· Features

Interview with David Smith, HR director at LV=

When David Smith joined LV= as HR director, he knew it would be a challenge. There was no HR to speak of and the mutual assurance company was struggling to fill vacancies. Now with an impressive fusion of his HR, PR and marketing skills, clever use of technology and 4,000 satisfied staff recommending the firm as a great place to work, Smith doesn't need to benchmark against best practice - he is leading the way.

For nearly 150 years, the letters LV have been synonymous with one brand only - the luxurious French fashion house, Louis Vuitton. So protective has it been of its interlocking L & V crest (the monogram is one of the world's most bootlegged), the company vigorously asserts its rights and has a formidable record of winning against anyone it feels has infringed them. That was until it took on business directory compiler Manifest Information Services, owner of www.lv.com - a list of companies based in Las Vegas - in late 2006. The National Arbitration Forum threw out Louis Vuitton's claim that it owned the rights to the letters. It found the owner of lv.com had a legitimate interest in it and had not bought the domain name in bad faith or with a view to cyber squatting.

So imagine how beleaguered Manifest Information Services reacted when it was approached by a far less visible company (a friendly society no less), also with 150 years of history behind it. The difference was that its recently installed CEO had a bold idea to dramatically re-invent itself. The CEO in question was former Barclays boss Mike Rogers. His company was Liverpool Victoria. His idea was to rebrand it LV=. Manifest needed no more persuasion. To rub salt into Louis Vuitton's still gaping wounds it sold the domain name ('for a lot less than you'd think,' say insiders), and LV.com, the website for the bright, new consumer-facing assurance brand was officially born.

It's just this sort of business cut-and-thrust that gives a sleepy sort of company like Liverpool Victoria a bit of something extra. For its HR director, David Smith, previously part of the Virgin family, this was just the sort of pull that told him mutual assurance could be going somewhere. "I'd heard the company was going to recruit an HR director for the first time and when Mike was appointed CEO with a view to change things dramatically, the opportunity felt too good," says Smith. "I could have said 'no', but I wanted the challenge."

Rogers has done his bit (underlying profits are up from £2.3 million in 2008 to £44.9 million last year), while Smith certainly got the challenge he wanted. When he arrived less than three years ago, there was no HR department at LV=. The entire HR function was outsourced and its heads of reward and learning and development were interim managers. And yet today he can look his boss in the eye unflinchingly. In March, LV= became one of just 42 companies to win a Britain's Top Employer accolade (engagement scores are mid-80%), and in December 2009 it also scooped the prestigious Customer Service Contact Centre of the Year gong at the National Customer Services Awards.

"The awards are great and it's fantastic to be considered one of Britain's top employers," he says coyly. "But for me, staff satisfaction is still the most important reward. I'm almost more happy that 90% of employees fill in these surveys. It's not just me; our staff feel that the company is going places too."

His decisions have not all been popular. Of the 90 HR professionals working for outsourcer Hays, only 50 were transferred when the function was moved in-house. "Some didn't want to carry out a strategic role - they enjoyed a more operational job," he explains. "But I was able to develop some of them and move them to other parts of the business - they knew I wanted to make a lot of changes."

Much of this change has involved bringing a Victorian mutual into the 21st century. "I really struggled to fill vacancies," Smith admits. "I struggled to find the right kind of applicant and I knew we had to build our brand in order to do this." Luckily, he has more strings to his bow: he runs the public relations and internal communications departments at the company and, together with the marketing function, has created something of an LV= cult around its head office in Bournemouth. As soon as anyone steps off the train they see it is the home of the company from the signs on the platforms. Subways around the town are emblazoned with LV= branding and the familiar lime-green logos seem to crop up everywhere.

"We are big advocates of communicating our brand in the community and I would much rather people got to know LV= by the work we do there," he says, as he talks about CSR projects, ranging from teaching children about road safety in its branded bendy bus, to working with disabled adults in centres near its offices. The local advertising has a very real purpose. "More than 70% of our recruitment used to be managed by agencies," he says.

One particularly successful project involves LV= working with local schools, helping young people aged 14 to 18 to achieve an NVQ qualification in insurance. Smith guarantees that every student who passes will be invited for an interview for a job at the organisation.

"I am currently advertising 350 vacancies," he says, as the company bucks the financial services trend for downsizing, "but, unlike three years ago, 70% of recruitment now comes from our workplace scheme where staff recommend people they know. I no longer need to pay recruitment agencies when I have 4,000 staff recruiting for me. We have saved £1 million since 2008 this way."

Most impressive is how Smith is fusing his HR, PR and marketing skills. Smith has just launched a poster campaign at bus stops in towns around the UK where LV= has a base, featuring an image of an LV= employee and a number to text. Potential applicants are encouraged to take a photograph of the poster with their phone and text it to the number shown. Shortly afterwards the person will receive an automated message from the employer saying they are looking forward to seeing them at LV=, followed by a text message with a link to the company's recruitment website.

Smith's next idea is to launch an LV= recruitment application for smart phones. He says: "I used to view our e-commerce department as 'Q from James Bond' but increasingly I am seeing them come to us if they want to know something. My main issue at the moment is technology - we are about what I call 'next-marking' rather than 'benchmarking'. I don't want to look to other organisations for ideas - I want to lead the way."

In the fast-moving field of technology, Smith does not believe it is difficult to keep up. "If I have an idea, I call up my CEO, agree it and go and get on with it," he explains. "I do sit on our executive team but I've never had a big issue with getting HR onto the board. It is more about building trust and there is a challenge there (for HR professionals). You have got to earn the privilege."

Part of his privilege is to sit on the firm's remuneration committee. In a sector still dogged by bonuses, Smith's position on the committee has, he hopes, kept the company on a more ethical footing. "I have worked hard to put a lot of changes in place. We meet five times a year to discuss remuneration and I have partnered with PricewaterhouseCoopers to devise a bonus scheme tailored just for us," he says. This was launched in January, and staff now receive their remuneration based on long-term incentives - depending on the enterprise value of the company. Previously, bonuses were based on a more complicated short-term system. But the new method, which depends on how the company is growing and developing, encourages staff to take a more long-term approach.

"The scheme has not paid out yet," explains Smith. "But it is now completely transparent and we have had a positive reaction to it. It took us a year to design - but I believe we have got it right."

The ethical theme continues in the firm's induction programme, launched last October. "All staff have to complete our new compliance training online. It focuses on the ethics of the business and on treating customers fairly." If staff didn't complete the training within a specified period, warnings would follow, after which their security cards were deactivated and they were denied access to the office without their manager's approval. Unsurprisingly, all 4,000 staff completed the training by January.

It may sound heavy-handed, but Smith is adamant training is taken seriously. He explains: "We have been working with Ashridge Business School to develop a new in-house training scheme for all levels of staff and managers. I am also investigating the possibility of developing our learning and development centre, so other businesses can send staff here to learn from us."

It's an ambitious plan, but here is an HR director not afraid of taking risks. He is confident to try out new ideas and blaze a trail, but happy to keep traditional HR techniques that work (LV= still invites employees' children to the staff Christmas party). HR magazine hears the cliche, 'people are our greatest asset', almost every week, but when Smith adds: "We are all about our people and how they change the business," I believe him.

2008: Appointed HR director, LV=
2004 - 2008: Head of HR, Virgin Atlantic Airways
1998 - 2004: Joined Sainsbury's as HR manager, rising to HR director
1995 - 1998: Joined Homebase as personnel officer, rising to senior
personnel officer and culminating in HR manager for distribution
1988 - 1995: Various HR roles at Savacentre