Creating impact and additional revenue through HR
Jonny Gifford from the CIPD launched the session by stating that it’s not enough to be HR generalists plodding along with the HR tools we use any more. We need to pay attention to things like culture: what are the social norms in our organisations? HR is the natural guardian of organisational culture.
He handed over to two HRDs with impressive roles:
- Darren Hockaday, HRD of London Overground
- Sue Swanborough, HRD General Mills
General Mills are behind numerous big name food brands. They have over 35,000 employees, marketing and selling products across the world. Why do customers buy their brands? They are available in the right place at the right time; seen as value for money; seen as high quality and some individual random personal reasons (“I always have Haagen Dazs on a Wednesday”!). They rely on insight from their people for R&D, marketing, logistics – and even HR! People run throughout their P&L sheet.
London Overground is responsible for 140 million passenger journeys per year, crossing some of the poorer boroughs of London. Every minute of delay costs them £65 so their people are critical to avoid any issues. Customer satisfaction is another measure – they have to give money back to Transport for London if there’s a rip in a seat or a scratch on a pane of glass. Ouch. Again, their people are critical in spotting these issues and resolving them.
Darren said he has interviewed around 50 people for HR jobs in the last 12 months. He gets frustrated that he hears a lot about tasks and responsibilities but the impact of those activities was missing. We in HR do ourselves a massive injustice when we talk about commerciality – we don’t make the link between what we do and the business.
Sue asked what commerciality meant in our organisations and asked us to write what we thought are the top 3 activities within our HR functions this year. She he asked: what financial value will that add to the organisation? If you were going to sit with your FD and ask which they thought would add value, which would still be on the list?
Darren said being visible is so important. Darren was on the platform at Stratford station throughout the Olympics and he learned so much more than being in the office. He also took over all the station announcements and wouldn’t hand the mic back!
He presented a model that he and Sue have developed to answer the question “How do we measure commerciality?”:
- What we do in our day to day HR – the “unsung hero” stuff. Paying people, supporting managers etc. I.e. how we run our function.
- How can we demonstrate we’re leading on cost savings? HR often slow to get around the table when discussing cost reduction. CEO’s and leaders want us to start that conversation. We need to work with our customers, identify what we can do over the coming 12 months. I.e. how we interface with our customers.
- Not just knowing the business but leading on things that are spontaneous and continuous throughout the year around the Exec table. What are we doing with the senior teams?
Darren gave us examples from London Overground of each of the above:
- Attendance management. They introduced daily reports, welfare calls, sickness reviews, live reporting and other reports to Exec team. The live reporting system tracked and managed action – this was the biggest thing. The team met every day to discuss who was off that particular day and what actions were needed. Minutes showed that actions were happening. As a result, they saved £600k compared to the previous year. Everyone in the HR team is focused on the commercial impact of this activity.
- Planned cost savings – taking conductors off the trains in a redundancy programme saved £5m. The union reaction was not positive, unsurprisingly. But HR led the initiative in a people-focused way to save £5m. A number of staff were transferred to more sustainable customer service jobs within the organisation. It involved safety, customer service and operations. Taking out the conductor reduced delays as they were often tempted to hold the train for someone running down the stairs, leading to late arrival and build up of more people waiting for trains further down the line.
- In an incident at Camden Road, a freight train derailed and one of the containers fell off the track onto the side, dragging down the gantries and ruining a set of points. Two trains were stuck in the wrong place and they couldn’t run any more than a 30 minute serivce. As a result of a suggestion from Darren, they found an unprecedented way of getting a train pulled by locomotive across a non-electrified set of points. The Operations and Fleet Directors said it couldn’t be done but the MD wants to consider it further. Within 24 hours, Network Rail managed to get the train over the points and into service, meaning they could run a 10 minute service.
Sue then gave examples of each of the three from General Mills
- Recruitment – they noticed staff turnover was increasing and asked what that was costing. They reckoned they were investing a third of that person’s first year salary in bringing new starters in – a big number. This meant there was immediately a business case because they had put a number on it. They asked how are we turning our data into knowledge and asked “the obvious questions”. They introduced recruitment accreditation for managers – covering this is the culture, this is what you’re coming into, speaking to candidates from an authentic point of view. None of what they did was new but what was important was how they talked about it.
- They wanted to understand what mattered to their people and what was in their culture. They launched the Old El Paso soft flour Tortilla boat by putting together the longest chain of taco shells (1,567!) and going into the Guinness Book of Records. They created a buzz within the organisation and proactively created a lot of Twitter and Facebook noise on a new product, which meant saving money on marketing.
- When GM launch a new brand, HR is at the table in the Exec team and involved in the discussions. Consumers and employees were consulted and HR led on this.
They concluded that we need to move from a support function, thinking about process and data provision, to delivering commercial benefits, translating data into insight.
Darren left us with a number of challenging questions, the top one being: “How much does HR cost your business as a % of turnover? Do you share at with your teams?” In London Overground, the HR team costs £1m. They have saved £600k with their attendance management programme.
As an HR generalist leading an HR team, I really enjoyed this session. It was highly practical, not particularly “trendy”, but was two very senior HR professionals giving clear and practical case studies about how they make a significant commercial contribution to running their organisations.
More thought-provoking stuff.