Episode 10: Treating employees like family

David Lancefield
Welcome to the tenth edition of Transformation Talks, my name is David Lancefield and I am a partner in Strategy&. It’s fantastic to welcome James Timpson, OBE, CEO of Timpson. The OBE was awarded for your services to training and employment for disadvantaged people, so congratulations for that, and we will come back to that topic later in our podcast.

The Timpson Group has been a family owned and operated business for 150 years. As I am reminded, it’s much more than just a cobblers. It has a wide range of while-you can-wait services on the high street, from key cutting, to dry cleaning, to engraving, and photo IDs. There are eight brands in your portfolio from Timpson, to Jeeves, to Johnsons the Cleaners, to Snappy Snaps.

In this podcast, I’d like to talk to you, James, about your views on the changing British high street and Timpson’s role within that landscape. How you run and transform your own family business and your own approach to leadership and management, particularly around how you devolve responsibility to the people in the business?

James, you are very welcome, great to have you here.

James Timpson
Thank you very much.

David
So let’s start on the high street. The story of Timpson is very much about your long history on the British high street. You were founded as a family business in 1865 and now have 2,000 stores across the UK and Ireland. Clearly, we hear a lot of doom and gloom about the high street more generally, and it’s quite a disruptive environment. What’s your approach to the high street, in terms of how you are trying to transform the business, in that context?

James
We are very fortunate, because most of the things that we do, you can’t do on the internet. Over half of our shops are actually in supermarket car parks, or in out of town supermarket sites.

So yes, we have been affected by the change of the high street, but only because we’ve opened up a load of shops against ourselves. So, what we have found is that where we do a really good job, where we have really good colleagues who give really good service, we continue to do well.

We haven’t opened up any new shops on the high street for the last five years, but we have opened up 550 shops out of town. So, we’re growing; our like-for-like sales are up, our profits are up, whilst most retailers are in retreat. But we are different, because we do not compete online, and we don’t really have any competition.

David
It’s interesting, I was reading last year during December that the government had published a report on the state of the high street, with recommendations by a panel chaired by your father, John.

The key recommendation was about reinventing town centres in a more collaborative way, with sections of the community, to try and put the buzz back into the high street.

I know you have out of town places at supermarkets, for example. How are you trying to put the buzz back into the town centres?

James
Well so far as our business goes, we have just got to do a really good job in the shops that we have. What’s really important to me is that we have really high standards. Our shops look good. We invest in our shops on the high streets. We paint the shop fronts. We refit the shops. We have a tradition in our business, where we believe that we have to have really high standards, not just the bit that the customer sees, but the bit out the back as well.

We have an important role to play in any high street, because we are in most of them, because we have Timpson shops, Max Spielmann shops, Snappy Snaps shops and so on... but what’s really important for us is that we do our little bit very well.

David
How do you maintain standards, because in some ways when it works well, and you have great people, you have tied trust they will keep the high standards, but you devolve responsibility a lot, that’s one of your hallmarks. How do you keep those high standards up?

James
When you talk about standards, you can talk about the physical standards of the shop or the standards of the culture. Let’s just start on the standards of our shops. I have never known a great business to have poor standards. We insist on really high standards across the board.

We do a thing called ‘Perfect Day’ where we have one day of the year where each shop has to be perfect, as in: everything is spotless, all the light bulbs are working, the toilet is clean, there are enough plasters in the first-aid box, and there is no chewing gum on the carpets. We go around and we mark and everyone gets a mark out of 100, and we give awards out and so on, so we are always resetting the standards.

As part of our culture, we have two rules. The first is, you put the money in the till and the other is, you look the part. And look the part basically means standards. So we look smart.

For example, if you want to grow a beard in our business, you can do, but you do it in your holidays, because you either have a beard or you are clean shaven. We don’t have the radio on. In our Timpson shops, everyone wears a tie and a badge, and those are the standards that we really insist on, but there are so many other things you can do whatever you want.

David
How do you actually enforce it, given that you’ve got so many different shops across the country?

James
It’s ingrained in our culture. If you are a colleague, who cannot maintain high standards, 99% of the time your figures aren’t very good either, because high standards go with high performance. We will give you every opportunity to improve, we will go back and reset the shop, and reset the shop again. But it may be that this is not the job for you.

David
On one hand you are obviously welcoming, and you look after your employees, we will come on to that, but at the same time, after a while if you are not performing, you leave the business.

