That steeliness comes across to some extent in her approach to the interview. She is very much in control she makes it clear that she wont be rushed in conversation, but is nevertheless easy to talk to. She may have answered these questions before, but there is nothing pat about her responses they are thoughtful and considered.
If theres one characteristic that indicates someones ability to make it to the top in HR then its boldness and a strong personal conviction about whats right and wrong, states Chapman. HR can be a no mates job so you need the resilience that enables you to act as if you dont mind if they fire you tomorrow. Ive done things that have made me unpopular, but Ive also done unpopular things that in the fullness of time proved to be the right things to do.
Changing the management grading system soon after she arrived at Tesco was one of them. As an international business, operating in 10 countries, Chapman argued that the firm needed to be able to recognise its top 300 managers at a glance. People asked why I was thinking about grading when there was so much else to do. But we needed a system that was modern, flexible and covered everyone it needed to in the management population.
Things are looking good at Tesco and its not too hard to believe that Chapmans people policies from the top 300 downwards must be a contributing factor. Back in 1999, chief executive Terry Leahy promised investors profits of between 140 million and 160 million and a return on investment of between 9% and 10%. By April 2003, the figures announced were 141 million and cash returns of 9.7%. This was accompanied by plans for a further 20,000 jobs this year, including 11,000 in the UK.
Its an exciting time to be holding down a big job in one of the top supermarket chains but scary too. Competition between the big three Tesco, Asda and Sainsburys is fierce as they vie for pole position at a time when retailing generally is in a rut.
What is more, by todays standards, supermarkets are labour-intensive businesses, which means that how you manage, develop and reward staff, really matters. With 296,000 employees across 10 countries, Chapman has a lot of people to worry about, although, she quips, The real chief personnel officer in Tesco is Terry Leahy.
Her admiration for Leahy is obvious. They meet regularly
once a fortnight at the People Matters group where he and
other top staff, including Chapman, work the people manage-ment issues for the most senior levels of the business, and the pair talk at least once a week on top of that. She appears amused at the suggestion that they might need to talk every day, summing up her relationship with Tescos CEO as one of listening, learning and then acting. I spend a fair amount of time understanding what Terry wants to do in terms of the people at Tesco.
Four years ago Leahy wooed Chapman from a promising international HR career with PepsiCola. She had begun her working life in retail as a buyer and then training manager for Harrods before moving on to Quaker Oats in training and generalist HR roles. In the early 1990s, she went to the US where she was given the task of setting up a company university. There was a massive redesign of business processes going on at the time and the Quaker University became a change management vehicle for this. The training took place wherever it was needed. If that was on the third shift in a factory in Topeka, then thats where it happened. The experience I gained was fantastic, she says.
The move to PepsiCola in 1994 found her back in Europe, albeit in Vienna and then, as international vice-president for HR, in Hungary. Her next PepsiCola role would probably have been in the US. But by this time she wanted to stay in Europe and was already thinking about her next job when Tescos headhunter called. Cheshunt may seem a bit of a come down after Chicago, Vienna and Budapest, but they dont come much bigger that Tesco, Chapman smiles. But what really hooked me was the discussion I had with Terry Leahy and his view that it was capability and not capital that would constrain Tescos growth. It was the chance to use all of my experience.
Having been an expat for 10 years it was also an opportunity to settle back down in the UK while retaining such a senior level job. I was ready to play a role that required roots within a community, so Tesco was attractive for that reason. It gave me the chance to come back to the UK but still be international. And it was the chance to put down roots with my husband.
Not surprisingly, attracting, retaining and motivating staff is core to Tescos people strategy. One of the key developments in the way supermarkets do business has been the close correlation they now draw between employees and customers. As Chapman points out, staff loyalty is directly related to customer loyalty. What she says she wants is not the functional loyalty whereby people turn up to work every day, but the emotional loyalty that means they bring their brains with them. The way to get this she suggests is by constantly reviewing how you reward staff, and by listening to them.
Listening to staff is her big theme. A few years ago we realised that we knew more about our customers than about our staff, so we set out to find out what staff really wanted, she says. They came up with four things. Tesco staff want managers who help them; they want the opportunity to get on through training and development; they want jobs that interest them and make them feel they have done something worthwhile; and they want to be listened to and valued. So Chapman proceeded to reorganise the corporate HR function around these four wants, dividing it into resourcing, learning, involvement and whats called the people insight unit.
The firms employee attitude research called viewpoint was also redesigned to focus on these four issues. All staff are surveyed once a year while twice a year smaller surveys are carried out among about 1,000 staff chosen at random. To capitalise on good ideas coming from the shop floor Tesco launched First Steps a sort of modern suggestion scheme. So far Tesco has notched up between 9 million and 10 million worth of improvements.
