Over the last 2 years what specific activities has M&S undertaken in response to the recession?
At the beginning of 2009 we undertook some cost reduction activity so we closed 26 Simply Food stores because they were underperforming and we made about 1000 redundancies at our Head Office.  We didn’t make any redundancies at all in stores.  We also introduced some changes to our final salary pension scheme.  We have done some restructuring but looking more at efficiencies and how do we get more with less as opposed to taking a knife to it and just cutting it out.  The whole area of new products and service is such a significant area for us.  That whole area of innovation particularly in the food business is massive for us – we invest a lot in innovation.  About 25% of our food products on average are new and we’re bringing a lot more newness into womenswear and general merchandising because that is what the customer is wanting

Would you say that innovation has been a focus for M&S for a long time – Innovation is one of your values I believe?
Yes, It is one of our values.  It has always been part of our fabric but we do believe consumer habits and behaviours are shifting so it’s become even more important.  Because the customer has less to spend she wants to really be able to trust the brand that she’s buying from, she wants to know that she’s got quality, she wants good customer service.  So those things are even more important now than they were a few years ago; they are absolutely the bedrock.

So have you had to make any changes from an HR perspective to ensure that they are the bedrock for you?
It links into our whole talent agenda.  Resources available to focus on innovation are quite limited and in demand so we have done a lot more work on looking at the future and predicting ahead where we need the right talent.  That’s not just in innovation – that’s in International for example – where are we going to grow; and in multichannel – as one output of the recession I’ve seen a growth in home shopping.

Have you had to reorganise in any way to foster better collaboration between different parts of the business?
Yes we did a big reorganisation about a year ago.  We used to have two parts of our retail business, one of which was called Online Direct which was completely separate under different leadership.  Then we had the other part of the business which was Stores - the operations side of running the stores.  There was a disconnect: there were no economies, no leveraging or sharing of customer data so there was no connection between the customer who shopped in store and the customer who shopped online and of course that can also be the same customer.  You can now shop online and have it delivered to store.  There are some tensions with that because where does the profit sit – at the store where you collect or online?  So we now have it all under one Director, we collapsed it all under multichannel.

You mentioned earlier “doing more with less”.  Can you tell me a bit about how you tackled that?
In a number of different ways. Some of it was around restructuring, thinking about how we do things.  About a year ago we launched a programme called Ways of Working, which was looking at what stops us being as efficient as we should be.  We ran a series of focus groups to understand what some of the blockages were that cause us to be inefficient and a whole number of things came out as a result of that from which we created the Ways of Working programme. We focused on 5 specific barriers to efficiency.  By way of example, one area where we felt we could be more efficient was business management processes.  E.g. decision making processes could be slow because we weren’t always clear who the key stakeholders were, who had the decision rights so we did a piece of work around that.

Was that in a discrete part of the business or across the whole organisation?
Everyone in head office was involved.  We improved working across the business, meeting etiquette, we improved corporate governance processes, and we revisited and introduced a whole new approach to clear job accountabilities.  It wasn’t rocket science but it was a real tidy up; it was good business discipline.  We introduced for the very first time in the 125 years of M&S, an incentive scheme that was linked to individual performance.  In the past if we hit the financial number everyone got the same percentage bonus per grade.  Introducing performance management related bonus schemes was a breakthrough in the organisation.

How difficult was it to land that?
There was quite a bit of resistance because individuals were not used to being evaluated against their individual contribution with rigour and discipline.  We have just finished the first year and we have got a distribution curve that you would expect – a significant number in the middle and 5 in the top end and 5 in the bottom end.  We got there and the vast majority believe it’s absolutely the way it should be.  To drive that sustainable performance culture in the business where you are constantly raising the bar, is a big step forward for the business.

Have you had to change your performance management model in any way?
Yes, it is completely new.  We’ve had to help people understand what they have to do, making sure managers have regular feedback sessions so it’s not a surprise at the end of the year if you’re rated a poor performer.  It’s been a big step change.

