HR restructure paves way for M&S road to recovery

Marks & Spencer’s HR director admits she has learned more about human
resources in the last two years than in her previous 21 at the UK’s largest
clothing retailer.

Over the past year, Helena Feltham has restructured the company’s HR team to
better support the business strategy and is now driving a culture change in
performance management. In anticipation, she completed a course in strategic HR
at the London Business School. "I’ve had to take my brain out and
re-programme it," she said.

The ‘surgery’ appears to be working. Last month, M&S reported an
increase in pre-tax profits of 31 per cent to £647m for the past financial
year. It plans to open 20 small food stores this year, creating about 1,000 new
jobs, a far cry from October 2000 when its share price hit a low of £1.71
(shares are now trading at nearly £4) and cost-cutting was top of the agenda.

Its new 17-strong leadership team – many of whom were recruited from outside
M&S – launched its business strategy in March. The approach is based on
restoring the UK market and offloading its loss-making overseas chains.

M&S is trying to regain dominance in clothing and speciality food
through exploiting the value of its brand and is developing new product areas.

Feltham said: "We had to be clear about our strategy and the unique and
fundamental strengths of the business.

"We have had to go back to what made us great – including 100 per cent
own brand, superior quality and innovation – and this has to be underpinned and
executed through the talent and capability of our people."

Key appointments highlighted this change in direction, and Feltham played a
leading role in the recruitment drive. (see box).

"The recovery has been about getting leadership capability in place. We
have very quickly put together a good leadership team, in which HR played a key
role," she said.

The HR team has been more closely integrated with the business to support
the retailer’s strategy. She explained: "We took HR away from central
areas and embedded it in their business areas, so every business head – whether
they be a board member or store manager – is clear about who their HR partner

"HR is now a fundamental part of senior teams in all business areas,
and it sits down with them from the inception of their commercial strategy.
People strategy is constantly being developed alongside the commercial
strategy, and that is a huge change."

M&S cut 60 HR jobs as part of the restructure and now has 205 at HQ.
"It was a difficult time because it became very obvious to me that we
needed fewer and better people," said Feltham.

The new-look HR team is focused on delivering high performance. It is
reviewing recruitment procedures to ensure it hires those who fit its ‘ways of
working’ targets, which include customer focus, passion, team working and
listening and learning.

Feltham said: "The big thing is talent and capability. We learned that
getting the right people in the right place at the right time has to be our
overall focus. The recruitment and retention of fantastic people is it."

To incentivise staff, M&S introduced a new bonus scheme last year.
Employees receive a bonus if their store or region exceeds sales targets on a
quarterly basis, and they have worked more than 96 per cent of their contracted
hours during the period.

Improved feedback from the shop floor has also been vital to improving
performance, said Feltham. A regular staff survey has been introduced and
business involvement groups – which have six elected members of staff
represented – have been set up in each store.

She said: "We are working hard to do things in the right order. It is
important to know if the leadership team is creating the right conditions for
success and helping their people to do a great job."

Staff feedback has highlighted that while M&S is improving its customer
focus, employees are uncertain about how to improve their performance.

A new performance management system was launched for all 60,000 staff
alongside the business strategy in March, and includes a performance review,
objective setting, development planning and performance coaching.

This is supported by a dedicated performance management team headed by
Magdalen Chadbourn, which was created with the relaunch of the HR department
last October.

Feltham explained that M&S lost the link between individual and group
performance and has responded by pulling together learning, reward and career
development in one team. "People seemed to think the performance of the
company could be OK if individual performance wasn’t improving.

We weren’t confidently asking ourselves the question what is the business
trying to deliver here, and how do we incentivise that through our HR policies
and practices," she said.

Blanket training programmes are no longer being used and the training team
are treating staff as individuals, offering extra learning and career

She said: "Getting the right balance between buying or building people
is important – we have to make sure all the frameworks are in place to grow our
own staff."

Much of M&S’s learning investment is initially going into the HR team.
Feltham said: "I’m not being parochial – we have to put ourselves first. I
have to get this team right if they are going to be trusted business partners.

"We have taken a deliberate stance that unless we are role-modelling
everything we are guiding the organisation to do, then we don’t have a right to
be here."

Despite the encouraging financial results – M&S is outperforming the
benchmark FTSE 100 by 14 per cent so far this year – Feltham stressed that the
recovery is still "work in progress".

The potential for outsourcing and self-service HR, for example, is being
explored by a new people proposition team, headed by Denise Keating, recently
recruited from Nationwide.

HR will continue to play a central role. She said: "HR has played a
fantastic part in the results and people are feeling really proud for the first
time in a long time."

By Mike Broad

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