Case study: Coping with the recession at Barratt Developments

Construction and housebuilding were among the biggest victims of the recession in 2009. But Barratt Developments HR director Jayne Mee is still chipper, as Tara Craig discovers.

On this page:
Recession causes redundancies
Employee engagement survey
Reward and benefits cutbacks
Preparing for the economic upturn
Signs of economic recovery.

Personnel Today last interviewed Jayne Mee in February 2008. She was just over a year into her role at Barratt Developments, the UK's largest housebuilder, and described the job as the best she'd ever had. And despite 18 months which have seen her cut 1,800 jobs while Barratt's year-on-year revenues fell by more than 35%, she insists it still is.

Mee is resolutely upbeat - an attitude that stood her in good stead as her sector nose-dived, with projects grinding to a halt, swathes of new houses remaining unsold, and a chronic cash-flow crisis (in September 2009, Barratt launched a £721m cash call to reduce its debt from £1.3bn to £700m). Year on year Barratt's revenues fell from £3.55bn to £2.29bn, resulting in a reduction in net income from a gain of £86.40m in 2008 to a loss of £468.60m last year.

Recession causes redundancies

While Mee acknowledges the severity of the recession, she is proud of how she, her team, and the company reacted. "We recognised pretty early on that we needed to take action," she says. "We were probably one of the first in the sector to see this."

The housing market began to "drop off a cliff" - to use Mee's own words - in April 2008. Within just two months, Barratt had shed 35% of its workforce. With fewer building projects, the first to go were the employees on the ground, but Mee is quick to point out that the job cuts were across the board.

While the redundancy process was undoubtedly an unpleasant one, the result is a leaner company, with a truly national organisational structure. "We cut fat, not muscle," says Mee. She believes this has enabled the group to operate more efficiently.

Post-recession, while Barratt does not intend to continue cutting jobs, it does plan to go on operating in this new, leaner fashion. And while it was cutting jobs out of necessity, Barratt took a look at some of the other parts of its central services, such as IT. The result? New, more efficient processes, which Mee says have compensated for the smaller teams.

Not many HR directors, least of all in the construction sector, will admit to being comfortable with where they find themselves, and their organisations, at the start of 2010. But Mee, winner of the HR director of the year category at the recent Personnel Today Awards, does just that. She is particularly proud of the speed with which the company reacted to the threat of the recession, and says the redundancies feel like they happened a long time ago.

Employee engagement survey

Morale was always going to be an issue, given that a third of the workforce lost their jobs within such a short time. Mee - astonishingly Barratt's first HR director in almost two decades - launched the company's first employee engagement survey in January 2007, soon after her appointment. It showed that staff were disengaged, and it was evident that the concept of engaging them was not part of the company's culture.

Employee engagement became a priority, and something that the HR team continued to work on before, during and after the redundancy process. Mee launched a recognition scheme - 'Get Recognised' - in July 2008, at the height of the redundancies. She concedes that more traditional HR practitioners might have questioned her timing, but is adamant that it was the best time possible. Staff were overwhelmingly in favour of the scheme, which enables them to recognise colleagues instantly, using a scratch-card mechanism.

The next employee engagement survey, in January 2008, saw a 59% improvement. Mee says she can't pinpoint exactly what brought about such a significant change, given the range of measures taken across the group. Following the survey, each department and division devised and implemented its own action plan, based on the survey results for their area. Mee and her team provided HR support.

Reward and benefits cutbacks

But there's more to boosting morale than scratch-cards and pats on the back. Reward and benefits is a thorny issue at the best of times, no more so than during a recession. Barratt carried out a pay review in 2008, but only for grade 6 and 7 staff - builders working on site. The executive committee, of which Mee is a member, considered them most at risk from the poor economic climate. No pay review took place in 2009.

Barratt has traditionally awarded an annual bonus, but in 2009 took the unorthodox step of awarding a "half-year bonus", for the first half of the year. In the second half, not knowing what the rest of the year had in store for them, the board opted not to award a bonus. But, says Mee, they were careful to communicate all pay-related decisions clearly and consistently, leaving staff in no doubt as to the reasons behind them.

The blow may have been softened by the executive committee members' decision to forego their own pay rises and bonuses in 2008 and 2009. Senior staff were not forgotten, however - the company ran a share option scheme for them in the autumn of both years.

Other 'nice-to-haves' also took a hit. Barratt launched its first graduate recruitment programme in 2008. While 30 of those graduates are now fully fledged members of staff, the programme had to be scaled back later the same year. There are now just five graduates on the recruitment scheme, but Mee is hoping to bring 30 on board in September 2010.

The group's apprenticeship programme is also to be scaled up again this year, with an intake of 100. It was a relatively early casualty of the recession - with no building work going on, there were no builders to take on apprentices.

Mee says: "There's nothing we want more than to continue to bring young people into our business because we recognise that they are one of the feeds into our succession plan for the future."

Preparing for the economic upturn

Confident the worst of the recession is over, Barratt is recruiting again, particularly junior and mid-level managers such as buyers, quantity surveyors, and contract managers, and Mee expects to widen the scope soon. One of her priorities is the employer brand. "We've lost a lot of people, so our employer brand needs to speak for itself."

Recruitment processes have also come under scrutiny. Mee believes these haven't been properly looked at in the past, and that while there is no shortage of people looking for work, the group's processes need to be structured to attract the right calibre of people, who will fit the company culture. "We know what a Barratt person looks like now," she says.

HR directors often talk of skills shortages, but Mee is in a comfortable position. There are enough core trade skills to meet Barratt's needs. But she acknowledges this may not be the case for much longer. As the economy picks up, so will the amount of building work. And Barratt and its competitors will be recruiting. Barratt is already working with ConstructionSkills, the Sector Skills Council for construction, to prepare for the inevitable skills shortage.

But it's not just a case of shortages caused by a reinvigorated industry. As more environmental restrictions continue to be placed on the construction sector, up-to-date skills and product knowledge will be required. Employees will need different experience and qualifications. Barratt staff at operational level will need to be able to apply different trades at different times. It will no longer be a case of just being a plumber, a roofer or an electrician. To this end, Mee and her team have introduced multi-skill training. She explains: "For instance, with apprentice roofers, we will now also expect them to be able to fit solar panels."

Signs of economic recovery

Mee admits there have been challenges during her time at Barratt, but she's also grateful for the opportunities the role has afforded her, including the chance to change the company culture, influence the business, and bring HR centre stage. She now regards her company's HR capabilities as "the best in the sector, and among the best in the industry". But she accepts that her next challenge is convincing people that HR is about more than restructuring.

And there is renewed hope in the sector. In November 2009, the number of new houses being built rose to its highest level for more than a year - a sign that housebuilders believe the worst may be over for the industry. Barratt said at the time that it believed mortgage availability and more confidence among buyers meant that the market would continue to improve, although it warned it would stay subdued in the short term.

When she joined Barratt, Mee told chief executive Mark Clare "forget I'm here for the next two months", and she spent that time gaining a sound operational understanding of the business. She firmly believes that without that, she wouldn't understand the business the way she does today - or have coped as well with unprecedented tough times for the company.

It is hard to imagine that anyone at Barratt is still unaware that Jayne Mee is there.