Date: 01/07/2014 Duration: 00:19:39

While your business is small, the founder can personally interact with the employees and convey the core vision that they have for the organisation. As the organisation expands, this is increasingly difficult, and the founder has to rely on others to ‘sell the dream’. In this episode, we speak to Alex Saint, co-founder and CEO of Secret Escapes, about the process of ‘stepping back’ as his company has expanded and opened offices abroad.

We also speak to Ksenia Zheltoukhova, Research Associate at the CIPD, who discusses recent CIPD research findings, which highlight the importance of finding a way to formalise your values as your business grows.

To hear how DUO have formalised their values with the help of employees from across the business, we speak to Claire Alexander, HR and Talent Development Manager at DUO.

We also speak to Ben Saunders, Head of HR at IMarEST, the professional body for marine professionals, about the vision and values challenges faced by a membership body, and how they’ve used technology to ensure that their offices abroad keep close to their UK headquarters.

To discuss this episode on Twitter, use the hashtag #cipdpodcasts

Philippa Lamb: For many small and medium sized enterprises, keeping hold of the organisation’s core vision and values as it expands can be tricky. But as new CIPD research shows, these are vital assets, because if culture, purpose or values are allowed to slide your people and the business will both feel the impact. Ksenia Zheltoukhova is a research associate at the CIPD and I asked her about the challenge of maintaining culture through organisational change.

Philippa Lamb: For many small and medium sized enterprises, keeping hold of the organisation’s core vision and values as it expands can be tricky. But as new CIPD research shows, these are vital assets, because if culture, purpose or values are allowed to slide your people and the business will both feel the impact. Ksenia Zheltoukhova is a research associate at the CIPD and I asked her about the challenge of maintaining culture through organisational change.

Ksenia Zheltoukhova: Well the bigger context of this is that we know post-recession a lot of larger companies are struggling to regain their values; they almost lost what they had and now are trying to rearticulate what they’re all about. So the main key challenge or the key lesson for SMEs is not to lose those values in the first place.

So what we’ve found in our research is that of chief importance for the value, for the evolution of values, is when the senior leader - who is very much hands-on with the operational day -to-day side of the business - takes on a more strategic role and perhaps doesn’t have the opportunity to speak to every single member of staff every day to make sure they are on board with the values.

So at that point it is quite important that the business doesn’t lose what they’re all about and they put mechanisms in place to ensure everyone is clear what the values are and also have the opportunity to live them.

PL: Alex Saint is CEO of Secret Escapes, a travel deals website that he co-founded in 2011. Secret Escapes stated life as a couple of people crammed in the corner of a small office, now the headcount is 135. That's a number that's constantly rising thanks to the company’s rapid growth and for Alex maintaining culture is one of the toughest challenges the company faces as the site expands.

Alex Saint: When you’ve got a couple of guys working in the corner of your office and you’re literally a few feet away from them it’s not difficult for them to understand what your core principles and beliefs are and for you to be able to mentor them and coach them through the way they go about their roles. But now trying to find a way of having the company operate as if I were working in every team and we’re having close contact with everybody and everybody could get a sense of how I feel about stuff and what my values are that's the real challenge.

But having said that one of the things that I'm starting to get to grips with is the idea that maybe there needs to be a level of individuality about each of the teams and maybe it’s not absolutely critical that everybody is a clone of me, that we need lots and lots of different types of attitudes. Provided that everybody buys into the fundamental principles of what we do and some of the fundamental methods of the way in which we go about our work then I'm becoming more and more open-minded to the idea that there are several different ways to skin a cat and ultimately what matters is the results. But I would love to feel like everybody who works for Secret Escapes felt the same way about it as I do.

PL: I asked Alex Saint about the values he felt were intrinsic to Secret Escapes and he described a passion for detail and quality. Now hearing him speak it was obvious those qualities are innate to him but how easy has he found it to spread his ideology throughout the organisation?

PL: And obviously that passion for detail and quality is innate in you and it was your vision for the organisation and presumably with the original management team and people you had round you at the time when you started. How do you spread that through a much bigger organisation? Obviously you can put processes in place but there's more to it isn’t there?

AS: Well you’re absolutely right - processes become more and more important and we’re trying to get our heads around that at the moment; how we go about disseminating that culture across the organisation. But there are simple things, like for example the way in which we measure our weekly performance is identical across each of the different territories and giving people a template and expectation as to how they’re expected to report makes it quite easy for them to understand what our expectations are in terms of the level of analysis that they go into.

