Hi-fi retailer, Julian Richer, is that rarest of success stories: creating not only vast personal wealth (estimated at £160 million in the recent Sunday Times Rich List), but also building a retail business that looks set to outlast the demise of the high street.
A quick look at Richer’s track record suggests he is something of an anomaly as a business leader, choosing to treat his employees as his company’s best assets. He pays them above the odds and boosts performance through a range of benefits. This strategy has been coupled with sensible store planning: minimising overheads by taking units in secondary locations with small footprints.
This prioritisation of people over short-term profits, and culture over capital, is all-too-rare. But it deserves attention. Consider the number of owner-managers who achieve Richer’s level of success. Then, consider the number that do so in retail, without equity investment.
Richer may have a lot to teach us. But are we willing to listen? It is telling that, in so many recent articles about struggling high street retailers, the main focus has been rent, rates, and debt structures. Once again, people are nowhere to be seen.
Richer’s success poses an interesting question: could the demise of the high street not be a question of changing consumer behaviour and landlord greed–but a question of retailers failing their people?
The argument seems clear: there are benefits to putting people first. But why is it so difficult to do this in practice?
1. Misunderstanding the role culture plays in business success.
Most boards and business commentators have ignored the impact of culture for decades. But this does not reduce its importance.
According to Gallup Meta-Analysis, improving culture by developing employee engagement yields better business results. The same research finds businesses with engaged employees show a -41% reduction in absenteeism and a +17% increase in productivity.
Failure to understand this leads to failure to prioritise. Failure to prioritise it, leads to failure to benefit.
2. Not considering people “scalable assets.”
Scale demands replicability. Yet in business we tend to consider scalability in the context of platforms or processes, but not people. Of course, we are all unique individuals. But it is in the principles that underpin good leadership and management where we can find scalability.
Alongside Richer Sounds, consider Pret a Manger, which continues to grow successfully. As reported in the Guardian, at Pret, “a staff member is not hired on the strength of a traditional CV but on whether they conform to the three core Pret behaviours: passion, clear talking and team working.” There’s a scalable approach to recruitment if ever there was one.
It doesn’t end there: “The company uses staff reward schemes. Every shop has a mystery shopper visit each week, who is looking for engagement with a team member. If the mystery shopper has a good experience, team members get an extra £1 an hour for the hours they have worked for the week.”
Scalable leadership and management results in scalable success.
3. Believing that people = conflict.
Psychology suggests that we are all simple creatures. We are drawn to things that are pleasant and repelled by things that are unpleasant. And managing other people is unpleasant, isn’t it? They can be unpredictable, irrational, and painful to manage.
At first glance, research published in the Creativity Research Journal would appear to support the fact that such conflict avoidance is healthy behaviour. Work environments that have high levels of personal and emotional conflict are likely to hinder problem-solving and the development of new ideas.
But there is another side to this: conflict may equal pain, but it can also equal progress. All businesses are a composite of different agendas. It is how well these agendas are reconciled that determines success. It is not conflict that slows us down, but unresolved conflict.
Reframing our understanding of value in this way pays dividends. I recently helped a client achieve a 23% uplift in productivity by becoming more adept at conflict management—leaning in when things got difficult, not legging it.
This requires entering—and learning to stay in—the ‘zone of uncomfortable conversations’, which most of us are primed to avoid. At such times, it can be helpful to remember that conflict is just growth trying to happen: it can actually be a positive thing. Understanding this can help bring objectivity into the discussion. Asking “why are we at odds about this?” in an open-minded way can create a platform to collaborate in creating a new and potentially better solution.
Try it in your next conflict, and you might be surprised.
