When The Alternative Hotel Group (AHG), one of the UK’s largest privately owned hotel operators, acquired Initial Style Conferences in December 2005, it set about transforming the company to reach the lucrative leisure and consumer markets.
Previously, Initial Style Conferences [now called De Vere Venues, following the acquisition of the De Vere Group by AHG in September 2006] – had provided training and conference services mainly to business customers. But AHG wanted to increase revenues from the leisure sector by upgrading the properties to four-star standard and adding new services, such as restaurants and spas.
This meant changing its business model from a five-day business to a 24/7 operation and ensuring that its people could embrace the change.
It was up to Jo Monk, people and development director at De Vere Venues, to drive the business culture and behaviours required by the new owners.
“The business had remained the same for many years,” says Monk. “But once it was bought by entrepreneurs, it was time to take the gloves off and to look at how we could do things differently. It was our job in HR to change the mindset of our people to adapt to the new markets.”
One of the main ways in which HR achieved this was by changing the leadership of the business. “We needed to move quickly to acquire the skillsets required, and these were very different to those that already existed in the business,” says Monk.
De Vere Venues changed around 50% of its staff at manager level. They’d had to fulfil four key criteria: to be hospitality driven to be intuitive about customers to be commercially savvy and to understand and participate in the sales engine behind the business. The idea was that if the people running the hotels bought into the new mindset to create a great experience for customers – whether on business or leisure – then that would filter down to the staff who worked for them.
Monk believes that staffing has made a major contribution to cultural change. “Recruitment has had a big impact on our change programme,” she says. “Existing staff have been re-energised by the new company ethos – and by the new managers we brought in.”
De Vere Venues’ approach to change – in its case, acquisition as the catalyst for a change in business strategy – is rather untypical. Most organisations are alarmingly oblivious to the staffing implications of change management.
“Very often organisations don’t include HR in the design process of a change project, but rely on them for implementation,” says Graham Atkins, head of the organisational effectiveness practice at Hay Group. “This is especially the case in businesses where HR is seen as transactional and passive. As a result, the full implications of the staff needed to undertake the project are not recognised.”
Peter Lunio, a director at Baker Tilly Management Consultancy, concurs. “Organisations tend to think about the tangible benefits of change – the increase in sales and profits, what the future organisation will look like – but they don’t think sufficiently about the implications for existing and future staff. They have no handle on the skills required to deliver the change.”
Lunio cites the example of a UK subsidiary of a German company he worked with recently. The client wanted to restructure its middle management tier, but hadn’t even looked at its internal skills. “They had no view of their current skills base and were ready to recruit without looking at internal candidates first and without thinking about the future skills they wanted to foster as an organisation.”
Ideally, HR directors should be part of the leadership team driving the change, advising on the impacts on the workforce, identifying potential change champions and resourcing project teams. Indeed, experts say that where HR has played a strategic role, change initiatives have tended to be more successful.
HR needs to review the skills currently available within the organisation and ascertain whether any training and development is required. “Human resource managers should ensure there is effective leadership, as it provides vision and understanding for change,” says Kim MacNamara, business development director at recruitment consultants, Ashley Kate Associates.
“They should offer training where required, including management skills, to ensure that change initiatives are completed on time and within budget.”
There may be a need for a change in leadership style, and again HR can help with this by offering leadership coaching. It may also be worth conducting a future skills assessment to review the types of skills required for the organisation once it has been through the change and to ensure there is a strategy to retain these people.
Baker Tilly’s Lunio recently advised a large retailer looking to outsource its back-office operations to conduct such an assessment. “They recognised that they needed to move towards a more collaborative – and less directive – leadership style, as they were going to be managing different stakeholders, not all of whom were employees,” he says.
“They needed to boost their project management and communication skills, as they moved from a traditional to a more fluid structure.”
