1. The Culture-Customer-Profit Chain
A successful retail case study
An extract from a UK Best Practice Club presentation

2. What this presentation covers
Culture – what is it and how can it be measured and improved
The impact of culture on performance (the culture-customer–profit chain)
How we set out to test this with the client
Questions and conclusions

3. A successful retail case study
Culture – what is it and how can it be measured and improved
The impact of culture on performance (the culture-customer–profit chain)
How we set out to test this with the client
Questions and conclusions

4. Definitions of Culture
The ideology of the organisation
An integrated pattern of human behaviour
The way we do things around here
Culture is a relatively stable set of behaviours and practices
Climate is a short term status affected by recent and current events
(e.g. redundancy, pay rise/freeze etc.)

5. Measuring culture vs. attitudes
VIEWS ON VARIOUS ASPECTS OF THE ORGANISATION AND TYPICAL BEHAVIOURS ME
THEM
ATTITUDES of
toward
champion
victim

6. Likert’s Scales Causal Intervening End-result
Rensis Likert - The Human Organisation (1960)
Well established and trusted scale and measurement methodology based on indicators at different positions in the cause and effect chain as shown
Uses a 9 point scale to expose extremes of opinion and problem pockets
Culture is primarily an end-result
Causal
Intervening
End-result

7. Changing culture involves the 4 “A”s:-
Assess the culture
Analyse the causes
Systems &
processes
Structure
Style
e.g. through:-
Health check
Burke Litwin Model
McKinsey 7S
EFQM Criteria
Act on the Solutions
Audit the results

8. A successful retail case study
Culture – what is it and how can it be measured and improved
The impact of culture on performance (the culture-customer–profit chain)
How we set out to test this with the client
Questions and conclusions

9. Profit through people? Recent research has shown clear links
Culture
Customer
Profit
Sears – USA (800
Stores sampled)
Institute of Employment Studies – one UK retailer (95 stores sampled)
This research (700+stores sampled)

10. Institute of Employment Studies
“Although we had recognised the potential influence that company culture may have upon staff , we had not expected it to feature so strongly.....”
“...Our final model found company culture was a powerful influence within our attitude chain.”

11. Hypothesis Management Style Company Culture Employee Commitment
Customer
Satisfaction
Spend Int.
Change
in Sales
People
Customers
Profit

12. A successful retail case study
Culture – what is it and how can it be measured and improved
The impact of culture on performance (the culture-customer–profit chain)
How we set out to test this with the client
Cultural surveys
Links to KPIs
Questions and conclusions

13. Cultural Survey development
Strategic drivers – Board level ownership
Values
Brand
Desired future culture
Who is the customer?
Testing/customising
First results were key to roll-out decisions
Action
Media
Results
Analysis
Logistics
Design

14. A brief history of our relationship with the client
1996 – first survey – assessing capability for change
1997 – static - confirmed stability/validity - preparing for change
1998 – major improvement across nearly all indicators
1999 – continued change and further improvement
2000 – plateaued – but survey changed to 100% and down to Store level

15. How the early surveys were used
Testing the receptiveness of the existing culture
Identifying change barriers and levers
Customising the Visioning process
Giving a go/no go to different parts of the business
Validating the survey itself

16. How later surveys were used
Measuring impact of the change programme called Living the Mission, especially on the Company Values:-
Getting it right for the Customer
Everyone making a difference
Learning by doing
Pulling together
Being passionate about (company)
Being Straightforward

17. How later surveys were used (cont)
Enabling decisions on HR and customer strategy, e.g.
Implementing store standards
Introducing an idea management programme
Mystery shopper programme
Reward and recognition systems
Integration with balanced scorecard
Widening ownership of results

18. Results
Real and verifiable movement in culture occurred during 1997/8.
Improvement continued in 1999 and was sustained in 2000
All balanced scorecard targets were surpassed
Excellent results on
Approach to customer/supply chain and quality
Teamwork
Working conditions
Communication, involvement and ideas
Plus major Improvement in
Recognition and openness
Focus of reward schemes

19. Change over 4 years in overall culture

22. A successful retail case study
Culture – what is it and how can it be measured and improved
The impact of culture on performance (the culture-customer–profit chain)
How we set out to test this with the client
Cultural surveys
Links to KPIs
Questions and conclusions

23. Enablers to identifying the culture-customer-profit chain
Store number identified on forms
Confidence in confidentiality
100% coverage
Good management of form-returning process
Time off for staff to complete forms
Common format for K.P.I.s
All data collected in one place

24. What we looked at Store size (SqFt, takings, wages)
Store position/customer shopping mission
Third party opinions (Internal, Mystery Shopper)
Staff turnover and absence levels
Financial results (sales, contribution, profit, shrinkage)
Impact of “good” managers
The Company values (from culture survey)

25. Causal variables
Intervening variables
End result variables
Mystery shopper
Company
Recognition
Programme
Culture
Company Values
Management
style
Store
size
“Good” manager
Stock loss
Budget variance
Absence
Staff
turnover
Employee
Commitment

26. Staff turn/attendance
Staff turnover and absenteeism correlate with management style
Evidence that “engagement in the business” is significant in reducing turnover
Pay satisfaction and alienation from the business correlate to absence levels
Absence is more correlated to store size than staff turnover

27. Business results
Performance to Budget is negatively correlated with absence which is related to culture
Shrinkage is lower in better cultures and more customer focused stores and especially those which do better on internal assessment
More stable staff and lower turnover correlates to lower shrinkage

28. What was gained? Data gathered across the board in one place
Many assumptions about modern management methods confirmed and quantified
Many variables, but
consistent threads
enormous immediate and potential value
exciting possibilities
Greater ownership of the numbers
Makes people look at the wider picture
Makes sense of the balanced scorecard

29. What else could you do with it?
Measure impact of HR, strategic and customer initiatives
How important are management skills in influencing staff turnover and results and the opinions of customers?
What impact will additional training have on results?
What is the impact of employee involvement, communication, recognition etc. on performance and retention?
What is the effect of movement or change in local managers on employees and performance?
Are you measuring the right things in your business?

30. More detailed analysis of objectives
How do we go about understanding our own culture-customer-profit chain?
More detailed analysis of objectives
Analyse current data sets for compatibility
Obtain Executive level support
Set up a joint planning team
Set up a pilot run
Culture
Customer
Profit