Kia has been steadily growing a reputation for itself while other car marques are floundering. But HR boss Gary Tomlinson knows growth will only continue with engaged staff and dealers.
With so much attention on the precipitous position of car manufacturers, it is easy to forget the plight of the channel these makers cannot exist without - car dealers. The UK's 4,500 dealerships, themselves employing 600,000 people, have also borne the brunt of the parlous state of the British automobile industry. Despite a return to year-on-year sales increases in the past two months - thanks largely to the Government's scrappage incentive scheme - dealers sold 21.5% fewer cars from January to August 2009 compared with the same period last year; it is a situation that has caused dealerships to close at a rate of 10 a week.
Yet amid all this gloom, quietly making inroads, in a remarkable story of trend-bucking sales growth paralleled with impressive employee engagement, is a car company that is seriously developing a name for itself: Kia Motors.
The Korean marque, which only produced its first passenger car in 1974, and is now part of Hyundai, has sold 7,372 cars (up to September) since the scrappage scheme was introduced - overtaking the sales of better-known brands Vauxhall, Peugeot and Volkswagen. This is on top of consistent recent growth while all around it have floundered. Unlike virtually all car brands, since 2004 Kia's overseas and domestic sales have risen every year to total 1.8 million units in 2008 (36,000 in the UK). Its aim is to finish this year selling two million cars globally - 45,000 of which is to come from this country - taking its market share to 2.5%. This may sound small, but with Kia UK already bigger than Mini (which has a 1.8% market share), Mazda (1.8%), and Skoda and SEAT combined, it is now suddenly not far off the big boys of Renault (3.2%), Fiat (3.3%) and Honda (3.5%), all of which have a much longer heritage and brand recognition.
The man many regard as responsible for this is Paul Philpott, Toyota's former commercial director, who joined as Kia UK's managing director in 2007. This summer he was promoted to European COO. But it was with Gary Tomlinson, Kia Motors head of human resources, Philpott sought an audience with on his very first day. It was the outcome of this encounter that was to set the agenda for how the new boss was going to shape his reign, and engagement was the nut both decided needed to be cracked.
"That day Paul asked me to show him the results of our November 2006 employee survey," recalls Tomlinson. "Sales growth was hiding the fact Kia was being poorly managed. Head- office staff turnover was 31% and we were spending £600,000 a year in recruitment costs. Paul's vision was to increase the dealer network from 120 to about 170. He knew what I was increasingly understanding: the car industry is so small and so incestuous, no brand has the ability to grow long term if it has a bad employer reputation. We knew that only one in five staff would recommend us as a great place to work. This had to be changed."
Since that meeting, Tomlinson confesses to having devoted the past three years of his life understanding complex and competing theories of employee engagement to become a walking engagement expert. "I've made it my business to study as many reports, papers and articles on the topic as possible," he says.
With lightning efficiency, Tomlinson rattles off details of an influential study by Frank Russell, the US financial analysis consultancy, which, he says, hugely influenced him. It measured the return on investment through the development of engaged people at America's top 100 companies. "It's 18.2% higher, than those outside the top 100," he says with alacrity. "That told me engagement made clear financial sense."
What impresses is that while Tomlinson undeniably knows his engagement theory ("I want to encourage in people an emotional bond, one that sees them give discretionary effort," he says, in what could have come fresh from the latest tome on the subject), he has developed his own ideas about how to interpret them, and which elements apply to the Kia business.
"I decided leadership had a bigger impact than the power of our brand," he says. "At a practical level, this meant looking again at manager/line manager and staff relationships, and at a behavioural level, preventing the wrong sort of cultures from continuing."
Solutions to both these problems have included encouraging managers to praise staff more, and ironing out bad practices that, in theory, create engagement but do not produce good business results in practice. "On this latter area, we had a situation where a third of our staff were on different bonus structures," he says. "Great in principle but, in my view, when a measure becomes an objective, it ceases to become a good measure. So we removed all bonuses and targets. Before, staff were incentivised to create a certain number of new dealerships. The outcome though was that they would get any old dealerships, not high-performing ones."
