Once in Marconis offices, theres a chirpy hello and a firm handshake from chief of human resources Neil Sutcliffe. Everything about Sutcliffe is incredibly smart the suit, the close cut hair, even the answers. Many may argue, however, that the smart thing for him to have done would have been to distance himself from the troubled company. It has been a rough ride. A restructuring exercise has left Marconi a quarter of its size in terms of staff, and it aint over yet.
In spite of the devastation, however, Sutcliffe has stayed put. Sitting upright with arms crossed he appears a very serious and resolute character. Human resources is a long way from his early career as a missile engineer. He had also run Marconi Services and later its non-core businesses arm, Marconi Capital, before the HR call-up came in March last year. How did the move to HR happen? You mean, after all of that? he smiles. Uncomfortable when the attention is solely on him, Sutcliffe reverts to the bigger picture instinctively and the royal we. We felt that the restructure required a kind of operational approach to HR. We needed to reduce the headcount substantially in the business, because we had to reduce costs, and we felt that having somebody who had strong operational management experience, who understood our products, services and customers, was important in terms of keeping an eye on all of that.
All of that, indeed. Sutcliffe had certainly a lot to keep his eye on. It has been a tumultuous time for Marconi, for him and for the employees. Four years ago, the company transformed itself from the industrial business once known as GEC, which had been built up by the late Lord Weinstock into a defence and electronics giant. GEC was then transformed by Weinstocks successor, Lord Simpson, into Marconi, with the focus on telecoms equipment. At prices boosted by the tech boom the company embarked on an acquisition spree. Come the crash, many were caught out, and none more so than Marconi. It had huge debts, and a business stuck in a depressed market. The recovery plan includes a refinancing deal with lenders to help pay off around 4 billion of debt through a swap for cash, shares and loans within the new corporation.
There were job losses at every level and half of the executive committee went. Faces at the top changed also, and they had to. Many shareholders were livid at the dealings of Simpson, chairman Derek Bonham and finance director John Mayo. They all left within a year of each other. Mike Parton took over as CEO in September 2001, and chairman John Devaney was appointed in December last year, injecting fresh blood to lead the relaunched Marconi.
This is all very well-documented in the media what is less clear is what it was like internally. Nigel Sullivan, formerly head of HR for Marconis global operations division, worked alongside Sutcliffe in HR during this period. He left at the tail end of 2002 and is now group HR director at supply chain solutions company Wincanton.
HR had a really key function primarily around what I called at the time the 3 Rs. Retention and motivation of key talent, reduction of costs and restructuring, he explains. It is tremendously rewarding to see the company come through the other side of its restructure largely intact, he says, before adding, although there is a long way still to go.
Sutcliffe is similarly realistic, but is keen to get the numbers straight on the carnage that followed. In March 2001, there were 56,000 Marconi employees. The 21,000 people in its non-core businesses ranging from petrol pumps, washing machines, printers and medical systems were sold off along with the non-core firms, with another 21,000 made redundant from the core business. As of August 2003, around 14,000 remained, although a further 1,000 will go by March next year.
Admirably, Sutcliffe is keen to talk about how this has been done, rather than glossing over the details. Judging from the deep breath he takes before plunging in, it hasnt been easy for him. Clearly losing 21,000 people out of a core population of 35,000 is very traumatic, both for the mental health of the people in the com-pany but also for its operational health, he says.
In the UK, over 80% of the cuts have been on a voluntary basis, with enhanced redundancy terms. Marconi has provided outplacement support, including career counselling and seminars on how those affected can set up their own businesses. Sutcliffe is proud of this support, although there have been some hiccups: Weve always protected a core population in the company. This means that weve had some people who have expressed a desire to leave that we havent let go, but we think thats a necessary part of making sure that you dont damage the companys capability. You have to manage that all really carefully, because people can be somewhat demotivated by the experience, he sighs.
This must surely have been Marconis and in turn Sutcliffes greatest challenge: how on earth do you motivate your employees during such a rough ride? Times are still very difficult and morale is low, he confesses, although the restructure has been a major step forward. At least the future of the company is no longer in doubt.
Sutcliffe admits that the demands of the job mean that pretty much any spare time I get is dedicated to his wife and two boys. But his real passion outside of the office is one he shares with his chief executive, Parton Coventry City FC, and hes a Sky Blues season ticket holder no less. But apart from the FA Cup win in 1987, theres not much glory to be had at Highfield Road. Sutcliffes loyalty and commitment to the club mirrors that he shows to Marconi. Hes well trained for more downs than ups.
Just how does it feel when profit warnings and job cuts hit in wave after wave? Its very difficult, very difficult, he says quietly, nodding. In March 2001, we didnt know wed be losing so many people. The first announcement was for 4,000, and each time the market forecast fell, we had to take further action. The analogy we use is that its like living in tornado alley in the States. The tornado passes over, youve just put the roof back on and it hits again. Its very energy sapping.
