David Smith, one of our outstanding Group Chairs, is also a keynote speaker at many major business events. Last week I heard him describe how ASDA went from £1 billion profit to £1 billion debt in 12 months and then what David and other members of the turnaround team did to get the business back on track, including being voted the number one best place to work in the UK by The Sunday Times.
Of course there were many financial, operational and structural changes made but the number one reason for ASDA’s fall and rise was down to culture.
A toxic “command and control” approach led the way to near bankruptcy. By contrast, a “challenge and involve” environment was transformational, resulting in the business being acquired by Walmart who subsequently implemented many of the concepts David had introduced at ASDA into their US operations.
David has written several books and one, “ASDA Magic, The Seven Principles of Building a High Performance Culture” describes how one thing more than anything else impacts culture change most of all, (again in either direction). David asked the audience what they felt this might be, as he’s done on hundreds of occasions, and once again, no one guessed it, (David told me that to date, only one person has). I must admit, I didn’t get it right either but when David explained it, (and it’s obvious), I realised why so many businesses, particularly those in growth mode, change from being great places to work to average or poor.
The number one way to change the culture of a business is recruitment. Who you hire is critical, and in times when the economy is improving, and definitely when booming, many companies drop their standards in order to fill the vacancies created by increased demand for products and services. This can be fatal and the change in culture, even one built over decades, can change almost overnight.
One of the tools we introduce to our members is the FOC (Future Organisation Chart). The idea is simple and yet many people have told me it’s far harder to get right than they first imagined. In simple terms, you identify where you’d like your business to be in 3-5 years and then which roles will be needed at that time.
Typically there are “more roles”, – you’ll need more frontline people, bigger fulfillment teams, etc. Then there are new roles, for example you might have a marketing manager now but will need a specialist digital marketing manager, a head of PR and social media as well as someone overall in charge of marketing at that point. The main issue with new roles is that they’re new, in simple terms most people don’t know what good looks like having never done the job nor employed someone before to do it. Consequently, a candidate’s experience becomes more important than their attitude and behaviours – and hence the culture change which is exacerbated if these new hires will themselves be recruiting people.
The solution is to identify the right people well ahead of needing them. I like to think we take our own medicine and indeed can point to David as our example. I first met him a decade ago and floated the idea of him becoming one of our Chairs two years before we needed one.
Your current team will view new hires as what the leadership regards as being the new standard – please, as your business grows, remember this: “Better a hole than an arsehole!”
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