Midlands Cooperative Society
Midlands Cooperative Society or Midlands Co-op as it is better known, is the second largest independent retail Co-operative Society in the UK. Employing over 7,000 staff, it has gross sales in excess of £744 million. It also has a substantial investment property portfolio.
Its principle activities are Food and Non-Food Retail, Travel Retail, Funeral Services and Transport. It has 375 trading outlets ranging from superstores and convenience stores to funeral homes and Post Offices based in the Midlands. It also has a substantial investment property portfolio.
Midlands Co-op developed in its current form following several mergers of co-operative societies. However it was evident that the Society was suffering from lack of economies of scale. This, together with poor sales performance in the light of increasing competition in the retail sector and a lack of reduction in cost base led the Society to recognise the need for major change. The Chief Executive and the senior management team undertook a full strategic review of the way forward for the Society. Subsequently it was decided that a change programme should be created to create a culture of service excellence across the business. Excellent service it was believed would be the key to the Society’s long term success.
The Society appointed change management and customer service consultants, The Stairway Consultancy to help facilitate a long term process of culture change. Stairway used the principles of the Service-Value chain developed by Harvard Business School Professors Heskitt, Sasser and Schlesinger as the basis for change. This methodology is based on the principle that effective leadership and internal service quality promotes employee engagement and satisfaction. This in turn leads to customer satisfaction and loyalty which in turn leads to organisation profitability and growth.
The programme of cultural change was entitled Service Excellence and all associated activities were identified by this title. In order to change the culture, Stairway recommended that the first step was to define the current way of doing things throughout the Society. Recognising that culture is the glue that binds an organisation together and can be invisible to people within an organisation, the senior management team invited Stairway to conduct a series of employee and customer focus groups to help the Society better understand its current position.
The findings of the research indicated that the Society had many loyal customers who had traditionally shopped with the company for a long time. The key strengths of the Society from a customer perspective were the location and convenience of their stores. However, the Society, particularly in Food Retail, could not compete on price or range compared to the larger food outlets.
Some of the cultural indicators that Stairway discovered when conducting the internal customer focus groups included a highly siloed organisation where managers were still referred to as ‘Mr’ and where there was a divide between ‘Head Office’ and front-line staff. The culture was perceived as hierarchical and risk averse. In particular although many employees had worked for the organisation for 20 years or more, there was a strong feeling of lack of recognition for effort and achievement. 75% of employees taking part in focus groups cited this as a major area of concern.
Stairway presented the outcomes from the research to the CEO and the senior management team. Stairway recommended that the starting point for change was the development of an organisational vision and a set of supporting values. The organisational vision and values would then drive the resulting mission and strategy for the Society. The vision that was developed was ‘Making a Difference’. A set of supporting values that underpin the way the Society does its business were developed in a collaborative manner with a cross section of employees.
The senior management recognised that that the communication of the vision and values would be key to embedding them in the organisation. They appointed a General Manager Culture and Service, thus highlighting the importance that the Society gave to the culture change programme. Once the vision and values were communicated, Stairway worked with the Society to develop a strategy to help deliver the vision and embed a culture of service excellence. This strategy, set out as the Service Excellence road map, concentrated first on the Internal Customer (to improve employee satisfaction and engagement) and then improvements to the service delivered to the External Customer.
In line with the principles of the Service-Value chain, Stairway recommended that the Society needed to create a greater sense of internal customer focus. One of the first steps in the strategic road map was to develop a Business Support Centre based on the shared services principal to replace the traditional Head Office functions. This involved ‘Head Office’ being streamlined and renamed ‘Business Support Centre’ to signify its true function. There was capital investment in an office refurbishment to change to an open-plan environment. Stairway gathered feedback from internal customers on the quality of the service they received and areas for improvement. As a result, each department set internal service standards. These are measured on a regular basis. In the course of one year there has been an increase in internal customer satisfaction from 8.6 to 9.3 out of 10.
Rather than first focusing on front-line service training to bring about the desired changes, senior managers recognised that the Society needed to focus on its leaders to ensure they were role modelling the required behaviours in line with the values.
Stairway Consultancy developed a Service Leadership Programme for all Senior, Operations and Front Line Managers. In order to ensure ownership for the programme, they trained a team of facilitators from across the business to co-deliver the training with Stairway. In total 600 people attended the workshops. These focused on customer feedback, setting and measuring service standards, leadership style, recognising the needs of the external and internal customer, welcoming complaints and learning from these, looking for ways to continually improve and recognising success and achievement.
Once all the leaders of the Society had been through the training the Society introduced a successful one day customer service workshop for all staff.
One of the major changes Stairway recommended was to instigate a recognition scheme to address the concern expressed by staff about lack of recognition. In one year alone the Society received 3000 nominations for awards.
Stairway also helped the Society develop a competency framework to support and embed the values. This has been linked to performance review. A Retail reward strategy has also been developed linked to contribution, control of variable cost and attainment of customer satisfaction measures.
In addition the Society’s training and development offer has substantially increased. The Service Leadership Programme was complemented by further training and development interventions that have been aligned to support the Society’s new competency framework. During a three year period, the number of training interventions has increased by 52%.
Stairway also helped the Society to undertake customer research in order to develop a customer promise for each of the business areas. This set out the levels of service the Society promises to deliver on a consistent basis.
In addition as part of the change process the Society wanted to make it easy for customers to complain. As statistics show, a dissatisfied customer who complains and whose complaint is handled well, is more loyal than a satisfied customer who has no complaints. The Society has revised its complaint procedure for all the business.
The Society has undertaken customer and employee satisfaction surveys to measures the results of the culture change programme.
Looking from an external customer perspective, customer satisfaction measures have certainly improved. The measures focus on the customer promise. The Society has seen a 4% increase in its customer satisfaction scores. Last year the Society had its best trading year ever.
From an internal perspective, the Society conducts regular employee surveys to assess the level of employee engagement. These show increasing levels of staff satisfaction and engagement. Generally it is acknowledged that both customers and employees throughout the organisation are seeing the benefits of change.
The secrets of Midlands Coop’s successful service excellence programme have been the holistic approach to change. The key activities to help facilitate culture change included:
For more information about how The Stairway Consultancy can help your organisation to improve its customer service, contact info@thestairway.co.uk or call 01628 526535.