View from the top: Room for improvement

Whitbread chief executive Alan Parker says the company’s 50,000 employees are “absolutely” his greatest asset. “We think if we look after our people, they in turn will look after our customers, who will come back time and time again,” he says.

Well-worn cliche this may be, but for the UK’s leading hospitality company, with businesses including Premier Travel Inn, Costa Coffee, Pizza Hut and TGI Friday’s, Parker is right.

Except when he says it, it is not entirely convincing. Far from suggesting that Parker does not mean what he says – it is just that his tone lacks the necessary zest.

Perhaps I have caught him on a bad morning at the company’s historic London birthplace at the Brewery in Chiswell Street – now a leading event venue. It has, after all, been a difficult few months for the company. Falling sales across its pubs, restaurants and leisure divisions, combined with cuts in management jobs, have made for tough trading.

Parker acknowledges there is room for improvement. “Whitbread is sharing in some of the pain of the high street retailers. Some of our businesses haven’t been performing to their full potential. We have introduced new management and new impetus to get those businesses moving,” he says.

HR on the board

Questions about people management just do not seem to sit well with Parker. Maybe that is why he has brought his HR director, Angie Risley, along to the interview as support. Parker places great trust in Risley. One of his first actions after becoming chief executive in 2004 was to appoint her to the board.

“It was to recognise Angie as potentially a major contributor at that level, because it was not an automatic board position before,” says Parker. “It was about recognising the HR function as important and a big opportunity for us as a company.”

Does that mean HR was not seen as important by David Thomas, the former chief executive? Parker pauses and then answers the question with a straight bat. “Well, clearly we didnÕt have an HR director on the board before, so I will leave you to draw your own conclusions,” he says.

It is obvious that Parker holds Risley in high personal regard. “I think the chemistry in the top team is very important – to be able to work together closely. Angie is the eyes and ears of the organisation,” he says.

The chief executive’s appreciation of his HR director is fully reciprocated.

“I’m fortunate in that I worked with Alan before for eight years at the Whitbread Hotel Company,” says Risley.

“I think we’ve got a very close working relationship –  we speak or meet every day. From my point of view, I know everything that is going on in the company. That helps me because it gives me the remit and clout to actually get a number of things done that I might not have done before,” she says.

That isn’t to say Whitbread’s HR function could not do better, says Parker.

“We need to be more vigilant going forward on cost control. HR should not be a fluffy, soft function – it should be professional, competent and as profit-conscious as anyone else in business,” he says.

Parker’s critique is not lost on Risley. “A lot of people in the HR function are not commercially aware and not particularly business-focused. There’s an educational process that many still have to go through,” she says.

“There is a direct relationship between the performance of the business and investor confidence, the share price and the ability of the company to invest. HR should feel part of that.”

So with that said, has Parker ever heard of Whitbread shareholders ever expressing an interest in how the company manages its vast army of employees? “I would be misleading you if I said it was at the top of their agenda,” he admits. “But maybe it should be. We do have some conversations about the cost of employees and the performance of individual businesses.”

Annual reports

Parker is not so keen on businesses being forced to include more people information in their annual reports.

“I think we’ve gone a bit over the top in terms of what information publicly quoted companies have to disclose, so I wouldn’t be in favour of that,” he says. “At the moment, public companies are at a disadvantage compared to private enterprises, which have very few disclosure requirements.”

Perhaps this reluctance to divulge more HR performance measurements is linked to the corporate restructure the company underwent last autumn. Some of the 250 people who lost their jobs were from the HR department.

“We very quickly identified the people that were going to leave and those we were going to retain,” remembers Risley. “Even though I lost quite a few people from my own team, they demonstrated a real dedication to handling the project properly.”

But Parker is quick to refute suggestions that the company is downsizing. “We are sensitive to people leaving, but we are creating more and more new jobs all the time,” he insists.

Tackling turnover

Parker keeps his notes close at hand during the interview, as if fearful of saying the wrong thing and contradicting his opening assertion about people being Whitbread’s greatest asset. He is keen to tell me about the “Whitbread Way”, which encompasses everything from how staff should behave, to the strategic objectives of the company.

The firm conducts a “views” survey twice a year, which asks every member of staff how they feel about their job. The board reviews those scores and identifies the issues that need to be tackled.

Maintaining high levels of employee engagement in the hospitality sector is particularly tough, as the workforce is invariably transient and relatively low-paid. Parker acknowledges this is a problem.

“We operate in areas of high staff turnover – young people who are moving through transitional stages in their careers,” he says. “In Costa Coffee [which has 400 UK outlets], we do have a high rate of turnover.”

Risley recognises recruitment as HR’s biggest challenge at Whitbread.

The company has ambitious growth targets Ð planning to open 1,000 new sites by 2010. “Recruitment becomes absolutely crucial,” she says. “It’s about getting the right people in while recognising they might not want to stay too long”.

This challenge is even greater at senior level. Risley admits that many of the top positions in the UK hospitality sector are now populated by ex-Whitbread people. Does this mean the company struggles to hold on to its brightest stars?

“We know we are the biggest exporter of talent, so I accept that. But if we had been growing quicker over the past few years then maybe we would have retained some of those people we lost to competitors,” Risley says. “We’ve got to keep on growing as it gives career opportunities for our people.”

If Risley and her HR department can overcome these challenges, then Whitbread should have no trouble reaching its growth targets. Perhaps then Parker will be able to muster a bit more enthusiasm about the greatest asset in his business.

Whitbread in numbers

  • 1,600  Number of outlets across the UK

  • 10 million  Number of customers who visit those outlets

  • £1.07m  Alan Parker’s salary last year

  • 1742  The year the company was founded

  • £181m  Whitbread’s pre-tax profit in 2006

  • 84%  Percentage of UK population that live within five miles of the Whitbread brand

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