But I think without actually spending time with people it’s very difficult for them to pick up on some of the softer stuff, on some of the values, for them to really get where your particular passions lie and that's why it’s really important I think to spend as much time as possible with the senior management teams around the business. So we now have an office in Stockholm, in Munich, in Berlin, very soon we’ll have one in New York. I'm just going to New York next week to spend a full week with our nine sales guys over there, literally all cooped up in a room so that they can start to get a feel of what we’re about.

One of the problems I think we may have in the US if we’re not careful is it’s so distant from the core that unless some people with Secret Escapes in their blood go over there and spend some time with them they’re going to find it tough to understand what we’re about. So that kind of close contact thing, I'm not sure there's much of a substitute for that. I certainly haven’t found one yet but obviously the more people you hire who share your passion and share your vision the more they can do some of that evangelical work instead.

PL: Alex was the first to admit that Secret Escapes now has work to do in terms of adopting specific HR structures to support these processes as the business grows. I asked Ksenia about the sort of mechanisms she thinks are key to making sure that original values survive and flourish as an SME grows.

KZ: The important thing to remember is that values and culture are always in flux; there will be no point in time at which a culture is not evolving, be that due to the organisation growth - so hiring new members of staff who may be not on board with your values yet - or it is about the organisational restructure, developing people, changing the nature or the direction of your business.

So there is a multitude of factors that impact your values and culture at the same time and what we’ve discovered with this particular research is that specific people management practices can help you in articulating those values and also helping people to live those values, so almost sending them the keys and the signals of what is expected of them in terms of behaviours.

PL: What sort of things are you talking about?

KZ: The first thing you have to do is the articulation of values and that is all about creating the narrative about what your SME is all about and what it lives day to day. So although maybe putting your values on paper is a difficult task, or maybe some SME leaders and HR managers think it’s an unnecessary thing because of course we all know ‘what we’re all about’, it is very important for those new members of staff and perhaps for those employees who are not quite sure which way to go.

PL: So you need to really spell it out?

KZ: Absolutely but at the same time whilst putting your values on paper make sure they are meaningful and relevant. So what we learnt from the case studies and from the positive examples it’s always good to involve people in definition of those values and perhaps you will come up with a list of 26 at first but they will really help you to distil those to the key five or four that make sense to everyone in the business.

PL: Founded in 1974 with a head office in Bath, DUO is now an international footwear brand selling made-to-measure hand-crafted boots and shoes for women. Claire Alexander is their HR and Talent Development Manager. When we met in London she told me that DUO’s people played a big part in actually writing down the company’s values and specifying the qualities that a DUO person should have.

Claire Alexander: The DUO qualities that were identified by representatives from across all areas of the business and different levels of the business were: showing positivity, showing initiative, supportiveness, having integrity, being flexible, so having flexibility, and demonstrating commitment to DUO and to the company. We deliberately try not to be too prescriptive about how the qualities are discussed in reviews and appraisals, the language itself that describe the qualities is taken from the original concepts from when we had the workshops to come up with the qualities in the first place. I jotted down all the different descriptions that everybody used and that's what basically brings the qualities to life. So it’s written by the people for the people.

PL: For DUO involving their people in this process has reaped fantastic results. Claire Alexander.

CA: I think that was key in making it a very easily accepted thing, we had no kickback from it, we had no negativity from it, everyone just went along with when we introduced them and I thought that was quite key because when you’re talking about suddenly introducing into an appraisal system, measuring or assessing people on how they’re behaving then you could very quickly get people thinking, ‘Well hang on a minute how come you’re suddenly going to be measuring me on how I do things rather than what I do, this is something that we’ve never done before?’ So I was really conscious that actually if it’s stuff that comes from them then they’ve automatically already engaged in it and bought into it and already demonstrated it. So there's no issue.

PL: Ksenia, research adviser at the CIPD, agreed that involving employees in this process is very valuable.

KZ: If you involve your employees and if you ask them what they’re all about or what the company’s all about, they’re likely to come up with the words that actually have meaning to them and therefore stick to those values in future.

