Leadership brings sweet rewards for Sainsbury's

Sainsbury's latest set of financial results showed a massive improvement in performance. Behind this success lies a leadership programme for the supermarket's top managers, reports Alex Blyth.

The business

Sainsbury's is one of the UK's largest retailers. It has 150,000 employees and a central HR resource of 180. However, when Justin King took over as chief executive in March 2004, the company was struggling.

Diana Breeze, head of organisational development, says: "It was a bad time for the business. We had dropped to number three behind Asda, Tesco was still racing away, and there was a feeling that we'd lost sight of what the customer wanted. Some were even questioning whether there was room for us in the market between Asda and Tesco at one end and Marks & Spencer and Waitrose at the upmarket end."

The challenge

The arrival of King as the new CEO heralded a new approach. The company faced three key challenges: refining what it offered customers in terms of value and quality improving its processes so its shops were properly stocked and, culturally, recapturing the essence of what had made Sainsbury's great in the past. To do this, it needed to build a leadership team to take the company forward.

Sainsbury's began its leadership programme in October 2004 after the board developed a set of values that it thought would help the company achieve its goals. The six values that emerged were:

• Individual responsibility, but team delivery
• Treat every pound as your own
• Great service drives sales
• Respect for the individual
• Getting better every day
• Keep it simple.

Sainsbury's worked with business psychologist Gurnek Bains, of consultancy YSC, on the development of these goals and values.

Straight away, the HR team undertook a major communications exercise to spread these values throughout the business. This involved tweaking the company's staff opinion survey to include the values and embedding them into the performance management process. However, the team quickly realised that the company's leaders needed a clearer definition of what it meant to lead through these values. So, Breeze called in Bains again and they began the next stage of the leadership programme.

The solution

Bains and the Sainsbury's board decided it would help to come up with leadership 'behaviours' to help the retailer achieve its values and goals. After brainstorming, they came up with six: winning, tough love, commitment is earned, on my watch, try something new, and customers pay our wages.

"The behaviours are written in clear language that will mean something to all our leaders," explains Breeze. "While our values are unlikely to change, these behaviours are what we need now, so may change in the future."

To help staff get to know these behaviours, Breeze's team organised a two-day programme for the retailer's top 1,000 leaders. These were store managers and above, who attended one of 35 events held over three months at the leisure resort chain Center Parcs.

Sainsbury's used YSC and HR consultancy Lane 4 to help design and implement the programme, but much of the facilitation work was done in-house, by about 50 of Sainsbury's senior managers. The events involved 360-degree feedback and role plays based both in the business and out of it. A board director was present at every event.

Having completed that programme, Sainsbury's then decided that it needed to run something similar for the next level of managers - the department managers in stores, the depot supervisors and so on. There are 9,000 of them, and so the company ran 237 one-day events over three months. It did all of this without using external providers.

The outcome

Sainsbury's last audited set of financial results, which it reported in November 2006, are testament to the success of the leadership programme. The company enjoyed half-year sales growth of 8.3%, and a 60% leap in profits to £189m.

Internal measures have also shown the programme was well received. The company's monthly staff opinion survey has shown a 10% rise in the indices that measure employee engagement and leadership capability over the past 12 months.

Breeze is in no doubt that the leadership programme has been a significant factor in this recent improvement in the company's fortunes. She says: "If you look at it store by store, there is a direct correlation. Stores that score highly in leadership and engagement in the opinion survey have high sales and profits."

Employee perspective

Helen Johnson is the colleague insights manager at Sainsbury's. As one of the top 1,000 managers in the company, she was invited to the two-day Center Parcs event. She recalls: "It was a very exciting time for the business, as we'd just launched the values and behaviours and we could see it all coming together."

"I found the event extremely useful, mostly because it was a great chance to meet colleagues from other divisions. We were all mixed up together in lodges at the resort, so I met store managers and distribution managers - people I wouldn't normally interact with in my day-to-day work. I left with a much better idea of what they all do," she says.

Although she found the event itself extremely useful, she would have liked to have seen more formal follow-up afterwards. However, she has remained in touch with those she met at the event informally and they have even met up a couple of times to evaluate how they are implementing the leadership behaviours.

Guide to developing and implementing a leadership programme

1. Begin with the board. Top-level buy-in and participation is absolutely essential for the credibility and success of your programme.
2. Get help. Often you and your colleagues will be too close to the issues to recognise the solution, so it can be very useful to have an independent third party to facilitate your discussions.
3. Articulate your goals, values and behaviours in clear language that means something to the leaders in your organisation. Avoid the temptation to speak to them in corporate jargon.
4. Ensure you have a mechanism for measuring the success of your programme.
5. Provide post-event follow-up. Use e-mail and the intranet to reinforce messages and learning that, while embraced enthusiastically on the day, can easily get lost among day-to-day duties.

If I could do it again...

According to Sainsbury's head of organisational development, Diana Breeze, it might have been more effective to split up groups of senior managers attending the programme so that the message was more relevant to each group.

Breeze says: "We know that you're never finished with this type of programme. You need to always be looking at developing it further. However, what I have learned is the importance of focusing on the level of very senior managers just below the board.

"They are highly influential and it's important to ensure they exhibit the behaviours you're trying to embed, but last time we lumped them in with the 1,000 or so below them. This time we'll run an event specifically for them."