On paper, you could be forgiven for thinking B&Q’s workforce is going through a difficult time. Disappointing results and the loss of parent company Kingfisher’s chief executive Gerry Murphy have put the company in the news for the wrong reasons and the appalling Easter weather won’t have helped the already difficult DIY market.
And yet, despite this, B&Q’s employee engagement is the envy of its rivals. For the past three years it has enjoyed consistently high ratings in Gallup Q12 questionnaires, designed to measure how engaged a company’s employees are. It stands at 4.17 out of 5 and the engaged to disengaged ratio is 6 to 1 – “world class”, according to Gallup.
This wasn’t always the case, however. Since being promoted to B&Q HR director in 2005, Martyn Phillips has taken a tough love approach. His key change has been to make managers more responsible for their team’s employee engagement scores.
“We took a very accountable line and made sure we were very focused in terms of learning and development programmes, so we could say to managers: ‘We need you to be better. We’ll give you all the support you need to improve, but ultimately if you can’t get there then we’ll have to move you out of that role to one where you don’t manage people.’” And, he explains, if that doesn’t work for them and they have to leave the organisation, “then so be it”.
And now, building on the improvements this system has brought about, B&Q’s approach to engagement is moving on. It may have world class levels of engagement, but it doesn’t have world class levels of business performance. “2008 and 2009 has to be the period when we leverage that,” says Phillips. The HR team is setting out to create a return-on-investment culture. “It’s about being tougher on the things that everyone has to deliver,” he says.
As he explains, B&Q can carry out as many store revamps as it likes, but sooner or later those stores have to hit a set of numbers that pay back the investment that’s gone in. The HR team’s role will be to make sure everyone is aware of how crucial it is to achieve those goals and that everyone has their part to play in getting there. “We’ve used our staff capability and engagement to drive a change programme that would choke a horse, frankly. Now we’re saying that you have to get that return,” he says.
Phillips concedes that B&Q’s employees are “frustrated that our performance isn’t what it should or could be”. The retailer’s tactic is to confront this head on. “It would be easy to try to ignore the business performance and take an internal perspective, but that’s not the tack we’re taking. The performance needs to be better and we’re looking to people to respond in an appropriate way,” he says.
B&Q has set ambitious targets in areas such as market share, profitability and customer experience. The HR team’s role is to help people throughout the business understand how to reach those targets. And Phillips believes that with its engaged workforce, B&Q will succeed in the tough market. “In our view, you work harder as managers to keep people on track and secondly we have people who believe that ultimately the business has to perform,” he explains.
Crucially, Phillips says retail HR departments play a far more crucial role during times of tough trading than many might assume. Gone are the days of HR being the “employee conscience”. He explains: “HR needs to make the business look in the mirror. Every HR department should be in tune with its business and understand the tempo and rhythm of the organisation.”
Importantly, the culture of accountability that B&Q is striving to create applies just as much to the HR department itself. “If I’m asking other departments to run leaner, then I’m running leaner than anybody. It’s no good me saying I’ll be measured on the number of, say, return-on-investment workshops we ran. Either the work I did worked or it didn’t and the only way we’ll know is if the returns improved, so we should sign up to the business measures that we’re trying to effect, not the inputs that the HR team would typically be responsible for,” says Phillips.
And while he views training as an investment rather than a cost, he says he always considers closely whether every pound spent will mean getting a pound back. “If it does I’ll do it, if it doesn’t I won’t. If someone comes to me to cut my budget, I’ll think I’ve failed because I should have cut it myself first,” he says.
Then again, retailers can also be frugal with training wherever possible. In terms of customer service, for instance, Phillips is a bigger fan of a coaching approach in the workplace than he is of sitting in a training room discussing a hypothetical customer scenario.
There are many measures HR departments can take to help the overall business cope with potentially challenging times ahead. For example, if the overall business metrics and sales starts to drop off, the HR team’s costs should reduce accordingly. “We have a very commercial perspective on that. Productivity will be crucial for retailers in the next few years,” he says.
“We know there will be low growth on sales; we know that cost price inflation will exist – minimum wage will continue over and above inflation and property prices will continue to increase – therefore, in theory, you will have fewer people to deliver.” Consequently, he warns that influencing productivity and absorbing inflationary cost will be a core responsibility for HR over the next couple of years. “It’s about understanding the business concept,” he says.
Furthermore, Phillips advises that HR’s role in making departmental revenue budgets more efficient is a constant activity. Too many people tend to look at cost efficiencies and the renegotiation of service level agreements in six-monthly cycles. “It doesn’t work like that. You’ve got to look at it every day, every week, every month,” he warns.
Regardless of the performance of a retail business, every employee in every retailer will have their part to play in overcoming the challenges that accompany a difficult economic climate. But having a workforce that wants to do it is another story. B&Q thinks it’s got this cracked.