· 5 min read · Features

Enter the dragon: interview with Duncan Bannatyne


Entrepreneur and Dragons' Den star Duncan Bannatyne is clear. HR people are essential: they know about people issues, but they don't need to know how the business works.

Could RBS's Neil - 'it's not HR's fault, it's just a support function' - Roden have the most unlikely of allies? Entrepreneur Duncan Bannatyne, star of the BBC's Dragons' Den show is as bellicose when talking about the HR function as he is pouring cold water on hapless inventors begging for investment: "HR people are not to blame for bonuses," he asserts. "You would have to be supremely intelligent to see what was going on in the banks. It was like pass the parcel, with everyone looking for someone to blame. It wasn't the fault of the HR department. It's not up to them to implement a business strategy."

Not up to HR to implement business strategy? It gets better. "HR professionals don't need to know about the workings of the business," he says. "My HR team knows about people issues. But (they) let the finance director and the CEO think about how to make money."

The similarities between the wealthiest of the Dragons' Den dragons (he is worth an estimated £320 million) and the RBS boss are uncanny. Roden believes HR is unnecessary on the board; that it is a support function. Bannatyne says: "It's absolutely important for the HRD to talk to the CEO or managing director every fortnight - or even every week, but they don't have to sit on the board to have a voice. HR is just as important (but not more so) to the business as marketing, finance or any other function."

If these sound like shocking statements, especially from one who gives the impression of a people-centric employer, perhaps it is because Bannatyne is not the type to have built his business empire by immersing himself in libraries of jargon-filled management books. He has very much learned from his experiences. Starting out as a volunteer in the Royal Navy, he spent six months in a military prison for throwing his "bully" of a commanding officer overboard. When released, it meant he entered the workforce with no qualifications, no real work experience, no references and a criminal record.

Bannatyne believed his best option was to set up his own business, which he did at the age of 29 buying an ice-cream truck for £450. And, although he admits few entrepreneurs have ever refused to go into business with him on the basis of throwing someone off a boat, he hasn't forgotten his past when taking on new staff as he builds his hospitality and leisure empire.

"I usually recruit on gut instinct," he says. "I have interviewed people with degrees and people without any qualifications. Qualifications mean nothing if a recruit does not have customer service skills. This is essential in a service industry. I just want an honest, decent, hard-working person."

From the point of view of attracting talent to his business, Bannatyne is having no problems. In August, he recruited Scotland's Chef of the Year, Duncan McKay, for the role of head chef at his Somerset Carlton House Hotel. "Our business is buoyant because there are still opportunities out there for us," he explains. "Entrepreneurs will always find a way around economic problems."

Talking about the economic uncertainty in more general terms, he warns: "We still need to batten down the hatches. Inflation is high and it is difficult for business leaders to make decisions." He adds: "You can't afford to have one person on your payroll that is not pulling their weight. This is the challenge for employers."

Bannatyne, who owns the largest chain of private health clubs in the UK after purchasing 26 fitness centres from the Hilton Group in 2006 and in 2008, calls for business leaders to be more visible to staff. He claims his door is always open and encourages his managers to have an open and honest relationship with their reports.

Reflecting this openness is the fact that he is a serial blogger. He writes a weekly post for his website, and people issues regularly feature, with recruitment and performance management found among recent discussions. In other postings he has also called for longer-term incentives instead of a bonus culture and he explains: "In my view, creating an environment where talented staff can progress and fulfil their potential is more important for business leaders and employees alike than inflated bonus schemes."

"People are our greatest asset," he adds, repeating an oft-quoted HR cliche. "And I don't think you can show me one successful business in the UK where a CEO says this and doesn't mean it." That said, though, he still maintains the buck stops with the CEO.

Bannatyne is a keen charity supporter (he is actively involved with Quit, No Smoking Day, UNICEF, The Elton John AIDS Foundation, Scottish International Relief, the Bannatyne Charitable Trust and Comic Relief), and his latest mission is to encourage employees to give to charity through their payroll, by his involvement with the Geared for Giving Campaign and for employers to value the importance of payroll giving.

He explains: "As an employer, you shouldn't be asking yourself, why would I do this? You should be asking, why wouldn't I? We want to ensure HR directors are aware of Geared for Giving. It's not just about attracting talent to an organisation, corporate social responsibility or return on investment. The benefits are much more far-reaching than that - money is going straight to charity."

In August Labour peer Lord Joffe hosted a dinner in the House of Lords attended by minister for charities Nick Hurd to push the campaign. Bannatyne says: "Until senior business figures get behind the campaign, it can't work. I have no way of gauging the success of the event yet."

But despite his views of HR not being responsible for business, he is emphatic about needing the function. "I have had an HR director in place for the last four years (at Bannatyne Fitness)," he says. "How can an organisation work if the HR director's voice is not heard?" he laughs. "The business couldn't survive without it."

It's a comforting answer. As Bannatyne poses for HR magazine's photographer, he light-heartedly chats about his Dragons' Den co-stars. On the day of the interview, the tabloids are splashing stories claiming Bannatyne is attempting to oust fellow entrepreneur James Caan from the show for his reluctance to pay UK tax - but our subject seems unfazed by the coverage.

While this spat may be ongoing, the future of his own business, for now at least, seems bright. Bannatyne Fitness's sales increased by £300,000 to almost £88.6 million in 2009 and operating profit rose from £17.9 million to £19.8 million. And considering HR's celebration of the most influential people in the HR world, Bannatyne's views on people strategy must hold some sway with other business leaders.

So what is his advice to HR directors for the challenging year ahead? "There are a small number of staff who will use and abuse the system," he says. "Employees have to be as flexible as employers - but you can never negotiate with lazy staff." Simple. Decisive. That, ladies and gentlemen, is Duncan Bannatyne.

Geared for giving

Workplace: Giving is a tax-efficient scheme that allows employees to give to any charity they choose by having a sum deducted from their gross pay. This is also known as Payroll Giving or Give As You Earn.

It means a 40% or 50% taxpayer can increase their donation to their chosen charity by 40% or 50%. If an employee donates £10 a month, the charity will receive either £16.66 or £20 depending on the rate of tax.

With gift aid by donation, the charity can only receive the standard rate of tax at 20%.

The Geared for Giving campaign was launched in 2008 in the House of Commons by Anne Snelgrove, former MP for Swindon South, and Duncan Bannatyne. The campaign calls on UK employers to introduce or re-launch dormant workplace giving schemes. The objective has been to give a million more employees access to a workplace-giving scheme and ensure employers promote this method of giving to charity. The campaign has now succeeded in reaching this target, having raised more than £1.2 million for hundreds of charities with more than £8 million more pledged. Household names at the forefront of the campaign include Yorkshire and Clydesdale Bank, Barclays, Arcadia, Boots, ASOS.com, H&M, London Stock Exchange and the Financial Services Authority. With so many CEOs of top companies supporting the scheme, the message is starting to get through that Workplace Giving is the easiest and most efficient way to give.