Finally, building on the theme of listening to staff, Tesco last year launched a massive back-to-the store exercise. By June this year 1,000 head office managers will have completed their Tesco Week in Store Together, known as Twist. The aim is to give managers experience of the store but also to get them to spend a bit of time looking at the things they can influence, says Chapman.
Leahy was the first to go on a Twist week. He spent his time on the checkout, at the fish counter and in the warehouse. Chapman, too, has done her bit, spending her week with the HR manager of a local store. She learned three things, she says. I saw the importance of keeping life simple for staff. I found that what staff want to do is spend time with customers, which is what we want too. And I realised that if we want to make improvements then the people to ask are our staff.
But Chapman knows that listening alone wont buy loyalty you have to pay your staff too. In addition to receiving above-average salaries for the sector the provincial hourly rates for checkout operator and general assistant with one years service is 5.34 and 5.15 respectively three in four staff now participate in the companys Save as You Earn scheme. The scheme is important to staff. In February this year the company announced that 40,000 employees would share a pot of 68 million from schemes that were due to mature.
A degree of humility is also vital if Tesco is to succeed, Chapman says. Things change very fast in retailing, so humility does help. Its an attitude that recognises that we are here to serve staff rather than the other way round. It also means realising that we have something to learn from competitors.
Given the bullishness of the supermarket wars, humility strikes one as a rather odd word to use and certainly Tesco never appears a particularly humble organisation in its public statements. But, according to Chapman, part of Tescos humility is the value it places on experience and its preference for promoting from within. Six out of 10 board directors, all four regional managing directors, 27 retail directors and nine out of 10 store board directors are homegrown. Tesco is characteristically very good at succession planning, Chapman says. We are good at making sure people are prepared for the next role.
Not a statement in itself resonating with humility perhaps, but it does perhaps explain why Tesco appeared to flout the Higgs report recommendations on the independence of non-executive directors when it announced the elevation of David Reid to the chairmans job. Reid is currently deputy chairman and until 1997 was the groups finance director. The role of deputy chairman will be taken by Rodney Chase, the ex-BP deputy chief executive, who was selected as a non-executive director last July.
Chapman has absolutely no doubts about these appointments. No we are not following the [Higgs] guidelines, she admits, but the reaction we have received since we explained why the appointments made sense makes me confident that weve done the right thing. We value continuity and experience as well as external independence. I was surprised at how long it took me to learn the business. It took me at least one and half years before I was at a stage where I had an intuitive feel for what was going on.
Soon after her success in changing the grading system, Chapman launched a programme called Talent Spotting. The idea was to formalise the talent-spotting already going on. Its all part of a succession planning system that is led from the top. In addition to the fortnightly People Matters group, twice a year the board meets to look at the outcome of talent-spotting. Directors are expected to spend time getting to know who and where their emerging talent is.
Chapman herself is not a homegrown product and likes to look outwards in a variety of ways. For example, she is currently on the Governments modern apprenticeship taskforce and has just finished a stint on a lone parents taskforce. There is a material benefit to Tesco if we can become more effective at providing long-term employment opportunities for lone parents, she says. But it brings a certain amount of responsibility too.
She is perhaps expecting slightly more fun from her recently announced non-executive directorship with First Choice Holidays. Non-exec jobs are still quite rare for HR directors but this is not the first that Chapman has been offered. This is the first one Ive taken because it was the first where I thought I could add value, she says. Its also a chance to add breadth to her own experience.
While she may have joined the First Choice board, there is no sign of the same happening back at Tesco. Does it matter? Obviously being on the board of a plc is a fantastic learning opportunity, she replies, but not being on the board hasnt got in the way of getting things done. Its about influence and impact. Whether the board uses an HR director as a sounding board depends more on whether they trust that person than where they sit in the organisation chart, she adds. I think I enjoy a level of trust because the Tesco board sees me playing things pretty straight rather than working to an agenda.
Tesco has been number one in the UK supermarket sector since 1995. But with Sainsburys, Wal-Mart and hypermarket Carrefour snapping at its heels at home and abroad, being a grocer is still an uncertain trade. Every year, the challenge that we are dealing with means we have to think in ways we havent done before, Chapman says. That stops you from becoming too cocky. Theres so much innovation that needs to go on. And it doesnt get any easier.
Chapman is made for HR she has the ability to make people feel just a little bit special. For a brief hour I believed that perhaps I too had it in me to make it to a top job in business I felt part of her world. But the moment we walked out of the Tesco building, the spell was broken. Her silver saloon was waiting to whisk her off to her next appointment while I flat-footed off, in the rain, to M&S next door though not, of course, to the food hall.