Talking about people, you hire people with great personalities, you talked about having amazing colleagues, which is refreshing, and is refreshingly simple. Why is attitude more important than say skills or experience, in terms of the people you hire?

James
I’ve learnt over the years how this works for us, because when I first started the business, I was going around our competitor’s shoe repair shops, and finding out who were the world’s best shoe repairers and recruiting them.

The problem was, they may be really good at shoe repairs, but their personality wasn’t right. So what I decided is, it is much better is to recruit on personality and then train for skill, because no matter how hard you try, you can’t train someone to have a different personality than they have.

CVs for us, are a complete waste of time for us. All I need is your phone number and your name, and I will give you a ring. We will interview anybody who applies to us for a job. We are looking purely for personality. People who have fun, interesting, engaging, they’ve got that inner energy. We don’t want someone who is moody, lazy, and scruffy. Even though they may be technically very good, we don’t need that; we need a consistent personality. When you go around our shops, you will see a consistent type of personality across the business.

David
I wonder why some corporates don’t do the same?

James
I suspect they see it as safe by following a set of rules on recruitment. That’s when people apply online, their computers sift out anybody who has a criminal record, anybody who hasn’t got the right skills, anybody who puts a spelling mistake in there. Actually, from my experience, they are often missing out on some of the best people.

If you look at some of the great leaders of some of our best companies, they didn’t go to university, their spelling is rubbish, most entrepreneurs can’t even spell entrepreneur properly.

So I think it’s a safe way of recruiting if you make it part of a process. We just feel it’s better just to interview everybody and judge them on their personality, not on what they’ve done.

David
You are known clearly for recruiting and training former offenders. I am just interested in where that idea came from?

James
It started like lots of things in business, by pure chance. I was invited to a local prison near where I live in Warrington. It was just local businesses going around, and I was interested, everyone is obviously interested in getting to see a prison.

I was given this young guy called Matthew to show me around. We saw the gym, and the library, and their cells. His personality was just what I like. He was buzzy, interesting; a young guy who got into a fight, never done any wrong before, couldn’t go to university, applied for 70 jobs, got turned down for all of them. So I said, “when you are out, give me a ring, and I will give you a job”.

I forgot about it. Then, I got a call from his mother, saying he is out tomorrow, he still can’t get a job, will you take him on?

He is still with us today. He is really successful. Really nice guy. He is now married with two kids. So, it has all worked out well for Matthew. Then I thought, I’ll go and get a few more. I got up to about 20 ex-offenders to join the business, and I made a load of mistakes, but I worked out how to do it by then. Then I told everyone in the business, and they thought the people I recruited were really good, so they gave me a thumbs up and I went for it.

So now we’ve got 650 prison leavers in our company. We’ve probably got more than that, but those are the people we’ve actually met in prison and recruited.

David
What was the impact on the rest of the employees in terms of there being a new type of employee in the organisation?

James
The reason it worked is because the people I picked were good, and most people are happy to work alongside someone if they are good. If they work hard, if they get stuck in, and they make the whole thing work.

David
What’s your next group then, have you got another one lined up?

James
We are doing work with veterans, which we are having increasing success. We started off pretty slow on that, but I think we’ve worked out how to do it. We have three Down’s Syndrome adults working in the office, which I am really pleased about.

I just think, we employ 5,500 people in our company, but I see it as 5,500 people in our family, and the more diverse we are, the better.

David
You are very open and inclusive in terms of holiday homes, after 25 years you get a dinner with the family, so it feels like a family in terms of how it comes across.

James
Yes, it comes down to values. What I recognise as important, is you need a strong culture, you need to recruit great personalities consistently, but none of that works if you don’t look after your people. What we try and do is find every way possible to amaze our colleagues, so they are inspired to give a really good service.

The way it works is, everyone gets their birthday off as an extra day off. We give out loans to anybody who has short-term financial problems. We have 20 holiday homes, where colleagues go on a free holiday, and they are really nice holidays.

We do dreams come true. So, we do half a million a year to colleagues for their dream to come true. They may have health issues, so we do lots of dentist treatments, and that sort of stuff. We do a lot of trips to Disneyland, because parents have always wanted to go, but they were never able to save up enough. So, you are going to Disney, or it could be just driving lessons, so they can get on in the company, that sort of thing.