PL: Ben Saunders is head of HR at IMarEST the international professional body for marine professionals. Founded in 1889 it’s now the largest marine organisation of its kind but it’s recently undergone a period of acute change which included the downsizing of the London office whilst expanding overseas. So big challenges, and I asked Ben how the organisation had tackled them.

Ben Saunders: It’s been a really good challenge and I think it’s probably something that's come better with the use of technology. So we have not only members of staff based in effectively three areas in the world but we also have 50 branches throughout the world and representation in over 100 countries. And perhaps as an organisation we've focused more on our members than our staff and it was a bit disjointed.

So one of the functions that came into effect with our new chief executive was the creation of a people function. So not only the members going through, joining us and getting their products and services and also their technical voice, but also the volunteers actually coming under the same remit as the HR function because people is what we do, we’re a people business. So that was one way actually trying to bring together the volunteers and the staff to stop that divide of the headquarters and paid staff and our volunteers doing this.

PL: Right.

BS: The next challenge was actually communicating them. So we’ve just launched a new online collaborative forum called Nexus which is there to provide our members with opportunities to upload information, share ideas and also our staff in other areas. So we’re not necessarily bound by actually having to geographically meet when holding our meetings of our staff consultations. So that's quite a good step forward.

PL: The use of new technology was a key development here but iMarEST is also sharing its cultural vision through both collaboration and communication. Doing that has taught them that different approaches can be needed in different regions and that maintaining cohesive vision and values doesn’t have to mean replicating the same organisational structure everywhere. Ben Saunders.

BS: We still maintain face to face but perhaps we won't do it as regularly. So the chief executive or one of his senior managers will spend time in Singapore, our second largest office, but they'll do that as part of a business development trip so that they’re actually there to help engender that culture into the second office.

What we also found was that we tried to mimic in Singapore the same setup in London and so we’d have a membership person, we’d have a salesperson and we’d have an operations person and where they actually used to report to three different direct reports of the chief executive we found that when they had a comms meeting, that each direct report would feedback different information or slightly different takes to their teams over in Singapore. So the three people sitting in Singapore or those three teams were sitting and saying, “We've heard something slightly different.” So we actually learnt quite early on that the distance probably needed to be addressed in a slight new way. So we formed that into an Asia pack business unit reporting to one direct report to really sort out the weeds in communication that could have happened beforehand.

PL: Okay so more direct lines of communication, direct line of sight in a sense between different bits of the organisation.

BS: Exactly.

PL: I was interested to hear how the staff and members of such a long-established organisation had adapted to these changes. Here’s Ben Saunders again.

BS: With a period of change, any period of change it can be exciting for some people but also daunting for others so what we’ve actually tried to do is very much focuson bringing the communication and the decision-making involved in the wider organisation at an early stage than perhaps as was previously done before. So when the board of trustees meet then the next week the chief executive will brief all the staff collectively rather than just the heads of department involving them in perhaps decisions moving forward. That's a commitment that's given by our chief executive to engaging our members of staff in the decisions. And it’s not just a sort of communication, here’s a PowerPoint, it’s actually getting their views and their opinions on the things that matter.

PL: And is that working well?

BS: It has. Initially there was always perhaps it was a broadcast and then look at PowerPoints and slides, but now people are not frightened to actually ask questions and to put forward their suggestions. Another thing I think we’ve actually tried to instil in our managers is that perhaps the questions from members of staff when they’re excited or naturally curious about something is not necessarily a bad thing. We should encourage our staff to question a decision that's been made or a proposal that's going to take place it tends to bring out a richer learning environment but also a better product at the end.

So when we actually said to our members, we’d like to move all our members to digital communications one of our staff said, “Well actually that's perhaps going to be all right for the day-to-day, those who are au fait with technology but some of our older members perhaps may not like this.” So we had to build those sort of clauses in and that way of caring for them while still taking care of the increasing needs of our business.

PL: IMarEST is a not for profit, members’ organisation and I asked Ben if that presents any particular challenges in terms of values and culture?

BS: I think actually in the past when I first started there was almost a view, ‘well we’re a charity’, a professional body is a charity or can be a charity and we’re a charity so it’s all right to not be profitable and that's a bad thing being profitable. But actually what we try to say is now we’ve got to be commercial to make excess money to be charitable or to deliver good causes. So that's what we’re trying to change the focus on.

PL: And that is quite a shift in values isn’t it?

