As Marks & Spencer shows, even mighty businesses can fall on hard times. Kyran Fitzgerald hears how logistics firm Kuehne & Nagel developed a winning human resources strategy
Marks & Spencer (M&S) has embarked on yet another overhaul, marking a further attempt in self-invention by a company which was once the Golden Boy in the world of management studies.
It has brought in Archie Norman, former chairman of ITV and former boss of supermarket group Asda, as well as a former high-profile Tory MP.
He will be the troubled retailer’s executive chairman.
Mr Norman is a highly skilled operator, but many believe that his arrival may have come too late to save M&S in its current form.
The corporate bacon slicing machine is back in operation as hundreds of branches across Britain face the chop.
It is all a far cry from the 1980s when M&S was dubbed the “British housewife’s friend” and many of its human resources practices were seen as simply the best in the class.
So what went wrong exactly? Hard to say. Complacency. People being too set in their ways. Too many middle
managers strutting around the place in boring suits. Not enough challenging behaviour, perhaps, and not enough animal spirits. Too much conformity, for sure.
The tale of the past decade or so, is a sorry one. It is a lesson that people at the controls of all established businesses, however apparently successful, must bear in mind.
Of course, other great companies have gone into eclipse and have managed to reinvigorate themselves.
Think of the Apple Corporation and the dramatic return of founder Steve Jobs.
Or consider IBM, the top manufacturer of computer mainframe systems and its subsequent move into business services.
Stories of reinvention are often of greater interest than those successful start ups.
In the technology industries, we have grown used to tales of geekish youngsters burning midnight hours on desks littered with abandoned pizza boxes.
We can also glean quite a lot of useful information from the stories of the lesser starred businesses.
The country’s human resources practitioners were treated to an interesting account from an executive at the recent conference of the CIPD — the human resources and training people.
The name Kuehne & Nagel (K&N) calls to mind a trendy US West Coast craft beer chain but is, in fact, a leading global logistics company.
Logistics is not exactly a sexy subject but firms in this industry are close to the heart of our modern economy.
K&N operates without the need for owning outright its fixed assets. It gets by through leasing and by sub-contracting. Garry McCabe, the head of human resources at its Irish operation,
described how the business in Ireland was turned around.
Mr McCabe recalled: “We had a poor reputation in the workplace and we relied heavily on recruitment agencies.”
When it came to internal communications, the messaging was inconsistent, lacking in clarity.
Information resided by and large with the managing director and a small group of trusted lieutenants.
There was very little dissemination of information down the line.
With little focus on recognising people and their accomplishments, “We actually considered abandoning
performance management as only one quarter of managers had engaged with it,” he said.
It failed to ask its customers for feedback.
All of which meant that people inside and outside the company were not working together.
At the same time, the boxes were being ticked.
A lot of money was being spent on training which “looked good”, he said.
However, career development opportunities were available only to the chosen few, leaving many frustrated by a dearth of career routes.
So what occurred to cause the company and its management team to begin changing its ways?
Mr McCabe said it was at an awards gathering where a modestly-sized company, Euro Car Parks, was unexpectedly named as Ireland’s best workplace.
The speech by its chief executive proved something of an eye opener.
When he got up to speak, the chief executive looked uncomfortable.
His tie was crooked. He was not your typical smooth performer, but he soon warmed to his task, describing how he communicated with 300 employees spread around 127 car parks for whom he was responsible.
His “trick” was to drive from car park to car park, meeting staff over cups of tea, shooting the breeze, talking sport, building personal ties while setting out his vision while simultaneously securing feedback.
“It is very simple. It doesn’t cost anything,” said Mr McCabe.
Better than commissioning another consultant’s report, arguably.
The human resources director decided to do something similar and set about securing his own “quick wins”.
One idea was to engage in “recruitment pipelining”, which is building up contact with potential recruits, meeting one or two candidates a week.
“We were selling our brand. It was clearly a positive experience for the individuals concerned,” he said.
Last year, of the 65 people hired by the firm, 41 were part of this so-called pipeline. The company has also developed online recognition tools and in particular, a web tool called Nera.
This allows for immediate interaction with staff who have developed interesting ideas.
“If I see someone doing something smart I can immediately notify Nera,” he said. The person in question gains “instantaneous recognition”.
This process is also carried beyond the company by sharing best practice methods with key customers.
Another aim was to fill the gap that existed between human resources and the line managers, who ensure that the cargo is moved around and that customer complaints are dealt with.
Adding human resources tasks on to an already busy role appeared an impossibility.
“Every time we tried to introduce something new, there was an obstacle to be faced. The line manager. They wouldn’t interact yet the human resources agenda depends on the line managers for its success,” he said.
The answer to the conundrum was to set about reducing the burdens on line management by offshoring low level administrative tasks which absorbed much of their energies.
“You have to create space to allow people to do the ‘people stuff’ well,” he said.
The role of human resources was to support the line managers in implementing career paths and learning.
In Mr McCabe’s view, progress is considerable but the work is ongoing.
“We still need to get our line managers fully aligned. They are now the central internal organisational focus,” he said.
The firm is working on succession planning.
Over the past five years, headcount has risen by over a 20% while net profits are up 75%.
Everything may not be rosy in the garden. However, this logistics story could provide a blueprint for leaders in other sectors of the economy.