Is there anything else in response to the recession that M&S has undertaken?
I’d answer it in a slightly different way.  I think what we’ve been particularly good at is really holding our position in a number of areas despite the recession.  So for example we have invested a lot more both financially and in the whole area of employee engagement.  We’ve really stepped up in understanding more about what does that mean, what’s important to people and how do we demonstrate that we understand that.  For example, we invested in time and money in celebrating the success of being on the High Street for 125 years and creating a real sense of pride and passion in the brand so our customer assistants felt proud to be part of M&S.  We have invested more in training and development so unlike other organisations we have said that this is the most critical time to invest in our talent, particularly in our leadership talent.  For a lot of leaders these are uncharted waters, many have not been through a recession like this and what it means in terms of keeping people engaged and focused and motivated.  We launched a programme called “Lead to Succeed” about a year ago which was really designed to facilitate leaders to think how do I lead my team through difficult times and it was around the M&S brand values.  Those values are Trust, Value, Service, Innovation and Quality.  Those values have been our bedrock for 125 years – we must be one of the only companies that has had the same values for that long.  We’re passionate about them but as a leader what does that actually mean, especially in these difficult times.  We created the programme around the M&S leadership brand and it’s been very successful.  In terms of graduate recruitment, we recruit around 200 each year and we’re still doing that so the whole pipeline of talent I believe is even more important and if you cut your investment in it that’s your Achilles heel.  And when we come out of this recession, organisations that cut back will be in massive catch up and I believe we will be in a much stronger position.  We do an annual employee opinion survey and we’ve just had the results.  If you think back to what we were doing at the beginning of the year – making redundancies, pensions changes etc, we actually scored higher this year than ever before and we had a 94% response rate which is unbelievable.  Our positive score was 73% and our employee engagement score which is 5 questions that measure how engaged you are as an employee was 74%.  We’re doing something right.

As a result of all the activities you’ve described how does M&S feel now?  Has the culture changed significantly?
It has. M&S is a great place to work and the people turnover is very low.  We’ve continued to build on that success.  There wasn’t a burning platform to change the culture.  It’s a very very positive place to work.  The challenge has been to keep building on that.  So it’s not been about dishonouring the past, it’s been about understanding what are the things that our employees believe are the most important things to them and really harnessing that.  That’s what shifted the culture.  At the leadership end, as a result of the programme I described, there’s been more of a harnessing, a strong leadership culture and focus on sustainable performance.

What’s the appetite for change like in M&S?  You’ve described a lot of change over the last few years.
It’s getting better.  As a company we are a little resistant to change.  Under Stuart’s leadership, we’ve invested significantly in our infrastructure, in the engine of the business.  We are implementing so much change – probably more than any other retailer has ever taken on all at the same time.  We’re doing a massive investment in our business foundation – how we run the business – e.g. HR, admin, payroll etc. We’re doing a massive investment in tilling and that is a lot of change.  We’ve improved our ability to underpin it with individuals who really understand how you make change happen.   So rather than just the project managers looking at it in a technical way, we’re looking much more at the emotional impact it has on people.  So we’ve upped how much we communicate, how much we explain rather than just implementing it so there’s a lot more involvement which is helping us to manage the amount of change we have to go through.

Can you tell me on a scale of 1-10, how efficient and responsive would you consider M&S to be? (10 is extremely)
Responsive to customer needs: I’d say we were a 9.  We have a massive customer insight team and we have regular data on what customers like/dislike and we respond to that.

And how efficient would you say you were?
same for efficient

What has been your biggest contribution in the last couple of years?
Ensuring we have a commercially savvy HR business plan which is absolutely aligned with what the business needs. 