But the reason why I believe it’s really important to look after your people, is because it works, and I am really commercial. The more we spend on looking after our colleagues, the more holiday homes we open, the more new benefits. Someone told me today a new rule, which we are going to have to adopt, which is, people need a day off when their pet dies, because to some people it’s like a normal bereavement. So, that’s another benefit to add to the list. But the more you give the more you get.

David
I remember looking at one of your tweets, where you said that, you don’t spend on marketing or external PR agencies, you give that money to your people.

James
Yes, we have no marketing or PR. We are a key cutting business and we recruit burglars and armed robbers. No marketing department would ever let me do that in the first place, if we went for that.

The best marketing we have is when our colleagues give great service in the shops. That’s why 4% of all of our transactions are for free. That’s why we do free dry cleaning if you are unemployed and are going for interview, and all that sort of stuff. So, it doesn’t cost us anything, it’s just a good idea.

David
You are keeping the business fresh, you are trying new services all the time, where do you get that stimulus from, where do the ideas come from?

James
I spend a lot of time looking around and I spend a lot of time asking people who have gone into industries, who have gone into business, how it works.

For example, we’ve got seven little barber shops we’ve opened up in supermarket car parks. I noticed when I was walking around high streets that the only shops opening up were tattoo parlours, nail bars and barber shops. So, I didn’t want to do tattooing, I could just imagine the customer complaints on that. I didn’t fancy doing the nail bars, but the barbers are interesting, especially doing it out of town. I spoke to Sainsburys and Tescos and so on, and they said let’s have a go, but we are learning.

David
Given you are growing the business, trying new things, it’s a family business, how do you get support then, because it sounds like a lot on your shoulders. How do you build your management team around you?

James
Well we don’t recruit anybody from outside of the business, everyone is promoted from within. I am really fortunate that my colleagues, who run the various businesses, get it, because they’ve been there for so long. My role is to encourage them and to make the strategic decisions around property, and capex, and so on. I’ve spent a lot of time going around the shops. The best way to solve any problem is to ask colleagues who serve the customers, because they know what to do. If there is a problem in the warehouse, don’t ask me, ask the guys who work in the warehouse.

I am in a business group called the Young President’s Organisation. Basically ‘young’ means under 50, so I am still in! That has been a really good source of advice, encouragement, and competitiveness.

David
There is a lot of strength in the family business, promoting within, the culture you have. Are there any down sides in the model or the approach you have?

James
We are probably less brutal than lots of other companies when it comes to tackling people problems. I feel as a leader, I have a moral duty to make sure that my fantastic colleagues only work alongside people who are as fantastic as they are. But sometimes we have people in the business, who really, no matter how hard they try, their best isn’t good enough for us; they would be much happier somewhere else.

We’ve developed this way of really helping people leave the business, and yes, that probably costs us loads more in wages and so on, but it’s probably the right way of doing it.
Because we don’t have any targets to meet, I am not really incentivised by turnover. I don’t know what our turnover is. I know what our profit is, I don’t know what our turnover is.

What I am really interested in, is when I go around the shops, are they consistently good?

David
How do you spend a typical week?

James
Probably, one day in the office a week, but I am no good on two days, so one day is enough for me.

David
What happens if you are two days in?

James
I just end up lighting fires and causing havoc, really.

I spend two days a week going around shops, so I will do 15-20 shop visits in a day, I get up early and just bang out the shops.

I do one day a week on my prison work, and spend quite a lot of time in prisons. I chair a wonderful charity called Prison Reform Trust, I am quite involved in the policy side of things. Then, I have one day a week where I am just wandering around looking for ideas, just asking a load of questions and learning. I find business fascinating.

David
So, when you are in a shop, if I am running one of the shops and you come in, what happens, what do you do?

James
Okay, we have a chat, ask how you are, I have a little look around just to sense, because I can tell within three seconds whether you are on it or not, because it is all about the standards.

And then I look at the figures, to have a look at how the figures are doing compared to last year. I ask them how they are in themselves, how the family are, what problems I need to sort out, and then head off to the next shop.

David
Going back a level, back up to the board level, you have five on your board. What are the big questions and choices you typically face, I am not talking about the confidential stuff, but at the moment what are the big choices you are thinking about?

James
We are in a fortunate position that we are very profitable business, so it’s what do you do with the cash. We don’t have any debts. It’s what do we do with the cash long term. It’s the way you invest it, which fits with our skills, because we’ve got a number of examples, where we’ve tried things that have strayed away from our core skills, where we made a complete mess of it.

