· Features

Mercedes-Benz UK HRD and CEO: On the road to recovery

In the mid-2000s, carmaker Mercedes-Benz UK was on a downhill trajectory, slipping from its perch as top luxury brand, but a leadership change and a top HR director helped the luxury carmaker shift gear from neutral back into drive.

It took only five minutes in conversation with Marcus Breitschwerdt to understand why Mercedes-Benz adopted Gotlieb Daimler's motto das beste oder nichts (the best or nothing).

There isn't an iota of second-best in the imposing frame of the German-born Mercedes-Benz UK chief executive and president.

Breitschwerdt, it genuinely appears, thrives on beating the competition, and it is this winning mentality that brought him to UK shores to revive the fortunes of a stagnating luxury stalwart.

But ask Breitschwerdt who is at the heart of Mercedes-Benz's UK revival and he gestures to the firm's softly spoken HR director, Catherine Taylor. In fact, he describes Taylor's HR team as "the gold standard of all the functions I have seen with the company for the past 25 years".

And it's a good thing, too, given the state of the business Breitschwerdt inherited after arriving from North America in 2011.

From the early noughties, Mercedes had slipped from being the top luxury car brand in the UK by unit sales to number three in 2011.

The company was stagnating at about 75,000 units a year in the passenger car business.

"It's always a challenge if you have a rich history and pride that people can become a bit complacent and you could slow down, and we did here," he says.

"For years we didn't grow. Our main competitors [BMW and Audi] were 40-50% ahead of us.

"So (when I arrived) our target was to implement a growth strategy, a positive growth in the organisation and to make the team happy to conquer."

Since then, Mercedes has grown vehicle sales to 85,000 units in 2011, 91,000 in 2012 and will break 100,000 this year. Plus it's had record van sales and better-than-expected results in commercial trucks.

The key to jump-starting Mercedes-Benz was a focus on de-cluttering processes, while inspiring and empowering staff to stay ahead of the competition. And HR has played a central role in the whole process.

Here's how they did it:

Cut red tape with post-it notes

When Marcus Breitschwerdt arrived at Mercedes-Benz UK, the business was overrun with red tape - the opposite to his experience at Mercedes-Benz Canada where he led a successful recovery project that was hampered by lack of process.

"There was no deficit of processes at Mercedes-Benz in the UK," he recalls.

"There were too many back-ups of back-up processes, and not enough processes at the point of sale and point of service. We needed the organisation to be run like an airline or surgery room - precise and flawless - but we were over-administrated."

To address this, Mercedes launched a strategy to cut red tape and focus on initiatives that made it easier to do business and help the company beat the competition.

"If you are dealing with a customer or are in a workshop, the process has to be crystal clear in order to avoid mistakes," Breitschwerdt says.

"However, it's important you don't confuse yourself by having an overload of stuff around it that is not essential."

The strategy is known internally as the Post-it plan because it was devised on a series of Post-it notes.

The strategy is based on four core stakeholders of the business - parent company Daimler, Mercedes dealerships, customers and employees.

Business objectives are aligned to one or more areas: for example, improving network and systems performance applies to people, customers and dealerships.

HR the enabler

HR has been at the heart of change at Mercedes-Benz. Breitschwerdt explains that senior management can deliver on only five dimensions - strategy, processes and methods, structure, resources and people. "For all of these dimensions, the HR department is a very important player," he says. "We play a leadership partnership, and Catherine and her people are integrated into every single strategic decision, from what type of cars we order through the line."

Testament to HR's importance to the firm is that Taylor is an integrated board member.

She says the essence of good HR is partnering the business and being able to see your work through "the eyes of the business and your receiver, not from an internal ethereal HR model".

"From a business partner point of view, we act as an enabler," she says. "The underlying people processes and work that we do reinforces that. It's not about having rock star moments, but about working quietly in the background and focusing on things that will make a real difference."

Empowering staff

A common drawback of bureaucracy is that workers can become so bogged down in processes that innovation is stifled due to process fatigue.

As Taylor recalls, it was "an organisation almost in waiting".

"I think there was a lot of latent talent, people waiting for that opportunity to unleash their potential," she says. "So rather than have to go 'let me look at the rule book' we want them to say 'I've got a great idea to improve this for the customer'."

The leadership team set out to create an environment where everybody feels relevant, whether you are an engineer, a salesperson or a cleaner.

"There's been a massive change in the past two to three years," Taylor adds. "We've had some great feedback from staff who now feel empowered to make decisions without having to seek permission. Unleashing that potential has been really important for us."

To acknowledge staff achievements, the company introduced the prize of Mercedes-Benz Award, for which anyone can be nominated - the prize being a Mercedes to drive around for a week.

Consistent pay

Mercedes-Benz has been able to lift retention rates by offering new career pathways for talent.

Taylor explains that staff used to work in only one part of the business, but now the function helps staff understand career options in other parts of the company. Mercedes-Benz UK comprises several divisions, including passenger cars, commercial vehicles and finance.

A legacy of this had been pay and reward structures that were misaligned until a recent initiative to create one consistent grading system for the company's 1,400 staff.

"In parts of the business [pay and reward] had fallen into disarray and in other parts it just didn't match. So we took time to put in clear policies on how employees can develop and move through different parts of the organisation," Taylor says.

"It was about having one simple structure that people understand and buy into. Do I understand where I fit in the organisation, and how can I develop my career either laterally or upwards?"