Reinventing Reuters







After several years in decline, global information agency Reuters is at last getting back on track. Global HR director Mark Sandham explains how.

Reuters is the last major news organisation to leave Fleet Street – its address since 1939. It is moving to a new headquarters in London’s Docklands. Although not a big change geographically, the move represents a big shift for the company. Having notched up a net loss of £394m in 2002, it is pinning its hopes on a new HQ and a massive change management programme to help turn around its fortunes.  

Mark Sandham is charged with implementing the lion’s share of this programme. He is Reuters’ global head of HR operations and HR director in Europe, Middle East and Africa. Together with group HR director Chris Verougstraete, who manages talent, organisation development and culture, he oversees 15,500 employees – including 240 HR professionals – across 99 countries.

Sandham has been with Reuters since 2001. The loss of £394m in 2002 – the biggest in Reuters 150-year history, made it harder to digest by the fact it had enjoyed unprecedented business growth in the 1990s when the financial services market was bullish.

But by early 2000 a worldwide economic slowdown had begun, and that trend was accelerated by 9/11. Reuters offered financial intelligence to city traders who were being laid off as fast as they signed up to the company’s services.

Reuters was heavily criticised for diversifying into too many areas it knew little about, and critics said it should have stuck to what it knew best – supplying a global news and pictures service. Its plummeting share price spoke volumes.

So, in 2001 it hired new management and appointed a new chief executive, Tom Glocer. Since January 2002, 5,000 staff have left the company, although Sandham says new staff have been recruited to key areas such as client training and helpdesks. But another 1,500 are set to go by the end of 2005 as part of the company’s Fast Forward change programme and some HR heads may roll.

Sandham is one of the new breed of HR director with a keen interest in the bottom line. “My job is to ensure we support the business objectives,” he says. To date, Reuters has slashed overheads by outsourcing IT support, payroll and pension administration.

Sandham admits he has investigated outsourcing the whole of the HR function itself, but concluded such a move couldn’t work. However, much HR information has been put online for staff to access when they need it, taking pressure off the department.

Sandham believes local markets around the globe need local knowledge, and he wants HR to be freed up to concentrate on actual people management.

He points to Iraq, which Reuters flooded with journalists early on in the hunt for Saddam. HR had its job cut out ensuring as far as it could their safety and fulfilling a plethora of requirements from staff at the frontline.

But while Reuters reporters performed brilliantly in Iraq and won numerous accolades for their work there, veteran scribes now complain of massive demotivation, even depression. They cite past mismanagement and now blame lack of leadership, management performance linked to perceived inflated short-term bonuses, heavy cost-cutting and a drain of institutional knowledge as a result of mass redundancies.

“We’re stunned into lethargy,” one tells Personnel Today. Another says: “Reuters is replacing all the older experienced journalists with youngsters who have little knowledge about the craft. They’re cheap and tough and short-termist. Our training has been replaced by online stuff, like ‘how to learn Japanese in a day’.”

Yet a third says journalists are convinced their function is about to be outsourced and points to an experiment in India, where Reuters is hiring up to six journalists in Bangalore to cover news on small and mid-sized US companies.

David Schlesigner, Reuters’ global managing editor, recently said in Business Week magazine article that the Bangalore pilot was technically not outsourcing because the journalists will be employed by Reuters itself. But the experiment is unusual for a news organisation in that it will base journalists offshore to cover US company news.

“It’s clear what’s happening,” says a Reuters insider. “India is a low-wage country. We’re terrified this is where journalistic jobs are going to go, along with call centres.”

Committed to talent

Despite the change programme, Sandham says Reuters is committed to nurturing new talent and will not be cutting back on its graduate recruitment programme. It insists on a second language and global mobility, and each year takes on 40 graduates from across Europe and the UK from some 3,000 applicants.

However,  90 per cent of Reuters’ revenue comes not from the supply of news and pictures to the world’s media, but from its financial information services business. The news input from journalists, though, is crucial to this function, because news is fed direct to the traders and news events can crucially affect stock prices.

The journalist sources say Reuters sidelines their importance, but Sandham emphatically denies that. He says to date, only 100 editorial roles have been axed and claims that most jobs have been lost from support functions.

Sandham is stung by the criticism, but the pain, he says, is necessary to get Reuters back on the straight and narrow. Reuters is now in the process of product reduction to 50 services from about 1,300.

