Following Whitbread’s unsuccessful attempt to buy Allied Domecq in the summer of 1999, the company faced a series of challenges. These included questioning its long-term strategy, a sharp fall in its share price and a subsequent exit from the FTSE 100. Then followed a period of major refocusing, resulting in the disposal of Whitbread’s pubs and bars, Beer Company and Thresher Wine company. This culminated in the relaunch of ‘Future Whitbread’ – the UK leisure business.
As Whitbread’s then chief executive David Thomas said at the time, having “come out of the tunnel and started to see some light” by August 2001, the time was right to define what the future vision and direction for Whitbread would be. At this point, Thomas asked HR to help come up with a plan.
The approach recommended by HR was to run a two-day workshop involving the top 40 leaders. It also suggested using Jim Collins’ ‘hedgehog concept’, taken from his book Good to Great, to define Whitbread in the following terms:
– What it could be ‘best in the world’ at
– What drives its economic engine
– What it is deeply passionate about.
As a result, Whitbread was able to define its purpose, passion, measure of success and values.
At this stage, the top 40 were enthused and engaged, but there was potential for division below the Whitbread senior leaders. This was understandable, as the previous two years had caused much uncertainty and anxiety, with half the workforce being sold.
To understand the potential barriers, the company decided to use an organisational and fitness profiling (OFP) process. This system originated out of Harvard Business School, had been used successfully in Whitbread’s Marriott business and was recommended by its then managing director, Alan Parker.
The first step was to gather a taskforce of 10 senior leaders – people who would be independently minded and unconcerned about sticking their head above the parapet. Members of the taskforce were from the divisional boards and a variety of disciplines, including HR.
The team then interviewed a cross-section of 100 leaders across Whitbread to gain their honest views about the vision outlined and potential barriers to success. Members reviewed the feedback using a structured process and presented the findings ‘warts and all’ to Whitbread’s group executive.
The feedback was tough, and included comments such as: “The vision is great, but our leadership is currently not great!”, and “We have a culture of accepting under-performance.”
The group executive listened hard. Members then worked together to define the actions they needed to take to address the concerns. Its plan was presented to the taskforce, which then pushed the boundaries even further, demanding more radical action.
As a result, the group executive defined a series of actions that became known as the 11-Point Change Plan.
The four key areas of the plan were:
– Winning leaders – creating a cadre of world-class leaders that are ‘owned’ by Whitbread
– Winning brands – becoming renowned for its brand leadership
– Winning performance – fostering a climate of high performance, not tolerating mediocrity
– Winning people – investing in and developing its people, while encouraging personal ownership and accountability.
It was critical that the rest of the organisation recognised and believed the intent behind the proposed changes and that it felt like an integrated approach. HR played a key role in championing the change, ensuring it was communicated in a joined-up way. It also took control of the overall project management and led and delivered a number of actions.
These included delivering a ‘brand masterclass’, a formal benchmarking and development process for all its leaders – 100 people – and a new reward-and-incentive package. This would give leaders the opportunity to earn real wealth for exceptional performance, while penalising mediocre or poor performance.
The change programme – or as it is now known internally, Winning Brands 2010 – has been recognised externally as being a key driver to Whitbread’s success.
The five-day brand masterclass programme, designed and delivered by HR for each brand executive team over a five-month period, gave the practical experience to create world-class propositions.
The masterclass then fed into the annual business planning cycle. This resulted in business plans being developed from a brand/consumer perspective, supported by brand delivery plans and specific brand measures. And it had a significant impact.
David Lloyd Leisure, for example, identified a new consumer group worth an estimated 35m as a result of the masterclass process. Travel Inn also identified that its biggest consumer is, in fact, leisure break rather than business, which has had a huge impact on the strategy of the brand.
With 80 per cent of masterclass attendees reporting it was “very effective” at raising their capability and understanding of brands, the business has decided to run a new version aimed at stretching and challenging brands even further.
Financially, the company’s achievements can be seen through five continuous periods of double-digit growth. This has put the business in the top quarter of major UK companies for financial performance. It has been one of the top 10 performing shares in the FTSE 100 over the past few years.
Internally, employees are positive. Three-quarters of staff believe there is a strong understanding of the business’s core purpose and ambition, which all the leadership groups say they are committed to.
Externally, Whitbread is also being recognised for the progress it has made. It has one of the highest ‘press favourability’ scores in its sector. And it has rejoined the list of Top 100 ‘Most-admired companies’ – jumping from 145th position to 44th. Harvard Business Review has also asked to do a case study on the Winning Brands 2010 strategy.
So it was not surprising that when Thomas retired in June this year and Parker took over as chief executive, he was keen to ensure that HR was placed firmly at the heart of his transformation agenda. In fact, one of his first actions was to appoint Angie Risley, group HR director, to the main board.
Parker also then instigated a 100-day review of the entire business with the aim of creating One Whitbread – a family of brands worth more together than alone. He recognised that Whitbread was a good company, but his ambition is to create a great company, which is recognised for its high-commitment and high-performance culture.
This culture change is a key factor in Whitbread’s transformation. HR is leading on it, as well as playing an integral role in the other elements of the 100-day review. This includes a strategic review of all the brands, a project to define better ways of working and a review of asset management.
Parker quickly recognised the power of the OFP process and decided to really leverage this system and apply it to all three levels of the business, at unit, brand and group level.
This is not an ambition for the faint-hearted. Whitbread currently has 2,000 units and nine brands in its portfolio, plus 67,000 employees.
The HR team has already gained agreement to and driven through some key changes, including a new approach to talent management and a common, balanced scorecard aligned to its values across all brands. A pilot at brand and unit level of OFP and the first phase of a longer-term vision to create a Whitbread University is also well under way.
HR has demonstrated over the past few years that getting the people-stuff right really does lead to satisfied customers and shareholders.