The retailing environment is getting tougher. Heather Falconer looks at how Virgin Megastores grooms its managers
It has been a challenging two years for Virgin Megastore managers. Ever since Richard Branson bought back the Virgin Our Price chain from WH Smith in July 1998, they have been under increasing pressure to improve profitability in an ever more competitive market.
The most recent example of this has been a radical restructuring in stores, designed to get more people out of the back room and on to the shopfloor serving customers. It will have resulted in redundancies in the 94 Virgin Stores by the end of October.
From the moment Virgin Group purchased the business WH Smith had put up for sale in a bid to halt sliding profits, it became clear there were problems, explains personnel manager Gill Horner.
"We just didn’t have a pool of managers ready to step into the big jobs such as managing the largest £6m-plus stores.
"The feedback from top management was, where are these guys? What had we done to get them ready?" says Horner.
"The answer was we had given them all the financial training and general retail skills, but in terms of creating senior managers with the ability to inspire people to get great results, we hadn’t done a great deal."
Between 30 and 45 per cent of Virgin recruits leave within 12 months. Those who climbed the ladder tended to develop excellent product knowledge and retail acumen, but their interpersonal skills remained raw.
"In terms of what the customer would see, it was probably fairly good, the stock would be in the right place at the right time. But in terms of creating and encouraging a team of people who could challenge, give ideas, constantly look at improving, those abilities were lacking."
Open, honest culture
It was at this point that Horner called in Jane Molloy of APT, a contact from WH Smith days.
The first step in implementing the programme, named Stop Making Sense after a Talking Heads album to appeal to the pop-literate audience, was a 360-degree appraisal.
"The areas that consistently came out weakest were leadership and teamwork," Horner says.
"The results showed a strong drive to achieve highs standards, but not to instil this in others," adds Molloy.
The feedback not only gave individuals good and often shocking feedback, but also built up a clearer picture of the organisation as a whole.
"The quality of the feedback was some of the best we have ever seen from a company where 360-degree appraisal was new," Molloy says.
"It reflected the relatively open, honest culture of the business – people were prepared to give low as well as high scores."
Armed with their personal development goals, the managers took part in a four-day series of business-related group exercises with each person concentrating on their own particular "issues".
On the third day they presented to a senior manager on how they intended to use the training in terms of improving the business.
A follow-up day two to three months after the event allowed the group to reform and report on their successes.
"We used that day to address another business challenge," says Molloy. "I remember one where we asked managers what were going to be the major challenges in making Christmas work that year. I know from talking with facilitators that they had some really quite measurable and significant results from people applying the learning from that workshop."
Horner says, "What I cannot do is say this programme contributed ‘x’ per cent to the bottom line. The results are dependent on what a particular individual was working on. For example, one manager might work on eliciting information from their team, valuing ideas, ensuring the team works effectively.
"Six months later he might come back and say, ‘The examples I can give you are that I now regularly hold weekly meetings with my people, another member of the management team chairs that meeting, and I contribute along with everybody else’.
Business improved
So, has the programme created a pool of talented managers ready for the Big Challenge? Horner hesitates. "Our expansion has slowed down considerably. But I can certainly think of one manager who was in one of our smaller stores and was deemed to be someone with lot of potential and has since been promoted to a larger store."
Sarah Jarman, then manager of the £5.5m Oxford store, was one of those chosen for the pilot programme back in 1998. "The 360-degree appraisal was a real eye-opener. I was only recently promoted so was still pretty close to my team, but some managers had become a bit distant from their people because of the size of the business. It took them most of the first day to come to terms with how they were perceived.
"The feedback from my line manager was quite a surprise. He wanted me to be a lot more assertive and challenging.
"A big store manager’s position is about influencing peers in the region, dealing with other senior managers and making your mark on the business.
"Afterwards, I got lots of feedback from my peers at regional meetings about how assertive I was, whether I gave a consistent level of input and challenged things I did not agree with.
"Whether it put more money in my till at the end of the day I couldn’t say, but I became a more confident manager. I got closer to other managers and that improved the exchange of ideas which definitely improved the business."
Organisational barriers
Now on secondment to the HR department, Jarman has facilitated on subsequent courses. "It is great to see people doing a lot of soul-searching and then going back to their stores really believing in what they are doing."
There are other success stories, Horner says. "When we first started running the programme we took a group of 12 managers to pilot it. Probably six months later four or five of those had been promoted. That is unusual. I am certain those people would have been ready eventually, but we pushed the speed."
Normally an important final component of the APT programme is to repeat the 360-degree appraisal six to nine months after the first. Horner admits there are now organisational barriers to this.
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"To ask teams to feedback on managers when those managers are making decisions about redundancies is difficult." Indeed, the upheaval means immediate training needs have now altered, Horner says.
"We have to make sure after the restructure that we are supporting not just individual managers, but the whole team of survivors.”