Rather than offer false hope, Sutcliffe says the company has stuck to honesty as the best policy. Efforts have been focused on internal communications. Parton writes to all employees on a fortnightly basis with a business update called Mikes View. Any employee can dial in and talk to him about whats going on through a quarterly conference call, and a page on the intranet called Ask Mike invites employees to email questions to him too (Id love to give you some of the questions Mikes been sent over the past couple of years, chuckles Sutcliffe).
Theres a gritty realism about Sutcliffe. Avoiding the corporate fluff and bland stock assurances about the future, he answers every question candidly, never trying to avoid the tough stuff. He also seems to relish a challenge. He had no real hesitations about the HR job when it was offered to him, he says. I knew what needed to be done and why it was an important role for the business.
Wincantons Sullivan recalls that eyebrows were raised when Sutcliffe first stepped into the HR role. I was a little wary of him at first. How could a very good line manager run an HR function? he asks. Well, I was pleasantly surprised. Neil did a very good job managing my expectations and spent a lot of time understanding what I was working on I had a lot on and was very supportive. In terms of strengths, Neil is probably the best line manager I have worked for to date.
He describes Sutcliffes style as very open (Too open at times, he adds mysteriously) and tells how Sutcliffe acknowledged that he was not a functional specialist, so concentrated on the leadership, measurement and influence that the HR function could bring to the business. He also brought a commercial edge to the function in terms of its cost and effectiveness, he says. Personally, what I learned most from him was about being tougher with line managers, when at times I would tend to look for a compromise like a typical HR person, he quips.
What does Sutcliffe like about his current role? What do I enjoy about HR? he repeats cautiously, as if suspicious that its a trick question. Well, funnily enough, the people side of the job, he laughs. We have a very integrated leadership team, we work very closely and we all know each other. I enjoy that part, and I feel very much at the centre of that team. Obviously its my responsibility to make sure that people are in the right jobs, getting the right sort of development, guidance and coaching. Because I believe that getting the people right is the fundamental long-term differentiator for any business, I feel Im in a position to really influence the success of the company in the long term.
Its not without its down side, he admits. My line management background means that Im often frustrated by the lack of line management ownership of some of the things Im trying to change. But Sutcliffe feels quite comfortable in the role now; he knows what needs to be done and that its going to take some time to see it delivered. Talking about Marconi, rather than himself, he seems to visibly relax, leaning back with his hands behind his head. Basically, the Marconi Corporation is a brand new company. Its a quarter of the size in terms of people, and not only has it gone through a financial restructuring, but its also gone through a massive operational restructuring as well. A lot of its basic people management and infrastructure has been challenged.
Now he has to make sure that time is spent embedding some of those fundamental people management processes. Performance management is key, as is a strategic understanding of where the business is going what he calls the organisation capability review. Questions are being asked: What are the major job roles? Who are the people who occupy those positions? What are their strengths and development needs? What is the succession plan? If you get those right, you break the back of the HR challenge, he says. Over the next six to 12 months, he believes the firm is going to have to start demonstrating to workers why it was a good idea to stay. Reward mechanisms, training programmes and career progression will need to be re-established.
Sutcliffe clearly has a high opinion of Parton and Devaney. Mike is a telecoms guy, but hes also got his feet on the ground, he says. John likewise is a down-to-earth guy who believes in managing the basics and getting them right. At no stage have we backed away from the things that needed to be done.
When I ask how his relationship with the top tier has changed since the senior moves, theres a long pause, and another deep breath. Well, this is a very different company now. This is a 14,000-strong telecommunications equipment services business. When I was working for George [Simpson], we were a 56,000-strong conglomerate, and therefore the leadership and management style was different. Will Sutcliffe make any observations about
the relative strengths and weaknesses of the leadership style then and now? All I would say is that we think that the way were running this business is highly appropriate for the type of business we are. With all the changes, was there never a point where he thought: I just cant take this anymore? He looks slightly perplexed at the
question, as if it had never crossed his mind. Erm, no, he says bluntly. That isnt to say it was easy, but no.
Here, he chooses his words carefully: Were sailing this ship through a storm. You dont let go of the wheel as the next wave crashes over the bows. You just grip harder. Weve never questioned the fact that its a strong business. Our customers, our employees and our creditors have supported us. Now thats not to say that there arent times when you wish the storm would stop and the sun would come out, he concedes, and yes, we do look forward to the day when it gets a bit easier. But were not getting lashed as much as we were, and brighter times lie just around the corner.
There was both good and bad news in Marconis latest
financial results. While its first quarter losses stood at 95 million, that was 200 million less than the same period in 2002. Is Sutcliffes admirable resolution shared by others at Marconi? Yes it is, he nods. There is a sense of pride and loyalty, which has been under massive pressure. When you go down to the pub on a Friday night and someone asks you: Who do you work for? and you reply: Marconi, they suck their teeth and wince.
Thats not easy. But people in the company, says Sutcliffe, know that its a good company. Loyalty and pride will come through strongly as we start to emerge from this downturn. But were not there yet
When the interview is over and before he has his photo taken, he asks me a favour about his stormy seas analogy. Please make sure I dont sound like Captain Birds Eye, he asks po-faced, before breaking into a smile. A sense of loyalty will get you a long way, but a good sense of humour can clearly help you go even further.
