Interview with Lynne Weedal, HR director at The Carphone Warehouse
With its recent mergers/demergers and acquisitions there is change on every front at The Carphone Warehouse - a significant part of it initiated by HRD Lynne Weedall.
On the morning I meet Lynne Weedall she has already faced a showdown. It's her son's fifth birthday and he doesn't want her to go to work. Time to call upon all the persuasive skills required of today's successful HR director. "If I don't go to work, then who is going to buy you your Go Go's," she says (for those not in the know, they are a range of strange, small, bone-shaped plastic figures that are all the rage with children). "OK then, go to work," her son immediately responds.
Such diplomacy is a useful technique to have when you are HR director of The Carphone Warehouse. In the past year, Weedall has persuaded the board to radically overhaul the company's reward structure by bravely making its store sales environment a commission-free zone, a move she describes as one that rival Phones4U would "look on with horror". She has moved the business to one where leading indicators are as important as short-term financial metrics. And she has also introduced a quarterly Pulse survey based on the Gallup 12 questions.
Underpinning all this is a balanced scorecard known as Compass. The £1.3 billion telecoms retailer and provider bases its performance management process - and bonuses - on this.
"This is an important shift," says Weedall, as we walk through a busy call centre in the vast hangar off London's Western Avenue road that is Carphone's head office. "When I arrived the company was financially-oriented and based on short-term metrics, such as margin per day, hour and minute. We still need those metrics but I have tried to shift it around so that we have good quality sales-making together with measures that tell us not just what we are delivering in terms of numbers today, but also what we will deliver tomorrow. If you go into any of our stores and call centres you will now see Compass on the wall and most people can talk to you about all the metrics."
It is obvious Weedall is just as happy talking about finance and metrics as more generalist HR issues, which is just as well given the major transformation the business is going through.
In May 2008 US retail giant Best Buy, the world's largest buyer of laptops, invested £1 billion to create a new 50/50 joint venture company running Carphone's retail business. At that point Carphone decided to separate this business from its 100%-owned telecoms brand Talk Talk. So Weedall was concurrently embroiled in a change programme involving Carphone and Best Buy while planning how to separate the people side of Carphone and Talk Talk.
Of Carphone and Best Buy she says: "They are two distinct brands and customers see them as that, so we have focused on what we can do consistently: having one employee relations team, one reward team and one management development team on the transactional side, for example. This is the obvious stuff but we have also developed one common performance management scheme based around Compass and one leadership programme."
As if that were not enough, in April Carphone founder and CEO Charles Dunstone confirmed the demerger of Carphone and Talk Talk and a month later announced Talk Talk was acquiring the UK arm of Tiscali for £236 million, making it Britain's biggest provider of residential broadband.
"We were so pleased to nail Tiscali for such a brilliant price," says Weedall. "The integration is a big focus and part of that is in bringing some value to the brand with Talk Talk. We have spent a long time learning how you run a good broadband service. We didn't always do it well and had to go back and look at all the processes and training."
The split follows pressure from investors who believe it will generate increased shareholder value. The plan to complete it by March 2010 is on track, with banking facilities for one part, Best Buy Europe, now secured.
"The demerger is a natural extension; we have been running the businesses pretty much separately for the past year and gradually separating the two elements from both the people and also processes and systems points of view," explains Weedall, seemingly unruffled by all the change. "There's a strong belief that, by demerging, both businesses can be really strong and drive agendas more effectively. It will help the stores to sell Talk Talk in a simple, impartial way, which was difficult when it was part of the same business."
The job now is around the leadership. Dunstone will continue to play a leading role in both businesses, something she says is "critical, particularly internally. It is important our people know Charles is still a key figure." Quite how this will pan out is still being worked through, but it may be a chairman role.
As far as the boards go, Weedall says the executive roles will be filled internally. "We have really strong, talented people in both businesses and have done a lot of work on developing and grooming successors. This is a natural evolution so we are prepared for it."
