Catering services company Sodexho needed to overhaul its processes to become more commercially focused
Sodexho provides catering and support services for UK businesses. It works with the public and private sectors and counts three in four FTSE 100 companies among its client base. There are about 3,500 different units in the company, and nine trading companies. Sodexho has an annual turnover of just under £1bn, and more than 50,000 employees. Since 2001, the company has had a new chief executive, as well as new marketing, sales and finance directors and several other high-level changes.
In 2002, Sodexho’s growth stalled and its profitability started to decrease. The business had historically operated on a cost-plus basis, but management realised this needed to change. According to Martin Archer, HR director at Sodexho, the company also needed to become much more commercially focused, overhauling its processes and systems to make them more performance-related. “The market in which we operate is changing fast, so we needed to change,” he says.
To effect the necessary changes, Archer says the skills and behaviour of all employees – particularly those in managerial positions – needed to change.
“We required totally different skills from managers,” he says. “We needed to have a culture around performance results.”
Turnover rates were very high (30 per cent for site managers) and after conducting some exit interviews, Archer discovered that many people felt they had been given insufficient – if any – training and support when they had joined the company.
As the company introduced a new SAP accounting system that made the invoicing and payment system much more transparent, it also embarked on its change management programme. This was branded the Sodexho Way, signifying that the company wanted all staff to operate in a particular fashion.
The geographical spread and disparate nature of Sodexho’s workforce meant that a very focused approach was required. And as a result, Archer appointed 26 employees to work as change practitioners.
One change manager per region worked with line managers to deliver the changes. An external facilitator was also used to run senior and middle-management training programmes, plus consultants were drafted in to help with the initial systems changes.
All 100 senior managers embarked on a two-day training programme that talked about the culture and systems change.
There were several goals Archer wanted managers to strive for, such as how to reduce labour turnover and how to fast-track talented individuals. He set a goal of raising the level of promotable managers by 20 per cent. Recruitment at site-manager level was outsourced, and an induction programme for all new recruits introduced. Spending on training and management development has risen by 12 per cent to £5.5m, with 22 district managers being seconded to be trainers.
As part of the new performance culture, the top 500 managers now have 360-degree feedback, where their bosses, peers and staff rate them against 20 management competencies. And all managers are now incentivised through a bonus scheme.
Since embarking on the Sodexho Way, overall staff turnover has fallen from 59 per cent to 46 per cent. Site management turnover has dropped from 30 per cent to 21 per cent. The number of staff with the potential to be promoted within two years has risen from 5 per cent to 11 per cent. The overtime bill, which was £45m a year, has been reduced by £4.5m.
As with all change programmes, there was some resistance from various staff. Some left, and some are still resistant, but Archer says the majority were won over. As far as the board was concerned, he says there were initially a few dissenters, but on the whole, they knew the change was necessary because profits were suffering.
The employee perspective
Account manager Andrew Finn has been with Sodexho for 20 years. He thinks the programme was well managed. “We had a map of where we were, where we would be in 18 months time; what the barriers were, and how to overcome them,” he says. “It was communicated very well by the change practitioners.”
This made his job easier as he communicated the change down to staff. Now, he thinks all employees have a better understanding of their contribution to the company. “Managers are seeing that what they do is linked to financial performance,” he says. “It has made people much more accountable.”