Perhaps because it was a tour de force of patience, Tomlinson still remembers how many meetings it took before the policy was rubber-stamped - 38. "Finally people accepted it," he says. "Now they tell me they are pleased bonuses have gone. In hindsight they recognise it was creating the wrong behaviours."
Praise is the more jovial part of linking managers to the much more serious side of competency frameworks, where managers are measured against five indicators, including communicating the strategic aims of the business to staff, and agreeing 'learning contracts'. Staff can nominate each other for outstanding recognition, managers are encouraged to award a 'KIA thank you' (a small card or gift) for jobs well done, while staff are also rewarded for suggestions they make for the business.
"It sounds simple, but all the research points to the fact people leave managers, not companies," he says. "It's rubbed off on me. I'm a strong believer in making people aware of what is expected of them," says Tomlinson.
To this end, he expects all senior executives to meet the staff they directly manage once a month. There is a now an employee message board - Kia Vision - and directors are encouraged to write up and email to staff what they see, and what is going through their minds when they go to various global motor shows. "It doesn't have to be much," says Tomlinson, "and it definitely does not go through our PR department. It's just honest reporting, with thoughts on what we as employees can do to improve what we do."
Books cannot tell you everything though. Tomlinson admits that, for all his reading, he is "still not entirely sure what 'good' employee communication looks like". However, he adds: "I took the decision to share the 2006 staff survey results with staff, to show them exactly where we were. People already knew things were tough, so by presenting it, together with our HR transformation plan in April 2007, we were visibly making a pledge to improve things, a pledge we could be judged on."
One of these targets was to reach employee satisfaction levels of 90%. Today this is 89%, and against all his other measures, there has been dramatic improvement. The percentage that says staff are aware of the strategic direction of Kia UK has risen from 32% in 2006 to 87% in June 2009. In the same time, pride in the business has improved to 86% from 59%. Most importantly though, 81% now say they still plan to be working for the company in 12 months' time (up from 56%) and 68% would recommend the business as a great place to work (up from 19%).
Tomlinson says he is most pleased with how staff rate the performance of their managers - 70% think they now get good feedback on how they are doing, up from less than half before. By having consistency of staff means 80% of them have been promoted - another contributor to staff engagement.
But is any of this really improving the bottom line? Tomlinson's activities may well have focused on head office, but these improvements are fully intended to find their way to the dealer network, a group of 1,150 people he also looks after. "I'm in charge of our Dealer Academy, the training arm that equips dealers with Kia's vision and values. Those who contact the new, improved head office get a very clear indication of what we're about and what they need to present to customers. They also benefit from our programme of improved communication and are kept up to date on our strategic direction."
So far this year 18 new dealerships have been appointed, in places as geographically diverse as Doncaster, Glasgow, Cardiff, St Albans and Ipswich. This brings the total to 152. These 18 have been researched, analysed for demographic fit and selected by staff who now know the business better and will have chosen partners who can best represent the brand. This, says Tomlinson, is the requisite proof a better informed, better motivated workforce will directly impact the company's future growth.
Kia's official strap line is 'The Power to Surprise'. So far, the surprise is that a little known Korean brand is starting to make great strides. Last year, Kia achieved Investors In People accreditation to prove it is serious about being an employer of choice. Improved engagement, believes Tomlinson, has been key in unlocking a new sense of purpose. Next year, he plans to enter the Best Companies league table. But do not be surprised if Kia does rather well.
Educated at Bishop Reindorp School, Guildford; University of the West of England - law degree
1998: HR adviser, CSI
2002: HR business partner, Ericsson
2002: HR manager, Centrica
2003: Joined Kia Motors as HR manager; moving to head of training in 2006; then head of human resources in the same year
Outside interests: Reading, walking and infrequent use of gym membership.
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