It’s a combination of trying to keep the focus on where we are going. We spend a lot of time talking about culture. We spend a lot of time talking about looking after our colleagues. It is really informal, with like five board meetings a year. I do the minutes and I try and do the minutes within a week. Otherwise I would have forgotten what we talked about.

It’s just a really good format for my dad and myself, just to get a bit of a sense check on things sometimes. We have a retreat once a year where we go to a pub in the countryside somewhere, and just talk about a few big topics.

David
I remember that your father John said he wrote a book called ‘Dear James,’ in which he passed on his lessons. Which were the lessons you really took to heart and which were the ones you, perhaps, even ignored?

James
As you get older, you understand that things happen for a reason, and also that you need a longer-term view on things. When you are young, you want to sort everything straight away. Everything is either a crisis, or you are going to create another crisis, so it’s just seeing things in a probably calm and more mature light, and there is a cycle to these things.

David
If you were to write a book in the future, what would it be about?

James
I am quite interested in how you motivate colleagues through kindness and love, and what works and what doesn’t. I don’t think I will ever be able to put a financial equation to it. But it’s just understanding that if someone goes to one of our holiday homes with their family and has an amazing week’s holiday, how does that really impact the rest of the business and the way they serve customers, and the way they buy into our culture?

David
To what extent does is help being a family owned business when it comes to ensuring that your business can adapt to the changes in the environment?

James
I think being a family business which is profitable, with cash in the bank, makes it a lot easier for us to be adaptable and to take risks. But there are lots of family businesses that aren’t in our position, so I don’t know how they handle things.

We’ve had times where we have nearly run out of money and where a lot of things were going wrong. But for me a family business isn’t there for the benefit of the family, it’s there for the benefit of everybody in our family, which is the 5,500 colleagues, who work very hard every day, for us as leaders.

If you just run a family business to the benefit of the few family members that are either in or out of the business, I don’t think you end up really generating the wealth and the values of a family business. For me a family business is when everybody is part of the family.

David
It’s very inspirational. Obviously it comes through with what you are saying, but how do you communicate that so people get it? Because you can say it, your family can say it, but how do you actually cascade that across all the different shops and stores you have?

James
So, we do it in two ways. One is, we do a lot of leadership training. Myself and my dad are involved in that heavily. We are building our new training centre, The Timpson University we are calling it. That’s where we talk a lot about how we look after colleagues, how we have difficult conversations, how we interview to recruit the right kind of personalities and all that sort of stuff.

But also, my dad and myself spend a lot of time going around the shops, so we know a lot of our colleagues personally very well. I do lots of things called roadshows. Starting in October, I’ve got five months, it’s like a band going on tour. I say the same thing all the time, although it’s just me with a little microphone. I am going around and I am updating everybody on what the plans are for the business, and what are the things we are introducing to make their jobs better and give better customer service. But most of it, is all around what are we doing for you, for this company to be in a better place.

David
There is a lot of listening on your part, and asking a lot of questions. And there’s a lot on your shoulders. How do you keep resilience, because there will be ups and downs, there will be some weeks that are good and bad. What you do personally?

James
I am just on it. I find it much easier just to be on it all the time. I don’t work like crazy hours, I don’t work weekends. But when I work, I am on it.

I had a colleague today phoning me, because he can’t get the holidays he wants, because he has used too many up or something. So, to him that’s really important. So, he will come to me, and I will just phone up the area manager saying, “listen can we just sort it.”

David
When you handover to the next CEO, how would you like people to talk about you in terms of your impact and your legacy?

James
A lot of people in the business have known me since I was 13 or 12 years old. They call me the whirlwind, because I am just quick. I would like people to think that I was just someone who put people before profit.

David
James, it has been inspiring talking to you, learning about your own style, your own impact. Fantastic in terms of the impact you have on peoples’ lives, especially people who have had a rough time, and you can see it in terms of how you look after them. But also how you look after the business, both now and the future, and that combination of kindness, training, ongoing renewal, innovation, being on it, and making a profit, that’s important too.

James
It is weird that, if you really look after your people, you recruit really good people and trust them to run the business, you make money.

David
Thanks James so much for your time. That was another edition of Transformation Talks with me David Lancefield, thanks for listening.

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David Lancefield

Partner, Strategy&, PwC United Kingdom

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