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Change agent

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The HR function at food retailer Somerfield has been transformed out of all recognition since the arrival of Katie Peters. Larissa Bannister reports

As HR challenges go, there cant be many to match the task facing Katie Peters, head of group HR at Somerfield. On joining the business in September last year hot on the heels of an entirely new executive board she faced an HR department in disarray and a business suffering in some areas from a lack of even the most basic HR functions.


HR at Somerfield has traditionally had a low profile. HR systems were paper-based and sporadic, providing little or no accessible data on employees. There was no staffing plan for the business, no minimum standards or policy for recruitment and employees were often not even being paid properly.


The structure within the business had also been affected by the companys merger with Kwiksave in 1998, so that there were far too many grades in head office, for example, there are 2,000 employees and 1,500 employment grades (yes, you did read that correctly). To cap it all, when Peters joined, parts of the business were not even complying with the national minimum wage.


The woman charged with sorting all this out is a young, businesslike HR professional with plenty of experience working in challenging environments. Peters has a very different profile to the board at Somerfield that appointed her. They are, without exception, men in their 50s. Peters is a 34 year-old woman who talks at lightning speed, is full of ideas, and despite Somerfields West Country location, admits to being a London girl at heart she even carries a Louis Vuitton handbag to prove it.


Neither party was put off by the contrast as Peters explains, You need different styles for different stages of a business, and mine is right for now. Before joining Somerfield, Peters was group HR director at Dyson, where she set up the HR function and worked as a board director on how to make a growing business successful without crippling it with bureaucracy. When initially offered this job, the size of the task was one of the attractions, she says.


I found the idea of working in retail very exciting, Peters explains. I had no experience in the sector which was a benefit, as it meant I could bring a fresh perspective. But a real incentive to join was the way that Alan Smith [group chief executive] and John von Spreckelsen [executive chairman] talked about the business and how they saw HR fitting in. I love the opportunity to have an impact on the business, not just on the HR department.


She is not afraid to challenge her board directors. When Smith and von Spreckelson originally asked her to take the group HR job they were very honest about the size of the task, she says Peters came up with her aims for the role and took the job only on the basis that these be agreed with the top team.


I said that as a business we needed to invest in HR, that I had to be given a free rein to make the right changes, that we needed to invest in our people and that I had to be able to make decisions about my own team, she adds. They said, Go for it.


Although Peters is not a board director herself, she says that her representative at board level is the chief executive and you dont get much better than that. She attends board meetings on many issues not directly pertaining to HR.


I am viewed as a general business person, not just as a functional expert, she says. Youre pushing against an open door when you are invited to take part in discussions that do not directly involve HR. Everyone here realises that people are absolutely critical to the success of the business.


This support has been invaluable to Peters in instigating widespread changes across the group. Her first priority, she says, was to create stability in the areas where good HR was happening by ensuring that the HR staff doing that work knew they were appreciated and could focus on where they were adding value. The second was to evaluate the HR team as a whole.


I talked to the managing directors of Kwiksave and Somerfield, and to Martin Gatto, the finance director, about their views of HR as it stood within the business and about their opinions of the people in the department, Peters explains.


From their observations and her own she then looked at the structure of the team, at who should stay and who should go, and at how best to manage that transition. It was very difficult, she says. I didnt want to be viewed as a new broom that sweeps clean but I did need to signal the start of a new era and that we were going to start operating in a very different way.


Peters aim was to introduce more informality to the department. She insists on her job title being head of group HR rather than group HR director. I hate the label HR director, she smiles. It makes me sound terribly important and I dont like hierarchical titles.


She introduced objectives for the HR team and for individuals, brought in personal development plans for the first time, and, she says, made clear the standards I expected in terms of delivery and accountability.


Once shed got the right people on track within her department, Peters got together with her senior staff to design a new HR strategy for the business. We came up with what I call a cobweb document, she explains. It provided an overview of our aims which I took around the business to match with theirs. We then turned it into a six-stage action plan for delivery over the next three years.


The business is in the middle of its third year of recovery, Peters continues. Weve improved operational delivery and standards and rationalised our logistics operation to take out some costs. Now, its about growth. We need to become more customer focused and use our brands and our unique locations [in town and city centres] to make it work.


The reason that the people strategy is now so vital, Peters adds, is all linked in with business strategy. We have a community feel to our stores, she says. They are situated on high streets, local people work there and their neighbours shop there so the interaction between customers and staff is vital.


But retail is a notoriously difficult sector in which to recruit and retain shop-floor staff. And Somerfield doesnt have the figures to be able to offer high base salaries to compete with the likes of Tesco and Sainsburys.


