· 5 min read · Features

Ford Retail Group HRD: Driving a rewarding strategy

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Ford Retail group has above average retention rates, soaring staff satisfaction levels and a pay structure that is the envy of many rivals, however, it wasn't always this way. HR director John Roberts (pictured) explains how he transformed Ford's largest dealer group.

When John Roberts walked into his very first Ford Retail Group dealership in 2007, from an HR perspective the place was a bit of a mess. There was no structure over how the company went to market, how it was going to attract talent, how it trained and developed staff, and how it rewarded and provided benefits.

"There was no structure when I came in. It was anarchic and chaotic, which was great fun, but clearly if we were going to be a professional company we needed to put some structure in," Roberts says.

Fast-forward to today and staff retention rates are a healthy 85% and satisfaction levels have risen from 45% to 61% in five years. But how?

Roberts arrived at Ford Retail with extensive experience in pubs, hospitality and retail. More importantly, he had ample multi-site experience to help shape a company that was rapidly growing by M&A.

Ford Retail is the world's largest Ford dealer group and the only one owned by Ford Motor Company (all other dealers are franchises). It was established in 2004 when Ford Motor Company acquired Polar Motor Group and has been growing since. Today, it generates revenues of £1 billion, operates across 65 sites and employs 3,000 people across the UK.

Roberts joined the company at a time when it was acquiring new businesses and launching dealership branded websites.

"There had been no strategicthinking about how we could harness theenergy and skills of the people," Roberts says. "One of the challenges was that no business strategy had been developed - there was nothing [for HR] to hang its hat on."

Roberts says that, although there had been some work around contracts and Ts&Cs, there had been no thinking about "who are we, what does leadership look like, what does our culture look like".

"One of the first things I needed to do around reward was put some grades in, particularly from a benefits perspective," he adds. "How do you have a benefits offering unless you have an understanding about the structure of the staff? The early mantra was: fewer, better people, better paid. Our cost base will go down over time, but our activity level and the outputs from those will grow."

An early problem Roberts encountered was pay drift - the average growth of pay rises above award. "When I came in, our pay drift was out of control, in excess of 5%. You can't afford to grow your basic pay 5% over and above whatever pay award you are doing," he says.

He launched a project to review pay structures across the whole group. The aim was to break down the ad hoc nature of rewarding pay by installing nine pay grades, which have since reduced to eight. The project needed to ensure dealerships across the group had consistent pay structures while driving higher levels of performance.

"So, if someone is overpaid and not performing we should deal with that in the right way, through a performance management process that gives them the opportunity to get to where we want them to be. But if they can't, we need to make the right decision for the individual and the company," Roberts says.

"If they are overpaid, they will eventually dribble out. If someone is performing really highly then they might be slightly overpaid but if they doing a great job you can live with it. It will wash out over time."

When the new pay structure was being set up, Roberts initially enforced rules that required HR to be involved in all pay decisions, removing discretionary powers from managers. The aim was to prevent managers from setting their own pay rates until a rigid structure was in place. This helped to curb pay drift, which has now dropped to less than 1%.

In cleaning up the reward structure, Ford Retail established job roles across the group and pay grades are aligned and assessed to set outputs - what Roberts describes as internal benchmarking. For example, a sales person's metric is to sell 180 cars per year.

Another aspect of fixing reward was external benchmarking - ensuring Ford paid good market rates for staff. When Roberts joined Ford Retail there was no market data on pay. So, four years ago, he called the HR directors of the UK's top 10 car groups and led an initiative to carry out an anonymous market salary survey. The survey is now carried out every two years and Roberts says it has allowed Ford Retail to pay staff salaries that would place it in the upper quartile of the car market.

In a similar vein to reward, Roberts also inherited problems with benefits from the company's earlier years. He explains that only a few basic benefits were being offered - such as pensions and insurance - and they were poorly communicated and administered erratically. "You'd go into a dealership and wonder why has that bloke over there got family health cover, while that manager's got only single [cover]?" Roberts recalls.

In his second year, Roberts launched a review of Ford Retail's benefits offering. One of the first tasks was for HR to regain control of the benefits offering. "What we've been able to do is reduce our costs over time on benefits because we got a grip on healthcare, which is pretty pricey, so we structure that according to grades," he says. "Also, we used salary sacrifice for people's choices around benefits, which saves us about a quarter of a million pounds a year."

That is a significant saving for a company that is targeting a £5.7 million profit, particularly in the car business, where profit on sales is often less than 1%. "From a HR perspective that makes you think about cost. It's not like working in pubs [like in many of Roberts's previous roles] where you've got 19% profit on sales."

Ford Retail identified it could save even more through other staff benefits. A significant number of senior managers take part in a car lease scheme run by Ford, which has stripped costs of £1 million and released £2.5 million in cash every year. "So from a benefits provision perspective, we are saving a total of £1.25 million every year and releasing about £2.5 million of working capital," Roberts says.

The next step was to add more benefits, make them flexible and easy to access via an online tool. Roberts says the company is always on the lookout for new benefits to drop in, such as Merlin amusement park discounts (added in 2012) and allowing staff to buy computers through salary sacrifice (2011).

"When we stage for auto-enrolment this month, for the first time every single employee will have their own unique website where they can manage their pension. They will also be able to look at all of their other individual benefits and package offering," Roberts explains.

Roberts believes flexibility in benefits will be vital in managing the future workforce, particularly when Gen Z workers arrive and there are five generations in the workplace. The online system Ford Retail uses means that for the first time HR can monitor "the behaviours linked to age to see if there are any differences."

Roberts, who has three daughters, accepts that younger generations "may only stay with you for a couple of years and move on".

He concludes: "The challenge will be to be really flexible in what you offer and almost give learning and development experiences according to what they want. They might not need that in their job but if it will keep them happy, if they want to go on a programme for £200 or £500 then do it."