Back in the day job, Weedall is also busy working on the Carphone people strategy, transforming it from a largely mobile phone retailer to one that helps reduce the complexity around today's world of interconnectivity. Last autumn it opened its first Wireless World store, taking the brand into laptops, gaming, wireless TV and music. The format also features Best Buy's famous techie customer helpers, the Geek Squad, complete with employees (or agents in their speak) who have titles including chief inspector, precinct chief, counter-intelligence agent and sleeper (that's leader, store manager, counter repair person and an employee who has been discharged from active duty to pursue other jobs to the rest of us. For more on the Geek Squad go to www.hrmagazine.co.uk).
To help staff understand the new concept the company implemented a training scheme last year - the Wireless camp. A total of 8,000 employees went off to the camp to learn about the new product. At the end they gained a qualification and received a free laptop.
"Our people know everything there is to know about phones but not about dongles, slingboxes and the like. I spent the first six months talking about sling backs," confesses Weedall. "We have built this into the core learning programme, adjusted our inductions and are in the process of implementing a more e-learning-based programme. Employees can go back and use their laptops as a learning tool. It has taken us from a standing start into the market. At one stage we were selling one in 10 laptops. Over a year ago we didn't sell any."
The strategy also compelled a rethink of the company's reward strategy. Store wages have been increased and commission has been removed to make way for a structure based on rewarding customer service (see box opposite).
"To do our change programme we needed to get permission from customers and hit on the head some of the perceptions about this sector, particularly that it is not always as focused on service as it could be," explains Weedall.
"Quite often in HR we start with the reward and a tactic when what we really ought to start with is what we are trying to achieve overall in this business: what are the strategic drivers and what is the business rhythm that stands around that? Wherever employees work they know what good looks like and they know their part in delivering the company's vision. This is one of the things that will make us stand out from the rest and I am confident that, even if our competitors copy our new pay system, it will be hard for them to copy the integrated system we've now got."
The plan is for 40 Wireless World stores so the company is on a recruitment drive. But this pales into insignificance compared with its strategy for the Best Buy brand. The first five stores will open in spring 2010 and the aim is for 100 within five years, employing 10,000 staff. The company has already brought on 150 people to set up the business, a quarter of whom are Carphone staff. It will need more than 1,000 people next year to meet the store expansion plan.
The alliance of Carphone and Best Buy is a canny move, given Carphone plays in a saturated market and the UK's existing high street electrical fascias such as Comet and Currys have had a somewhat chequered history.
"We did a lot of work around understanding where Best Buy and Carphone were the same and where they were different," explains Weedall. "It was absolutely clear that at the heart we were really similar. This is one of the reasons we did the deal. We both have a strong customer obsession and a genuine belief that people do make the difference. People are central to both organisation cultures and we are a very innovative, dynamic businesses. Both are relatively young and the founder is still in place, and both have a strong, can-do attitude. We both want to change the marketplace and make it better for customers."
Despite this, there are some differences, with Best Buy being more structured and process-oriented; "more planful" as Weedall describes it, while Carphone is more entrepreneurial and "seat of your pants".
"Best Buy is brilliant at engaging and getting people involved in day-to-day decisions at all levels. Their blue shirts, as they call them (frontline employees), decide what products are sold. Carphone has a very creative and fun culture but is probably a bit more top-down with strong leaders."
An example of learning from each other is the implementation of Chalk Talk. Every week all employees get together to talk about what are the emerging issues that week. "We draw the line at singing the song," laughs Weedall, "but this is a fantastic way of getting everyone aligned from top to bottom and bottom to top around the key messages of the week."
Chalk Talks are now based around the Compass balanced scorecard, looking at what's going on from the employee and customer perspective and how that is translating into profit. "We have a bit of fun with it," says Weedall. "For example, we launched our new Wireless World format in Exeter on Monday. We dialled into the store, the manager and team had a laptop with Skype and they took us round the store. We met some customers, waved to them and everyone was excited. It was a great way of involving the team but also using, and explaining, the technology that was being sold."
Fun and exciting are two words that crop up regularly when talking to Weedall. She describes Carphone as "one of most dynamic and innovative organisations". She adds: "It gives you the opportunity to be brave and bold and this encourages people on every level to see how they can transform something for the better."