I cant go to the board and say I need 100 million for a new performance management system or to spend on salaries, says Peters. The answer is what she terms an individual approach to management.


What this boils down to is the quality of Somerfields store managers. When we ask people why they leave, salary is rarely a primary factor, Peters explains. Rather, its the way they are treated by their manager, whether the work is challenging and fun, whether they get talked to about whats happening, whether they know the customers. Critical within retail to achieving good staff retention and morale is the store manager.


As part of the focus at this level, Peters has introduced a training programme called store manager designate, where deputy store managers and other bright young things are given between 12 and 24 weeks specific training and introduced to a mentoring scheme. Within the training theres lots of practical stuff like managing store security, she explains, but theres also how to mentor, how to manage, how to communicate with and motivate staff and how to deal with long-term absenteeism or grievances.


Traditionally, the group has worked to operational targets alone, she continues. But last year we piloted a performance management scheme for store managers at Kwiksave, focusing on what, in terms of delivery, but also on how, in terms of behaviour.


For Somerfield, which has never taken a competencies-driven approach, this is a major step forward. Weve already had some very interesting results, Peters says. You find managers that have excellent profit margins but huge staff turnover. The new scheme means that we can focus on problem areas.


This store manager focus may help with morale and retention, but what about attracting people in the first place? Recruitment and staffing in fact forms the first part of the six-stage action plan that Peters and her team developed out of the original HR strategy. In the past, there were some people who joined the business just because they were there and we needed people, she says. Our new strategy is about whats acceptable, how we should treat candidates, how the recruitment process works, how our ads look and about working on our brand in the market.


The second part of this was to create a staffing plan and labour model for the business and adapt it to the needs of individual stores, she continues. Some stores are busy in the evenings with people dashing in for wine and ready meals, others are busy all day. We have to have flexibility to accommodate what customers want.


Having a staffing plan for the groups 60,000 employees will also help with career development and succession planning. In the past, we have offered great opportunities but not in a very structured way, Peters adds.


Next on Peters list was investment in training and development. A company-wide programme is being phased in, looking at functional skills, business skills how to make decisions made on business knowledge and leadership skills, focusing on managing or working within a team. Im also in charge of executive development, Peters adds. Last year we introduced a programme for the top 70 people across the business where they are each given 5,000 to spend on personal development. We work with them in deciding what to spend that on whether it be an individual business school course or personal development coaching.


In September this year, the HR team rolled out one of its biggest projects a new compensation and benefits initiative for the business. The new package includes both a buy-as-you-earn and a save-as-you-earn share scheme, as part of a flexible voluntary benefits package. Stage one of compensation was to sort out the fact that in some parts of the country we werent complying with the minimum wage and we were having huge problems with the way that people were being paid, Peters says. Now we need to get across the message that our staff are valuable to us.


And bigger even than this task is the planned introduction of a SAP HR system that will cost the business 14 million. Until now, all HR at Somerfield has been paper-based, and there was never any accessible data on employees. This is one of the most critical projects we will take on as a business, says Peters. It will give us flexibility and information that will help us to make decisions. Were piloting it in 24 stores and within the HR department.


Employee relations also forms part of the plan. Peters team has reviewed every single employee policy within the organisation to ensure they are up to speed with employment law and is planning a review of employment contracts and the employee handbook.


The final piece of Peters six-part strategy is what she terms cultural and functional leadership. We have a different team at the top from the one that was there two years ago and we need to establish a set of values and behaviours to live by, she explains. Im working with the board to establish this identity for the group and for the individual businesses. The functional part comes back to the credibility of HR itself. Peters is determined that her department must be professional, well-informed and can demonstrate business as well as functional knowledge.


When she started the turnaround, Peters focused on high impact, low effort initiatives, that would help to raise the profile of HR quickly and effectively. Some of her plans will take longer to implement. But when she does get everything done, how will she measure her success or failure?


Im extremely driven by performance and measurement but its something that can be difficult to quantify in HR, she muses. Some stuff is tangible for example, if you invest in pay, you will get improved turnover and performance. But the intangibles are just as interesting, she continues. I want people to be proud of where they work. If youd asked our people two years ago, theyd have said they worked for a retailer, but now I want them to be excited by the fact that they work for Somerfield or Kwiksave. Some businesses like Virgin have that aura of being an exciting place to work. It would be great to crystallise that feeling here.


High on her list of ambitions too is a change in the way that Somerfield employees see HR itself. And perhaps this will be the greatest test of her plans for the department and the company.


I would love the day to come when people from the business are beating a path to my door saying they want to work in HR because its such a great place to be, she says, eyes gleaming. That alone would be no small feat but with the changes Peters has made in such a short time, you get the impression anythings possible.