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Organisation: HarrodsSector: RetailTrack record
Such is Harrods’ fame among label-chasing shoppers that the glitzy Knightsbridge store is officially a tourist destination. But six years ago, as she stepped into her new role, Sarah Andrews, Harrods’ HR and retail director, came face-to-face with a performance metric that was not living up to the hype.“As a traditional organisation we had lots of people who had been working with us for 20, 25 or even 35 years but [at the other extreme] we were having this incredible spin of people,” she says. The net result was an employee turnover ratio “in line with the industry average for retail and hospitality,” as she puts it. And that in a sector notorious for its difficulties in anchoring people down.“I knew the high turnover was costing us money,” says Andrews, who took on HR at the invitation of the store’s former owner, Mohamed Al-Fayed, after a career in retail operations. Head of personal shopping, Sabrina Cannon, adds: “When you are constantly losing good staff and training new members of the team, it puts a strain on the business.” Staunching the flow of staff departures was merely the starting point, however, for what evolved into a full-scale reorganisation of Harrods’ HR capabilities. Overall, the business was doing well. Employee pride in the Harrods brand was high. Commercially, the store was thriving, overriding the recession, increasing its profits and sales and bettering its internal targets. The model “wasn’t broken,” as Andrews puts it. But neither, as the rates of employee turnover illustrated, was it firing on all cylinders. Behind the timeless façade, polo-shirted sports staff and jeans-clad sales assistants from the young fashion department were rubbing shoulders with besuited personnel from more traditional areas of the store, fuelling a demand from managers for more customised approaches to recruiting and developing people. But with processes and procedures accumulated over decades, HR struggled to respond creatively. Historically, Harrods had never thought to sell itself to its employees. The corporate mantra was that the brand spoke for itself. Yet in society at large, as Andrews was aware, people’s expectations of employers were rising and Harrods needed to keep pace. “Knowing the business as well as I did, I knew there was more to be had [from HR],” she recalls.Key initiatives
Stopping the revolving door of arrivals and departures from Harrods’ cosmopolitan workforce was never going to be possible, but if she could make the store a better place in which to work, Andrews was confident that she could slow the revolutions down. The first goal in her sights was improving the information flow between senior management and the shop floor. In 2008, the company ran an employee survey, its first in 10 years, to find out what people did and didn’t enjoy about working for Harrods. The findings served as a wake-up call, though not in the usual sense. “The biggest issues that came out - and they were a surprise to us - were the staff toilets and the staff restaurant,” Andrews says. She took the feedback on board and pushed for improvements. As well as narrowing the gap between the luxury experienced by clients and the conditions encountered below stairs – the revamped loos now sport top quality showers and hair-dryers and the restaurant has had a complete makeover – the company has democratised its benefits. For the first time in 160 years, everyone gets the same discount regardless of where they sit in the pecking order. Gone are the days when the higher-ups received a Harrods hamper at Christmas and the lower ranks a modest thank you. The changes had come late in the day by most companies’ standards, Andrews admits. However, the message had been heard: attitudes to authority were changing and to attract the best people Harrods had to change too, while still holding on to its standards. “Culturally, society has shifted,” Andrews says. “I think people in service are just inherently less ‘subservient’ than they used to be.” Improving the fit between the roles that Harrods has to offer and the people who fill them has also been a priority. If people are doing well in a job they enjoy, it’s more likely that they will want to stay put. One side of this has involved profiling the store’s best and worst performing sales staff, so that recruiters know which characteristics to look out for (and which to avoid). The other side has been encouraging line managers to jump on every opportunity to develop people through secondments, training and promotions. “We are becoming more strategic in our approach,” says Cannon. “Otherwise, it gets to the stage where the employee is already demotivated and in the mindset of looking for another job.”