This is praise indeed when you consider the world-leading names on her CV. "The difference for me is that this is all about step-change. So while Tesco appears to be like this, it is actually more about incremental change, thanks to its enormous scale, and less about being brave and bold," she says.
Given all the change and the dynamic, work-hard, play-hard culture, it is perhaps not surprising that what keeps Weedall awake at night is the capacity to do it all and keep everyone energised. "There is change on every front. It's all about how to balance, priorities and how to do the things that really make a difference, rather than do everything."
So does Weedall have balance in her own life? Well, any spare time outside of work and family is spent down the gym. Oh, and she can occasionally be found at the monthly Carphone Beer Busts. All in the name of motivation and recognition, of course.
1994: Gained CIPD qualification; worked for a number of retailers including Tesco and Petsmart
1999: Joined David Lloyd Leisure; then moved within the organisation to became group organisation development director, Whitbread
2006: Moved to Bupa Hospitals as HR and OD director
2007: Joined The Carphone Warehouse as UK retail and distribution director
2008: Promoted to group HR director
Outside interests: Family and going to the gym
THE CARPHONE WAREHOUSE REWARD STRATEGY
In July Carphone Warehouse stores officially became commission-free zones. This radical step resulted from a fundamental rethink of the company's reward strategy and is a test of the retailer's commitment to putting customer service at the heart of its business.
Weedall admits it was a brave move. "Some 50% of people's pay was made up of commission and in this market commission is the norm. But we are convinced that by increasing basic pay, and still having a variable, but more team-based and customer service-based element, it will serve us much better in the long run. It is a shift from the short-termist, grab-a-sale view to driving profit through giving brilliant service."
The context is Carphone's change programme to transform itself from a largely mobile phone retailer to one that offers products and services that help customers understand the new wireless world.
But how do you persuade staff to accept a structure under which they may end up with less money than before? The company began by creating a working party to design the new scheme, including branch managers and store staff. A feedback mechanism, the Magic Wall, enabled employees to tell the board what made Carphone special and what got in the way. Pay emerged as a significant issue.
"They wanted consistency and to know what they would earn and when," explains Weedall. "They also wanted to focus on giving great service."
The data from this was fed into the design and a pilot scheme was tested in 200 stores in London in October 2008. A team comprising 1,000 people ran a launch event and all staff were invited to hear about the new proposals.
The previous wage structure had huge variables, with sales staff earning £9,000 basic and Carphone guaranteeing it up to National Minimum Wage. With commission, the average earned in London was £17,000. Under the new policy, the basic wage is now £17,000 and staff can still earn a bonus based on customer service scores. A percentage of store profit goes into a bonus pool and that pool is doubled if the staff meet service scores or halved if they don't.
"You can still earn a significant amount of money but it is a real team effort to drive customer service," says Weedall.
She acknowledges that previous top earners cannot achieve the same levels but says: "We were worried at the time that the high earners might move on. Some have, and frankly some of those may not be people we want in our business. But others have either said this is better because it is about service and the team, or have come forward to say they would like to progress in the business and become a manager. Up to that point they had no incentive to do this as they were earning more as a sales consultant."
Weedall admits to being surprised by the high retention rates, although she acknowledges the recession has helped. Moreover, feedback from London customers was positive. The company's net promoter scores (NPS) methodology is based on asking at least 40 customers in each store what they think of the service, using specific questions. This helps them identify positive staff from negative ones and the NPS results from subtracting the scores. Since the strategy was implemented, scores have jumped from 30 to 60.
Following the trial, Carphone has run Grill the Big Cheese sessions, whereby senior managers pitch up at a store or pub and employees give them a grilling on what they like and dislike about the new scheme. Staff can also read case studies on the intranet while customer consultants (formerly sales consultants) visit other regions to spread the message.
This shift from individual to team recognition is just the beginning, says Weedall. "We have seen through the hard metrics that it is working. We have positive like-for-like sales and are growing market share.
"It is encouraging as there was a degree of nervousness initially, and when we introduced the policy it did hit sales and margins. But we held our nerve and they have more than come back."