Could you say a bit more about what you mean by “commercially savvy”?
When I joined 2 years ago there were lots and lots of initiatives and with great respect to the people HR wasn’t really high on the agenda so there were lots of initiatives going on because individuals thought they were what the business wanted or they were sexy fun things to do or they were something they’d done in a previous company and it was something they wanted to bring in.  It wasn’t holistic at all.  Now we go through a rigorous process where we really understand what the business challenges are for the next year/18 months.  We understand where the business is going, what the requirements are going to be on the people agenda and then having an HR business plan which is absolutely aligned to the business and which is signed off by the management board.  There is nothing on the HR agenda which is either below the radar screen or is something the business doesn’t need.  We will only work on things which add value to the business, delivering to the bottom line.

I want to start the next section by asking you how important thinking about the future is to you?
Very.  I think we are moving into a period where the pace of change and the way people will work and interact is so significant I think it will make a massive difference to how businesses are run.  In retail the way people shop today is so different to the way it was 5 years ago and will be significantly different in 5 years time and we need to be ready for that.  Social networking, the education system will have a significant impact.  The top 10 jobs in demand today didn’t exist 5 years ago – we’re developing teenagers today for jobs that don’t yet exist.

As an organisation what is M&S doing to try and anticipate those changes?
In multichannel, for example, we’re doing a lot to understand how people will shop in the future, how to use Twitter etc.  That’s a big piece of work for us. 

Catherine Glickman from Tesco talked about how their top tier team, the top 85, have been involved in future thinking workshops.  Have you done anything similar?
Yes, we have a top 100 leadership group who meet once a month.  We also have a team that are working on what the latest thinking is.

How do you anticipate customer needs changing in this decade?
I think shopping habits will change immensely.  I think there will be more immediate demand and customers will expect to be able to find their size and availability straight away and if they can’t they will go online and have it delivered the next day.  In homeware and furniture, stores will become more of a showroom and customers will then go online and have it delivered direct.

What about your workforce?  How do you anticipate it changing?
I think that’s interesting for us.  We have a very low turnover and a significant number of employees who have been with M&S all their life.  Trend research suggests that teenagers today will be in their 7^th or 8^th company when they’re in their mid thirties.  This means we have to get a much better understanding of how do you manage individuals through that transition.  How do we get what we need from them before they move on?  With qualification inflation we also have many extremely well qualified customer assistants so how do we ensure that those roles are challenging, exciting stretching etc

I have some cards I would like you to sort in order of where you see the greatest challenge for M&S in the next 5 years.  (The cards are entitled People, Process, Strategy, Structure, Measures)
It follows a logical order really: Strategy, Process, People, Structure, Measures.  Strategy because partly due to the timing of Marc Bolland arriving and because of all the things we talked about coming in the future, having a very clear strategy and knowing where to make your investment.  So do you invest in China, in India, in multichannel, smaller stores, bigger stores, in town, out of town, offer food online etc.?  All the processes underpin that so you will need an infrastructure that supports your global footprint so if a product is made in Sri Lanka and it’s going to a store in Greece you have the infrastructure to support it so you know where your stock is.  That will then have an impact on people, managing virtual teams etc.  You need the structures that support that and then you need to measure overall performance.

What will be the focus for your role in managing these challenges?
Firstly on the Management Board regarding the strategy and then working closely on aligning the processes that support the strategy and the whole people plan aligned to the strategy.

How would you describe in general what you believe the purpose of your role to be?
I’m a member of the Management Board which is responsible for running the company and I have a particular focus on the people agenda.

What has been the most influential business book you have read and why?
It depends on what you need … but for people who are interested in the future and how you build a meaningful organisation Meaning Inc by Gurnek Bains is very good and very practical.  For employee engagement this is good: Carrot Principle by Adrian Gostick and Chester Elton.

Have you been involved in the MacLeod report on engagement?
Yes, I’m speaking on it tomorrow!  It’s a subject I’m particularly interested in and we’re doing a lot in this area - we’ve got a good story to tell.

Are you reading a novel and at the moment and would you recommend it?
The trilogy by Stieg Larsson – the Girl who Played with Fire – fantastic – I’ve read the first two and itching to read the third.