The crash, bang, wallop of Lehman Brothers is a modern day reminder that we live in a constantly changing landscape in which certainty fails to hold much currency. Annie Hayes reports on how two HR practitioners led and supported their organisations through the change experience.

It’s not just financial turmoil that can turn organisations on their heads, but the endless pursuit of profit-chasing, opportunity and merger and acquisition. Accelerated by the immediacy of technology and the fluid and fast-paced way in which we live, the pace of change is seemingly unfaltering.

Talking at the Chartered Institute of Personnel and Development’s (CIPD) annual conference on the subject, Rebecca Newton, an expert in change leadership, presented some figures that illustrate the point: “In a recent survey as many as 82% of HR reported that their organisation has undergone major change in the last two years. CIPD research alone shows that organisations experience a major change once every three years and experience smaller changes on a daily basis, yet 40% of organisations fail to meet their change objectives.” Failure is a high price to pay so how can you get it right?

The NSPCC story

Liz Booth, HR director for children’s charity the NSPCC, was charged with steering her organisation through the merger with ChildLine, not an easy task for two operations at either end of the age spectrum. The NSPCC was founded in 1882 and ChildLine in 1987.

Talking to delegates at the CIPD’s conference, Booth explained how the change journey began even before the merger occurred, when the charity took an internal look at itself: “We set about finding our anchors. These were children and young people, values and behaviours, knowing our donors, our seven aims, developing tools for new ways of listening to our people and understanding our ‘big picture’.”

The next job was looking at the organisation’s values and behaviours. This involved an extensive job analysis exercise with over 100 staff at all levels. The values that arose were then used in selection, performance, appraisal and pay.

Everything was looking rosy and then a challenge presented itself to the organisation, for which they weren’t prepared. In late autumn 2005 ChildLine called the NSPCC to say it had financial difficulties: “The demand for the service could not be met and significant investment was needed,” said Booth. It sought to merge with the NSPCC.

But would it be a match made in heaven? “We told ourselves there would be sleepless nights but not so much because it was a baby because it was more of a teenager at this point – yet it was very much a case of an older organisation joining with a younger one,” explains Booth.

The challenges presented by the merger were apparent. First up was to stabilise ChildLine quickly and build morale, the second was to protect the fundraising – there weren’t huge amounts in the bank and they couldn’t afford for it to fail. Next was to prepare for growth and understand the culture and deal with the perceived differences, whilst the final challenge was planning for integration. With the cards on the table the trustees of the charity dispatched key staff to what Booth terms as the ‘corporate world’ in order to learn how they could deal with the merger.

“The key lesson we took was to conduct due diligence which we did loads of, however, we quickly learnt that the focus was completely wrong – it was all financial, to communicate, communicate, communicate, to understand the culture and plan the change, seek economies of scale, and integrate the target. We were also told by management consultants to freeze recruitment during the change period but the children told us this was ridiculous and that we needed to grow ChildLine, so we did as they suggested,” admits Booth.

These points were married to the lessons reaped from ‘planet NSPCC’, including putting the focus of due diligence onto HR, integrating the values not the culture, communicating directly about things that matter, using survey tools to test the temperature and publishing the results, pursuing the existing vision including protecting the language in use and showing how this integrated with the existing aims, sticking with the idea that donors are loyal to concepts not organisations, training people from both sides of the business together, and that project management is worth the effort – map the vision; plan actions; realise benefits and control change.

The result of these gargantuan efforts is that ChildLine is now secure, its turnover has significantly decreased, the government has agreed a £30m investment programme, most staff have voluntarily transferred to NSPCC terms and conditions and there is a culture within a culture, but with the same values. ChildLine now fits with the NSPCC’s aim framework and is accepted as core work.

It’s a success story that reads well and a key lesson is sticking to your core anchors and identity.

Of course change in the private sector also happens at an alarming rate, where profits are often the driving force. Robin Cooper, director for HR service delivery at DSG (Dixons Stores) International, the electrical retailer behind Currys, told CIPD delegates their story.

The Currys story

DSG International is the largest electrical retailer in the UK and the second largest in Europe. It has a physical presence in 14 countries, but retails/e-tails in 28, there are 1,300 stores and over 40,000 staff serving 100 million customers per year. Yet there was a problem – whilst the revenue continued to grow reaching £8.5bn (2007-08) the profit did not.

“There was also the problem of defending our markets against growing competition – the major supermarkets now sell electrical items such as TVs, there are the traditional rivals including John Lewis and the head to head rivals, Comet for example. On top of this, however, is the growth of the internet with companies such as Amazon now retailing electrical items. It was evident that unless we changed our proposition we were heading towards the cliff,” admits Cooper.

The starting point was to look at the culture. In the early 2000s, Currys focus was on the bottom line, with the spotlight on the short-term, blame was prevalent as was a behaviour by in-store workers to sell the products that gave the best commission. It became apparent that changing this culture, and in turn the customer experience, was the only way they could differentiate themselves in the market.

Management consultancy Lane4 was selected as a partner to design the approach to the change culture and foster engagement. They helped the Currys Executive to move its rationale of ‘performance today is all’ to a balanced view. They also suggested that a regular use of 180-degree feedback was implemented to keep the leadership on track. The executive realised they needed to engage with the layers immediately below them.

Executive meetings were devised in which store colleagues were invited to participate. “We didn’t want to encourage ‘ivory tower’ thinking. Our colleagues brought us back to earth and it was very powerful,” explains Cooper.

This helped break down the silos and foster collaboration with the front line, and at the same time Lane4 assisted Currys to put in place a High Performing Leaders Programme (HPLP) which supported the executive in delivering change and improved results.

It developed personal effectiveness and team leadership skills with a mixture of management skills and practical training. Store managers that had attended HPLP were then compared to those who had not. The revenue tracked on average 5% higher across a year, whilst the margin tracked on average 6% higher and 180-feedback scores were consistently higher on re-measure against all 12 behaviours.

The next issue was to deal with the customer service experience. “Commission was driving the wrong behaviours. But the challenge was how to excite and engage the store colleagues if this was stripped away,” says Cooper.

A big hurdle was managing the fallout from colleagues who could take their earnings from £12k to £30k with commission. Currys reached out for more help, this time in the shape of Egremont Consulting. A forum network was established and the idea of removing the commission structure was pitched: “I was not a fan and neither were most of the executive team,” comments Cooper.

Currys talked with their staff and consulted, consulted and consulted some more. They benchmarked the sector, evaluated all store roles to create pay-bands and implemented team-focused bonuses which were rolled out to 500 stores. So what happened?

“Some people suffered badly and didn’t earn as much as they had previously but we managed that through good communication. We did lose some good sales staff yet half were better off and 30% earned the same. Less than 5% of the total store population raised a grievance and no cases reached an employment tribunal,” says Cooper.

A big test, however, was the effect on the company’s bottom line which over the course of the two and a half-year programme moved from around £50m to an impressive £100m. Understandably, the organisation was delighted yet the changes continue and with recession knocking at the door the business is faced with new problems.

Cooper says: “The whole change has been ‘iteritative’, not ‘big bang’ – the reason being that to make something stick you need to take your people with you. The journey never ends.”

True to their rhetoric, Currys is rolling out a new format at 35 stores and 50 PC World outlets with the first electrical Mega-Store opening shortly. They continue their journey with one important lesson in mind – the power of communication and taking their people with them. It’s a lesson both organisations have learnt and they won’t be forgetting that going forward.