From rags to richer
The Economist – normally a champion of full on free market capitalism – has a heart warming story regarding a British retailer which has succeeded by treating its staff well. Julian Richer has built a successful high-street chain of 52 stores, named Richer Sounds. “…the 60-year-old Mr Richer is an atypical entrepreneur. That became clear in May when he announced he was selling a majority stake in the company to a trust owned by the staff, and remitting around 40% of the proceeds in the form of a cash bonus to colleagues. For every year of service, they received £1,000 ($1,230). His gesture reflected the management philosophy he has developed over his 40-year business career.”
Mr Richer claims to have been inspired by that legendary management tome from the 1980s, “In Search of Excellence” by Tom Peters and Robert Waterman. “The top-performing companies described in the book had two common features, Mr Richer noticed: they treated both customers and their employees well.
In “The Ethical Capitalist”, one of his two books on management, Mr Richer writes that “organisations that create a culture based on fairness, honesty and respect reap the rewards.” They attract motivated staff “who are there for the long haul”. High staff turnover, he says, is a sign that something is fundamentally wrong. And he cites his firm’s turnover rate of 11% a year, compared with an industry average of 25%, as a sign of success. Richer Sounds also tries to promote from within. Each of the other nine board members has risen through the ranks.”
That’s not all. Mr Richer does a range of other things to look after his people: “How does he keep staff loyal? One way is to survey morale every week. Employees rate it, anonymously, on a ten-point scale. Store managers report the average and the lowest score. If there is a two, the company will investigate.
Another tactic is to ensure staff have the time to learn about the latest equipment in stock. The shops open at noon so that there is time for staff training without dragging people out of bed unreasonably early… if an employee has to take a telephone call on their day off, they get a £20 hassle bonus.
…Workers can stay at one of the group’s holiday homes; over 70% make use of this perk once a year. The only charge they face is £10 per night per adult, and £5 per child. The British authorities treats such holidays as a taxable benefit but the company covers this cost as well.
Mr Richer…does not like high-pressure sales tactics, preferring repeat buyers; bonuses are based on surveys of shoppers’ satisfaction as well as sales. On top of the bonus, workers get a monthly profit share, based on each store’s performance, and an annual share of the group profit.”