Improving Iceland’s Employee Engagement

Iceland is a Great Place to Work – and that’s official! The 2009 Sunday Times survey of the Best Big Companies To Work For in the UK ranked Iceland 14th in their top 20 – 73% of our staff told the Sunday Times they had confidence in the leadership skills of the senior management team; what an accolade!

“The Dark Ages”

This is a very different story to 4 years ago, when Iceland was part of the Big Food Group. Costs had escalated, the business was on its knees, sales were down, profits had disappeared and staff morale was rock bottom. Our reputation in the industry was badly damaged; nobody gave us a hope. We were perceived as a business past its “sell by date” and probably one which would be unlikely to recover.

Recovery and Restructure

Over the last 4 years, Iceland has become one of the fastest growing food retailers with double digit year on year sales growth. Following the return of Malcolm Walker in February 2005, we saw a 20% sales uplift in the first year. Investors were paid their money back at the end of 2006. Our operating profit last year was £136m; more than the business has ever made before. Staff engagement is incredible and our employee turnover has halved!

Malcolm Walker, our Chief Executive, was keen to simplify the business which had become too bureaucratic and lacked focus. We went through a period of recovery and restructure to improve our management approach and efficiency. We have rebuilt the business not only in profit terms, but we have also succeeded in rebuilding the spirit of the business – making Iceland, once again, a great place to work, where people are proud to come to work.

People Focus

Following the break up of The Big Food Group, our staff were confused; they did not know which direction the Company was going and felt they were being kept in the dark. As a Company we were process-driven and risked losing the hearts and minds of our people. We had to make some radical changes.

We knew it was important to address a lot of the issues that had developed over previous years, including complex processes and systems, low morale, poor employee engagement and an aggressive culture at management level.

The business plan said we should: Simplify, Focus and Accept Reality.
We also followed that principle with our people plan.

Embedding the HR Plan

Our HR plan – Get, Grow and Keep – was aimed at attracting developing and retaining the best people. This included the recruitment and induction process (Get), personal development and progression within the Company (Grow) and performance management and reward (Keep).

We worked alongside our commercial colleagues to ensure HR activities were not just the responsibility of the HR department, but that managing people became an integral part of the everyday. By building effective business partnerships with our colleagues we ensured that the ‘people’ activities below were owned by everyone, this gave our staff confidence in them as fair processes.

We’ve introduced a clear Performance Management process; including simplified reviews with clear objectives for everyone. The Company operates Performance Related Pay, so people can influence their own level of reward.

For our Store Managers we introduced development based on a modular principle. Over 160 managers have completed a coaching programme (endorsed by the ILM). Feedback suggests they are changing the way they do things. In one store we saved £30,000 in stock-loss after a Store Manager was coached by his Area Manager to reach Key Performance Indicators

Recruitment

New recruitment processes, application forms and tools have been designed to support Store Managers to make the best recruitment decisions. A Recruitment Champion Programme has been implemented to provide Store Managers with an ‘expert’ in recruitment at a local level.

Internal talent events have been held across retail, resulting in a whopping 62% success rate in individuals gaining promotion.

Communication and Incentives

Iceland recognises the need for straightforward two-way communication with all employees. It is a fun place to work and we like our people to be able to gel together, let their hair down and enjoy themselves, as well as learning more about the business and their colleagues.

Annual conferences for Store Managers and Head Office colleagues provide a focal point for launching incentives and cascading key messages.

Channels of communication with our front-line colleagues are equally straightforward and simple. We hold Talking Shop meetings to give everyone their say on issues that affect colleagues in the Company and how things could be improved.

Incentives remain clear and simple. Last year a Store Manager who achieved exceptional results received a BMW convertible. Stores who delivered great standards over Christmas shared up to £15,000 between them. A fabulous surprise when the Chief Executive arrives in store with a crate of champagne and a case stuffed with money!
This year’s conference for retail is being held in Disneyworld Florida.

People plans are produced and people reviews held regularly in each area of the business. We also introduced and publicised the way Iceland can assist and support its’ people;

We opened links with Retail Trust, who provide us with a comprehensive Employee Assistance Programme and Reward Gateway became our voluntary benefits provider.

Terms and Conditions of employment were harmonised to ensure fairness and equality in reward for all levels of staff. This whole process was completed for 17000 employees within 7 months and our people were extremely positive about the changes.

Engagement

Over the last few years we have improved our annual employee survey to monitor levels of engagement and gather feedback on employee satisfaction and issues – ‘ORC’ International manages the process and provides a benchmark comparison to other retailers.

Our satisfaction index score increased from 67% in 2004 to 79% in our latest survey, while our management index also increased from 68% to 82%. Our staff believe the survey is their voice and the response rate is an industry busting 95% with only 11% of people not believing we will act on the information.

Each Region, Area, Store and Department has a bespoke yet practical action plan based on their responses to ensure that the issues which are addressed are those which matter to the people who work there.

Iceland moves like a speedboat amongst the super-tankers of UK food retailing. This makes for a lively and fast-paced environment; one in which we are keen to move forward and make the most of every opportunity. A great example of this is our new store opening programme which will see over 70 stores added to the Iceland estate within a 12 month period, creating a further 3000 job opportunities.

This year will be challenging in a hugely competitive market environment, but the HR team are looking forward to supporting the business at a time of significant growth.

The Bottom Line

At Iceland we have built our success on giving more: better value to our customers and better rewards to our staff. Pay rises are back in fashion and our Store Managers have seen a 50% increase in 3 years. Last October our frontline colleagues received a 6% pay increase almost twice the industry average in retail.

We can now afford to pay well, although that came second in staff priorities.
First was to improve morale and engagement.

Iceland has a Chief Executive who firmly believes that we should create the environment in which you make people feel part of the Company. As he refers to it – “a special family”. At Iceland, our staff are special. They are valued. They are appreciated and we look after them. It’s that simple.

By Susan Yell, HR Director for Iceland Foods Ltd.

Susan will be speaking at Employer Branding Summit 2009 on incorporating the Employer Brand into the HR Strategy. For a full list of speakers or a detailed programme, visit the website.