Cancelling or postponing key appointments is a false economy. Investment in people is a relatively small outlay and can make all the difference, says Clarity founder Fran Minogue.
The highest interest rate in 30 years, the highest inflation for 40 and potentially the longest recession for 100 years. Time to dive under the duvet and pull up the drawbridge?
No, quite the opposite. It is time to be bold — but selectively and strategically — and the phrase ‘self-help’ is making a comeback, having last come into common parlance after the financial crisis of 2008.
Yes consumers are trading down and big-ticket items are suffering, but encouraging figures from DFS earlier this month indicate that good value and well-targeted marketing can yield the right results.
“Many businesses seem to have gone into a holding pattern — uncertainty rules and the best plan is deemed to be do nothing”
Chief executive Tim Stacey said: “We’ve invested in range, format and colleagues, and we’ve also got a winning blend of TV and digital [advertising] that’s working very well. We’ve obviously benefitted from the demise of independents and we’re picking up share online. In tough times, customers gravitate to brands they trust. And we still have the [DFS founder] ‘Kirkham spirit’ — keep attacking.”
Many businesses seem to have gone into a holding pattern — uncertainty rules and the best plan is deemed to be do nothing. Plus, at this time of year, the refrain is often ‘let’s see how Christmas is’ – and kick the can down the road until January when, this time, everyone is expecting a bloodbath.
But history shows that making bold moves in difficult times can and does yield benefits. During the pandemic, those that acted decisively and grasped the opportunities born out of adversity emerged fitter and stronger. That can be the case again.
Retailers that moved quickly, listened to and supported customers, and recognised who could step up and genuinely add value, created leaner, more proactive organisations that are now well-positioned to weather the current storm. The approach to talent should be no different.
False economy
The first thing announced in a recession is often a hiring freeze and/or headcount reduction. But those that make ambitious, growth-oriented appointments will be rewarded with a broader and richer dialogue when it comes to scenario planning and strategic debate, and will be faster out of the blocks when markets turn upwards again.
Cancelling or postponing key hires is a false economy. The board may decide a new warehouse or store renewal project has to wait but, even at the most senior level, investment in people is a relatively small outlay and can be a real game-changer.
Look at the impact that Dave Lewis had on Tesco. When he joined in 2014, the company’s reputation was in shreds and it was groaning under a debt pile of £22bn. Fast-forward to when he left in 2020 and the debt had been halved, £1.5bn was carved out of the cost base and the profit margin had grown from 3.9% to 5.3%.
“In these straitened times every effort must be made to eliminate unnecessary costs and improve efficiency, but do not let that extend to blocking game-changing hires”
When Kate Swann joined WHSmith in 2003, it was a loss-making, declining and largely UK business, dependent on low-margin categories increasingly dominated by supermarkets and online players. She fundamentally reshaped the retail portfolio, pursuing ‘captive markets’ in travel hubs and hospitals, while focusing on higher-margin areas where the retailer could win and she set the strategy for an international business that today operates close to 600 stores in 30 countries.
In her final year, she earned a salary of £600,000 and a bonus of £871,000 – a nice package in 2013, but small beer compared to the return she generated for investors.
John Lewis’ woes have been reported in recent weeks, with the failure of the new ERP system causing stock issues and lost sales at Waitrose, while sluggish footfall and declining consumer confidence continue to challenge the department stores.
Full marks therefore to Dame Sharon White, who recently announced the appointment of Zak Mian as chief transformation and technology officer. He joins a strong roster of external hires, including Pippa Wicks and Nina Bhatia, who are helping to create a more competitive, outward-looking business that is fit for the 21st century.
Few retailers were as affected by Covid-19 as Primark, which famously does not offer online shopping, though a click-and-collect trial is now underway. The business has bounced back with bumper sales, reporting revenues of £7.7bn last week, and has vowed to support customers by not passing on further inflationary costs — a clear sign of investing for the long term.
Despite the impact on margins that this will inevitably bring, chief executive Paul Marchant is also investing in talent by hiring Michelle McEttrick, a self-described digital native, as chief customer officer. She is tasked with positioning the Primark brand for global growth as the retailer expands “across new markets, channels and products”.
In these straitened times, every effort must be made to eliminate unnecessary costs and streamline operations to improve efficiency, but do not let that extend to blocking the game-changing hires that will help you lead, not follow, both now and in the future.
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