Baker Tilly helped the organisation build the change project team and recommended a more strategic and less operational role for the HR department. This resulted in the appointment of a new HR director and an HR professional with learning and development expertise.
There is also a case for taking a more formal approach to assessing those suitable to take on change roles. In most organisations, change management roles tend to be appointed on an ad hoc basis, as the need arises. But this isn’t always an effective way to build the right team, particularly when speed is of the essence, as is often the case. Having a formal process of assessing those with the requisite skills would ensure a better fit and would help organisations hit the ground running for future change projects.
Often if the skills don’t exist in the organisation and there isn’t time to develop existing staff, then bringing in new blood is a good option. This has other benefits too. “Besides bringing new skills and experience to bear, one great role that new hires can play is to expose and challenge prevailing culture,” says Atkins.
Some organisations prefer to appoint interim managers with a fixed-term tenure, and the objectivity they bring is often part of the allure. “Interim managers bring a fresh viewpoint to a project and often have many years’ experience of similar situations,” says Ashley Kate’s MacNamara. “They are resourceful, as they have to deliver results quickly and aren’t governed by any internal politics or agendas.”
Ashley Kate Associates helped risk management group Lloyd’s Register to bring in an interim HR business partner for its rail business.
Appointed in January 2008, Steve Hardman’s remit is to recruit new staff to take advantage of new business opportunities, to establish talent management and employee relations programmes, and to bring HR policy into line with the rest of the group.
Once Hardman has put HR structures into place and brought Lloyd’s Register Rail’s policies and procedures into line with the group, the role will require a lower level appointment of a senior HR adviser.
This is an example of a short-term appointment to implement a longer term change, but certainly the value of HR’s input doesn’t stop once the change is complete.
“All of these long-term things are important, because companies want to avoid going through this level of upheaval on a regular basis,” says Lunio. “Plus you have to reward the behaviours you want to achieve.”
De Vere Venues’ Monk agrees. Her HR team implemented a new reward programme following the appointment of the new business managers. She believes that the new appointments and the development of existing staff that followed the AHG acquisition have been essential in driving long-term cultural change in the business. “The leadership can think it is driving change all day, but unless the people serving the lunch and serving the drinks in the bars buy into that ethos, it’s useless,” she concludes.
Case study: Kuoni Travel
Nick Hughes was appointed as managing director of Kuoni UK in August 2007, with a remit to turn around the luxury tour operator’s ailing fortunes. The UK business had suffered six consecutive years of profit decline and Hughes needed to deliver results to the Swiss board quickly.
“We were a business operating as it had done for many years, but in a rapidly changing environment,” says Hughes.
Kuoni was facing fierce competition from airlines and travel agents who were coming together to offer whole holidays, while the internet was enabling consumers to create their own packages.
Hughes put in place the Quantum programme, identifying seven areas that required attention: the rationalisation and upgrading of the company’s product range multi-channel distribution a stronger online presence a brand relaunch streamlined processes and cost cutting a new organisational structure aligned around the customer and the development of synergies across the business units.
The Quantum team consisted of Hughes, the operations director, the finance director and the head of HR. A network of senior managers helped flesh out an action plan based around the seven themes, and external consultants were brought in to conduct customer research and to develop the company proposition and brand. Meanwhile, the former sales and marketing director, who was displaced by one of the new director appointments, worked as a senior adviser to implement the change.
Finally, Hughes bought in a director of the commercial division (previously there were product, sales and marketing and e-business directors, all of whom operated independently) and a sales director.
The new organisational structure is now in place and the overall change programme will run throughout 2008. The company’s product offering has been upgraded, a new store has been opened in Kensington, and new ways of interacting with customers are being trialled, such as hosted travel parties and homeworking for consultants. Meanwhile, Kuoni UK is performing better financially, reporting 6% growth in turnover.
Hughes believes that the team behind Quantum has been a major factor in turning the company around. “You need the right people and skills, coupled with a structured plan of attack to make the change happen,” he says.