict the lives of people doing legal activities.
That said, I see nothing wrong with cracking down on smoking at work. Ever walk out in the parking lot during the day and see the same people standing out there smoking and taking a few hours a day just to smoke? What would happen if I just went and stared out the window for two hours a day and just ignored everyone? I’m sure I would get talked to.
Crack down with smoking at work…but not outside of work. Next, you’ll want to take my beer away.
Let’s look at this. I have tried to lose weight over the pass 40 years. I know that being overweight will kill me but I am happy and still working full time after 66 years. I have over 70 days of sick days to use if I need them. Younger people with my company are sick more than me. Just like the people who smoke, it’s hard to stop. My mother smoked for 70 years and did not have any problems. What companies have forgotten is that we are human people with wants and needs; not just numbers. What we all need is to love the people in our lives like we’ve never loved before. Laugh long, live long – yesterday is history; tomorrow is a mystery; today is a gift.
Well, here is a different point of view.
Having crossed over the line from a consultancy, and now an executive with a manufacturer, I am beginning to see things differently. My new firm has established a Wellness Center where we have asked all our employees, production as well as office support, to be tested for critical measurements of health and a healthy lifestyle. We have found, as a company, we are better on average in some categories, worse in others (smoking for instance).
We pride ourselves in the quality products we produce, and value our employees. We believe improving the quality of their life, improves the quality of their work. As we enter 2006, we will be establishing programs to encourage healthy behavior, and discouraging that which we know is not good for our employees. The strictness or severity of the penalty has yet to be determined.
Just because an activity is legal, doesn’t mean it is good for you. Would any company want their valuable employees engaging in something dangerous, or unhealthy? Like a group of family members or friends conduct intervention sessions to get a loved one out of a bad lifestyle, can’t companies who care get involved in their employees lifestyle? How they do it might become a battle in the courts for some, but the intent of the company is very worthy.
While I hate the idea of do-gooders telling me what to do, somehow, when my company demonstrates its concern for me, I appreciate it.
Last I knew, smoking was a legal activity, albeit restricted, but legal. I am not sure that legally an employer can restrict you from legal activities on your own time, even to the extent of charging you more for insurance. Can you charge more for eating the wrong things as well? Is that next? Fired by your employer for eating a Big Mac once a month?
Ah yes, more litigation! If those of the Nanny persuasion in this world really want to control everything about what we do, make it illegal. Then, complain about the crime associated with illegal trafficking of cigarettes.
This is so wrong, it’s ridiculous. Sure, it’s great publicity. But I wonder what kind of effect it has on all of their employees that don’t smoke. Ultimatums are never greeted well, even when not specifically directed towards you. No longer a smoker, I wouldn’t want to work for a company like this. My suspicion is that others might feel the same way. If you really cared about your employees not smoking, you’d offer the clinics; counsel and persevere until you reached your goal. But this isn’t about smoking cessation. In fact, I suspect it has nothing to do with their ad budget either.
There is a mass “hysteria” going on across corporate America that the worker is the sole cost of the business. As they try to draw blood from a stone, they have set their sights on the country’s craze of targeting unhealthy behavior.
This is an intrusion into an individual’s personal lifestyle. It is absolutely 100% wrong and should be made illegal. At issue is that unhealthy behavior exists across spectrums – as previously noted by the moderator.
At issue also, and to blame, are workers providing information about their personal lifestyle to companies blatantly on the basis of a company’s “good will” efforts. Here is a fantastic example of why they shouldn’t.
The curious psychology of smokers is that they often become defensive when their smoking becomes an issue, and seldom view suggestions about their quitting as “good for you.” Although there is a financial bottom line associated with this move by Miracle-Gro, there is also a health-related, positive bottom line for one-third of their workers. It’s doubtful, though, that they’ll see it that way. Smokers are so practiced at rationalization that most will be resentful of Miracle-Gro.
The accepted policies and practices for preventing the effects of alcohol (a legal substance) in the workplace can also be applied to nicotine (another legal substance). But the slippery slope is that, as the ex-smokers begin to gain weight – a frequent side effect of quitting, will Miracle-Gro then step in and begin legislating body weights? After all, they’ll still have the “good-for-you” argument going for them, and will still be looking to reduce the company’s health care costs.
Clearly, this antipathy dates back to a Supreme Court case decided in 1924 — Jones vs. Union Guano — in which a tobacco farmer sued a fertilizer manufacturer. Some vendettas last for decades. 🙂
This one is not quite as simple as it seems, as there are multiple interests involved and a lot of unanswered questions.
First, the company does, in fact, have a vested interest in the health of their employees. Study after study has shown a direct correlation between improved employee health and decreases in insurance costs, medical claims, improved attendance, improved employee satisfaction, increased efficiency, improved productivity, and decreased error rate.
With the costs of insurance and medical care continually increasing for the 60% of organizations that offer it to their employees, it makes good business sense that employers would offer programs designed to improve the physical and mental health of their workers, whether those programs are related to smoking cessation, weigh loss, exercise, eating habits, or stress control.
Scotts Miracle-Gro is within its legal rights to impose a smoke-free workplace; more and more companies are doing that every day. However, the “fire them if they don’t quit” policy leaves a lot of questions unanswered:
– Does the smoking ban relate to the workplace, or will the employees be drug tested for nicotine to see if they are smoking outside of work?
– Is this a “one strike and you’re out” policy, or are there avenues where employees could receive additional assistance?
– Is the policy being administered equally to all employees, or are some employees exempt?
– Is alcohol included in this policy, and what about illegal drugs that employees may be taking outside of the workplace?
Depending on the answer to these and other questions, Scotts may actually succeed in paying for some of their increased advertising through improvements in employee productivity, or it may take a Miracle to keep them out of court.
…so they’re trading black lungs for green lawns — is this their new environmental program?
To me, giving encouragement and showing benefits (of quitting smoking), not the use of intimidation and threats, goes a long way in showing the business savvy and integrity of a company/business.
Some very good commentary here. Most of it applied to the companies’ side of view. So, as we know, we humans have unhealthy habits. There are numerous scientific studies and a tremendous amount of data to show that this behavior is “unhealthy” or this activity constitutes a higher death rate. Companies decide to provide health insurance as an added benefit to retaining employees and aprapo tax benefits. Because we all know that companies have a “vested interest” in their employees.
Miracle Gro’s sole intent is to minimize costs and re-divert savings to other budget items. Regardless of how cold this sounds, I hold in high suspect that theirs is a “kinder” face to their purpose. And one can only guess what consulting firm or agency provided them with their findings to support this direction.
A business is not built upon individual liberties but making money – bottom line. As companies seek more and more to eliminate costs incurred with employees – there is no end to what will be restricted.
Yes, I am a smoker. I have no shame – it is a choice. And one day I may choose to quit. However, I need not have someone require me to discontinue a habit that does not interfere with the daily activity of running the business. I can throw out just as many statistics on company incurred losses due missed days, productivity, etc. based on other “non-life” essential activities. And let’s remember, that not only is this legal – it is also heavily TAXED by federal and state governments.
I believe if I remember my history correctly, a Tea party was held the last time a taxed product was over-regulated.