Tailoring HR services
By 2010, despite the solid progress – staff turnover has fallen by half over the past six years and absenteeism is down by a quarter - Andrews became convinced that HR could do more to support the store’s commercial managers. In 2007, the company had adopted a decentralised organisational structure with business units (food and restaurants, fashion, home, and so on) each supported by a dedicated HR team. In theory, the set-up was perfect for keeping HR in step with operational needs, but the reality had proved something of a let-down. One problem was that senior HR staff, the HR business partners, were spending too much time in the trenches, instead of working strategically with directors to improve the store’s management capabilities. At the same time, little inconsistencies were creeping in to how the divisions handled supposedly standard processes, such as staff transfers. It was at this point that Andrews decided to go for a root-and-branch restructure which would preserve the benefits of embedding HR in the business, but cut out the inefficiencies and duplication of effort. From the store, she appointed Jenny Parry, now head of resourcing, as project leader, and brought in consultants from Orion Partners to support her. The solution that the project team came up with was to keep the company’s corporate specialists (recruitment, learning and development, etc) as they were and place day-to-day HR in a central services unit, leaving a core group of HR business partners in the business units focused purely on strategy. “We wanted the business partners to be sat at the top table, thinking about the capabilities needed to deliver the store’s business objectives, not spending their time being dragged into basic tasks,” Andrews says. These basic tasks included answering routine queries, or getting involved in employee grievances or disciplinaries. Before taking their plans any further, however, the project team had to win round their retail colleagues. Like many line managers, Cannon admits that she originally feared that the abolition of operations-based people support would “depersonalise” HR and slow everything down. To reassure people that what was planned was genuinely an attempt to improve things, not a cost-cutting exercise masquerading under another name, the team embarked on a major consultation. This involved running focus groups, interviewing heads of units and setting up working parties to comb through the company’s HR processes to identify what was good, what was not and what could be made more efficient. The output not only provided the template for the restructure, Parry says, it changed for good the way Harrods approaches the design of HR services. “The message that we kept on hearing was ‘one size does not fit all; we want something that we can tailor up or tailor down,’” Parry says. As an illustration of how that message has carried over into business as usual, she mentions a recent decision to replace off-the-shelf psychometric tests with ones that are tailored to different roles. The company has also adopted a new approach to hiring that has seen it placing adverts in the performing arts newspaper The Stage to find employees to work in its new toy department opening this summer: the Toy Kingdom. “We want people with a service style that is a bit more theatrical than the sort of service that might be appropriate in, say, hospitality,” Parry says. With HR’s reputation on the line, the project team planned the transition to the new structure meticulously. Line managers were talked through what would change and briefings were produced for their teams. With one week to go, the whole of the HR function came together for a launch day of quizzes and scenario-based exercises to make sure that no one was confused about their responsibilities and that nothing would fall through the cracks. “Having invested so much money in the project, there was no way that I was going to have one of my fellow directors saying ‘you didn’t consider this or ask me about that,’” Andrews says. “We covered and over-covered everything.”
Challenging the senior team
Since the switchover, which Andrews says was seamless, she and her team have focused their efforts on helping their colleagues to settle into their new roles. For some of the business partners, in particular, the adjustment has been something of a culture shock. In the past, many people worked hard at sorting out the senior team’s people problems and trouble-shooting for junior colleagues. Now, all that had been taken away and conscientious professionals were discovering that in the new world they were expected to have opinions and challenge their bosses, not merely do their bidding. “You have to be quite tough,” Andrews says.After a year in which the HR business partners have been through bespoke training, and swapped notes over breakfast with their opposite numbers in other organisations, including M&S, Andrews is optimistic that people are getting the hang of what is required of them. As a text-book illustration of how she wants HR to work with the business, she singles out the preparations for the creation of Harrods’ new Toy Kingdom. Normally, retail people would do all the planning and, about eight weeks before the launch, HR would come in to talk about recruitment. This time round, HR has been in on the discussions with the architects and designers and when the department’s manager flew to New York to meet US toymakers, the HR business partner went too. “Six months before the department opened, we were starting to profile what personal qualities the staff would need, what uniforms they would wear, how we were going to bring people on board and what the training would look like. By normal standards, that’s a planning utopia.” Andrews says. Even so, she admits that the business of changing mindsets is a long haul that requires a lot of persistence - and the journey isn’t over yet. “Having my fellow directors tell me what a great job the HR business partners are doing is nice. But, if they are truly doing a great job, what they will be saying is ‘your people really challenged me on this or told me that I need to do that differently,’” she says.
Learning pointsNo HR model, however well executed, is optimal in every sense. On the upside, Andrews believes that placing administrative HR into a central services unit has allowed the people support team to develop greater expertise, while clearing the way for the business partners to develop in their roles as strategic advisers to Harrods’ commercial managers.The flipside to this is that the HR organisation is harder for people to get their heads around, so that more time and energy has had to be spent on team days and activities to get people thinking and behaving as a single team. “We have some really effective individual units,” says Andrews, “but the challenge - which we are sorting - is making sure that each unit understands what the others do.”On the human dynamics of managing change, Andrews says that allowing people sufficient time to grow into a role is important. But, when someone who used to do a great job is clearly not cut out for what you need them to do, she says, it’s better to find them a role in which they can be good again than to stand back and watch while they sink. The way to overcome cynicism is to identify your sternest critics and invite them to become part of the project, Andrews adds. If you can get them on board, they will become your “best ambassadors”.