BS: Absolutely, yeah. And so from certain points of view perhaps in the past we might have run a socialising event for some of our older fellows but if it wasn't actually bringing us in any potential leads or any sort of financial gain or benefit for us then we may actually question why we’re doing that and could we tie that effort from the executive into another activity that perhaps would raise our profile, that perhaps would increase our networking opportunities or our presence in the field.

So it’s very much changing that culture to say we’re not actually a charity what we want to be is a professional body that makes a surplus so that we can be charitable, whether that's supporting those in the field at university or colleges with sponsorships or bursaries or supporting an intern programme or creating a careers policy that can help attract people into the wider marine community and we can only do that when we’ve actually got sufficient money above and beyond our operating costs.

So that is a mindset we’ve had to go through and I know that's been an uncomfortable one for perhaps some of our purists that would say they’re a technical organisation so therefore we can't make money. Actually we can make money but we can then sponsor our greater range of technical products and services back to our members.

PL: Has that been a tricky conversation?

BS: It has been and I think it’s one of the things we’re trying to do. So when we sit there and say to people, “Actually we’re not going to run that event because it didn’t really create, or it won't create us the profile, it won't get us the recognition we need, and only three people were interested in it,” well those three people may be very interested in it but actually it’s not going to help us raise our profile within our marine community or generate or take up a lot of time for our staff.

PL: Brand is something that's intrinsically linked to culture and values and a strong brand that staff can identify with can help employees genuinely connect with the founder’s vision. Here’s Secret Escapes founder Alex Saint again.

AS: The brand is very useful in terms of helping us to cement the culture because, take the TV for example, the TV ads, it’s a visual embodiment of everything that we’re about and I think it makes it very real for everybody and it’s something that everybody is rightly very proud of, people can point to something on the TV and say, “This is us, this is what we do.”

PL: That’s where I work.

AS: Yeah absolutely and so I would say that's been a really strong element of our people, you know, I hesitate to say ‘development’ because that suggests some kind of proactive moves on our part but it’s part of what our people are and what they're about, the brand, we’ve been very fortunate to have created something that is so recognisable and well thought of and that makes a huge difference I think to our people.

PL: It’s important to emphasise that there are clear business benefits here as well as the more obvious benefits to people. And of course it’s worth saying that this isn’t just a nice thing to do this plays into your corporate performance.

KZ: Absolutely it makes absolute business sense and we always say that in SMEs people are ever more so your business because the organisation is so small and it has to often compete with global players. Every single person matters and it is very important that everyone is aligned to the same purpose and ultimately to the same values.

PL: I asked Claire Alexander, HR and Talent Development Manager for DUO Footwear if she could identify organisations that are managing this process of growth particularly well and that others on the same road to growth might learn from.

CA: I worked at Virgin Mobile for nine years and it became Virgin Media whilst I was there and I think certainly if I think back to the earlier days Virgin Mobile had a very, very strong values and very strong brand culture.

PL: And fast growth.

CA: And very fast growth and actually being at DUO feels a little bit like the early days at Virgin Mobile when it was very much working things out as we were going along and everybody was pulling together to try and make a success of something. I think the difference with Virgin is they had bigger budgets.

PL: Yes. Does that matter do you think?

CA: This is what I like to see as a challenge at DUO is actually how can we recreate some of the things that I know worked really well at Virgin but on a smaller, next to no budget. And I think some of the key things, the lessons for me were in communication, I think that was really big at Virgin they were very, very good at talking about the brand a lot, talking about the values a lot, introducing it into a lot of the things that we did and always being kept in the loop with anything that was kind of going on in the business, any upcoming changes.

And so that's again where I got the idea about having our annual company day was we had similar things at Virgin obviously on a much bigger scale. But it just meant a lot to just sit there and listen to the heads of the company talk about where it’s going and why and what direction we’re going to be taking and how we all need to pull together and what are our overarching objectives, where is it that we need to go and how can all of our individual objectives feed into that.

So that's something that we were really trying to bring into DUO. It doesn’t cost anything just to talk about stuff and just to get people on board with stuff, very much trying to keep communication channels open. Ongoing challenge but I think there's definitely been good progress made.

PL: That's it for this month. If you’d like to dig further into the issues we’ve been talking about you can find the research report on the CIPD website.

Join me next time when I’ll be looking at chief executive reward. Why has top executive pay risen so far and so fast and what will the consequences be?