Mitchells & Butlers – HR strategy to deliver business performance

Citation

Phillips, L. (2012), "Mitchells & Butlers – HR strategy to deliver business performance", Strategic HR Review, Vol. 11 No. 1. https://doi.org/10.1108/shr.2012.37211aaa.007

Mitchells & Butlers – HR strategy to deliver business performance

Article Type: HR at work From: Strategic HR Review, Volume 11, Issue 1

Short case studies and research papers that demonstrate best practice in HR

Mitchells & Butlers is the leading operator of restaurants and pubs in the UK, operating 13 key brands across 1,600 businesses and employing 40,000 people. In 2010 the company had annual revenues of £1,980 million.

It was recognized in March 2011 by the CBI People Awards for successfully devising and implementing a change program across the organization. This was achieved through planning, communicating and implementing a strategy to develop the company into the UK’s preferred choice for eating out.

Mitchells & Butlers operates in a market place facing significant challenges shaped by economic and legislative changes, such as the smoking ban, supermarket pricing and tax and duty on alcohol. As a result of these changes, the drinking-out market has continued to shrink year-on-year, declining by over 24 percent in the last four decades. The company’s strategy to develop its food-led brands in the growing eating-out market has therefore significantly accelerated.

In March 2010, the business challenge faced by the company was to achieve the following:

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  Re-shape the business.

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  Increase sales.

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  Increase productivity.

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  Develop a management culture to increase shareholder value.

The associated issues for the HR team included:

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  The need to be more strategic.

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  Relatively low corporate staff turnover and high retail staff turnover at 120 percent.

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  Paper based recruitment processes.

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  Training policy devised at brand level with high level of face-to-face training.

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  Limited cross brand movement of people.

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  Reliance on recruitment agencies and in house training with no visibility of costs and return.

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  Insufficient food skills in face of significant food growth strategy.

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  Slow and ineffective company level employee communication.

Investing in HR

The board agreed to the appointment of a dedicated HR director to the executive committee as it was identified that employees were central to the company’s strategic objectives. The priority was to develop a greater understanding of the issues by talking to key stakeholders and obtaining factual information relating to recruitment, retention and training numbers and costs.

A project brief was agreed and a business case developed to invest in technology as an enabler to develop online recruitment, training and communications. A project team was established to develop, consult with relevant people and test and review before each element was introduced and fully implemented. The project leadership team was strong, consisting of HR specialists across recruitment, training, reward and development. There was a significant re-structure across the HR department to centralize core recruitment and training activity, but also aligning HR business partners to the brands. Previously, HR was led from each of the individual brands; talent planning and development were not coordinated. Training was largely internal and without any accreditation. There was a balance required to maintain key relationships and accountability for delivery in the brands, while maximizing the economics and flexibility of people and resources across the company.

Leading a strategic change program required trust and confidence in making appropriate decisions with ongoing communication to address issues and share successes. This was led entirely by an internal team with no consultants as experts. There was a desire to seek “best in class” and emulate what had worked for other organizations. There was no shortage of information and suppliers providing products but it was difficult to identify a benchmark organization or best practice tool that covered all aspects. It was critical to have an integrated strategy and approach that would work for Mitchells & Butlers.

A focus on training and communication

Innovation was required in the areas of food development, food training and communication. This was achieved by implementing a new food development and training team, while a food training and innovation center was opened to deliver structured programs to management teams. A further change saw the employee communications function separated from external communications and positioned within the HR department.

Our wide-ranging internal communication strategy included the following elements:

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  Communication forums.

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  Employee inductions.

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  Company poster “What’s cooking?”

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  Targeted emails to senior and mobile employees.

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  Structured meeting process from executive through to retail staff.

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  Webcasts.

In addition, an employee intranet and a dedicated retail employee website (Ourhub) was designed and launched in order to ensure retail employees had a dedicated resource for internal communication.

The company’s external communication to key stakeholders (including shareholders, investors, MPs, police, media, suppliers and customers) is carried out through our website, stock exchange announcements, analyst calls/seminars, trade publications, social media and advertising. The strategy was communicated to all stakeholders and two-way communication encouraged, including consultation with business heads and the operations team to continuously improve quality and consistency of recruitment and training.

A centralized approach to development

The unique selling points we were able to offer as a company when recruiting were the number and range of job prospects. The challenge was the lack of development programs and the conflict between specific brand values against the company values that are part and parcel of a larger organization. Indeed, one part of the business, which operated to very specific independent brand values, would not agree to being part of the new company processes and so was excluded from the changes. However, within 12 months this aspect of the business recognized the value of what was being created and quickly changed its mind.

Accredited training was developed for all levels of the organization, including NVQs, certificate and diploma programs in multi-unit leadership and masters level programs, offering progression opportunities to engage and motivate staff. This was supplemented by internal development to assist internal succession.

Reports were introduced throughout the organization. Everyone was reviewed for their level of management and staff retention and succession. There was visibility on levels and costs of training undertaken and an ability to see the return on recruitment and development investment. Directors and business managers were able to benchmark performance among their teams in a balanced way, share successes and establish what the good managers were doing.

An employee survey was implemented across the organization to understand the levels of engagement across the business. Leaver surveys were introduced to establish why people left the organization. Information was provided to review and compare performance across the brands. Progress against the HR strategy and policy changes are discussed and agreed at the HR executive.

Significant achievements to-date

The results of the change program include the following:

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  Increased employee engagement at 82 percent through training, communication and coaching.

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  Employee job satisfaction high at 91 percent.

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  Staff turnover reduced from 120 percent to 80 percent.

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  Five hundred percent ROI for the multi-unit leadership program and 100 percent line managers reported performance improvements.

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  Productivity improved by 5.2 percent serving 14 million more meals and 3 million more drinks with 700,000 fewer hours.

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  Increased operating margin of 16.5 percent (1.2 percentage points higher than previous year).

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  Growth in market share, outperforming by 8 percentage points compared with decline in pub eating out and drink decline of 5 percent.

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  Increased sales performance of 0.5 percent and customer satisfaction up 2 percent despite recession. This is correlated to sites with high levels of employee engagement achieved through training (evidence of how an excellent HR strategy can deliver more for less).

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  Average profits per pub the highest in the industry.

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  Overall department costs reduced by £163 million.

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  An increase in like-for-like food sales, including an increase of 5.1 percent in 2008, 2.5 percent in 2009 and 4.3 percent in 2010.

Mitchells & Butlers has continued to re-shape the business and move food volumes through the sale of 333 non-core pubs, the Hollywood Bowl brand and 44 lodges (hotels), all in 2010. Food now accounts for 47 percent of sales and the future is looking very positive thanks to excellent leadership and dedication of the teams. Our strategy and future potential for growth as a food-led business is extensive with total outlets expected to increase significantly and focus on performance improvements to increase profitability.

Liz PhillipsBased at Mitchells & Butlers.

About the author

Liz Phillips is currently responsible for HR and OD across Mitchells & Butlers. She is responsible for the delivery of the HR strategy and achieving transformational change across the company. She was appointed Director of Manpower Planning and Resourcing in March 2007 to develop and implement the retail recruitment and succession strategy. Her role evolved to cover development and employee relations across the retail and corporate population, a total of 44,000 employees. She studied Hotel and Catering Institutional Management Association (HCIMA) and graduated from Nottingham. Liz Phillips can be contacted at: liz.phillips@mbplc.com