“It’s about being more profitable and focused,” says Sandham. “We’re moving away from a paternalistic culture. The company got too comfortable where it was and ignored the competitive threats. It became too focused on clever IT products and wasn’t speaking to its customers. We had clever people – intelligent people – developing products to suit the organisation, rather than the customers.”

So what next?  “Taking jobs out has been the painful, but easy, part,” says Sandham. “Now we’re into the tricky bits, like the centralisation of activities and the offshoring of jobs.” For starters, he wants a huge focus on the training of line managers.

“We’ve had some immature line managers and HR did a lot of activities on their behalf, like making pay decisions. They must accept accountability,” he says. This has to run side-by-side with the focus on customer satisfaction and a programme to improve that.

“Two years ago,” admits Sandham, “none of that was in place.” Neither were company values transmitted to anyone, at any time. Now they cover every available wall and pop up during most meetings or in most correspondence. The values include teamwork (sharing, challenging, trusting), understanding customer needs, and exceeding expectations through personal commitment.

Performance reviews are now de rigueur, says Sandham, and 100 per cent are completed annually. Sixty per cent of staff use online objective setting and there is a focus on the massaging of specialist skillsets and knowledge, especially for those training the traders who buy into Reuters’ services.

Sandham says talent is being nurtured from a tie-up with Michigan University where so far, 1,000 middle and senior managers have been sent to study leadership, among other subjects.

At the end of 2002, all global training was centralised and essentially run from London to get spend under control. Now, Sandham says, it is devolving back to local areas, and it is highly focused.

“Globally, one size cannot fit all,” he says. “Yes, online training is cheaper, but then you also get consistency.” Return on investment is linked directly back to the business objectives, he explains. “Too many people present training justification in theoretical terms,” he adds.

Still, what about the staff morale problem, usually uppermost in any change-management programme of this size?

On 11 June 2003, staff worldwide were mobilised to world locations to have a ‘fun’ day as a way to get to know the ‘new’ Reuters, its products and markets. London staff, for example, held a fun run, had to change the wheels on a car, then finished up in a local pub. At the same time a new worldwide staff feedback mechanism kicked into action and almost immediately resulted in some 3,000 replies.

Sandham says many of the issues brought to his attention from around the globe were generic and the feedback mechanism is now ongoing.

Meanwhile, Tom Glocer recently went ‘around the world’ communicating to staff by webcast. And employees have now been put on a profit-sharing scheme, with the first payout due next March. Sandham adds that  a lot of work is being done around stock option plans. In addition, a global recognition scheme has been introduced, giving line managers the right to reward good performers with points, which they can then convert into gifts or cash. Nominations for these awards can come from anyone in the company and are vetted by line managers.

As a result of all these changes, Reuters is on its way back. But shareholders remain vigilant over a recovery in its infancy.

Reuters: a potted history

1849:  German-born Paul Julius Reuter, launches business to transmit stock prices between Aachen, near Cologne, and Brussels, using carrier pigeons

1851: Reuter launches the business in London to transmit stock market quotations between London and Paris via a new Calais-Dover cable

1865: Extends service to provide general and economic news worldwide to British and European press. Breaks the news of US President Abraham Lincoln’s assassination

1872: Business expands to include the Far East South America

1925: Press Association, UK press agency, takes majority holding in Reuters

1939: Reuters moves to Fleet Street

1941: Restructures as a private company

1984: Floats as a public company on London Stock Exchange and on NASDAQ in the US. Subsequently it rapidly grows its network of media, financial and economic services.

1994: Launches Reuters Television for financial markets among other services

2001: Completes largest acquisition in its history by buying Bridge Information Systems

2003: Acquires Multex.com, a provider of global financial information

1849: German-born Paul Julius Reuter, launches business to transmit stock prices between Aachen, near Cologne, and Brussels, using carrier pigeons

1851: Reuter launches the business in London to transmit stock market quotations between London and Paris via a new Calais-Dover cable

1865: Extends service to provide general and economic news worldwide to British and European press. Breaks the news of US President Abraham Lincoln’s assassination

1872: Business expands to include the Far East South America

1925: Press Association, UK press agency, takes majority holding in Reuters

1939: Reuters moves to Fleet Street

1941: Restructures as a private company

1984: Floats as a public company on London Stock Exchange and on NASDAQ in the US. Subsequently it rapidly grows its network of media, financial and economic services.

1994: Launches Reuters Television for financial markets among other services

2001: Completes largest acquisition in its history by buying Bridge Information Systems

2003: Acquires Multex.com, a provider of global financial information

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