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Executive Report: Exceeding its goal Proud of his personal invitation, Robert Aplin reports on GAP Group’s 2007 Management Conference, entitled ‘Satisfaction Guaranteed’. No hirer had ever asked me to attend its annual Conference before, so, after my initial surprise at the Directors’ invitation, I felt privileged and honoured. For many years, we have kept a close eye on the progress made by GAP Group Ltd as this Glasgow-based family-owned independent hirer has expanded steadily south through England and Wales. Throughout this time, we have enjoyed a great relationship with the company, particularly with Joint Managing Directors Douglas and Iain Anderson, who have always been open and honest with us. When I last caught up with GAP Group’s progress in autumn 2005, the Directors had already set a £100m turnover target by 2009. In that year to March 2005, turnover stood at £56m. Opening this year’s Conference, Financial Director Andrew Stewart revealed that turnover in the year to March 2007 increased to £74m, although pre-tax profit, at £6.2m, was weaker than the previous year. GAP, however, maintained its capital expenditure at £30m, its borrowings remained static and its gross book value of plant was £136m. In his financial overview, Andrew Stewart stressed the need to manage growth and control costs. He also stated “we must no longer chase low margin revenue as the consequence is often bad debt write-offs.” He pointed out that the tender process for new national account contracts now takes 6-12 months to impact the business, which is much longer than five years ago. Although not satisfied with GAP’s profit performance in the latest financial year, Andrew Stewart highlighted “our excellent financial stability” and told his audience that the company will make the necessary effective changes in this financial year. In his lively, seemingly ‘off the cuff’, presentation on customer satisfaction, Iain Anderson stressed to GAP’s management team, “customers want value for money, consistency, honesty and openness, as well as for us to be a problem solver for them and to build a long term relationship.” He stressed the need for the GAP team to establish customers’ expectations, value their business, be easy to deal with and provide them with…doughnuts! “Show them you care – take them something nice.” GAP, like every hirer, faces issues of retaining its own talented employees. In discussing employee satisfaction, Iain stated, “our greatest resource is you and your team. However, over 50% of people recruited will leave within two years, 25% of people recruited leave within six months and, generally, nearly 70% of organisations report having difficulties replacing staff. Failure to retain talent is an enormous cost when you consider that it takes, on average, nine weeks to replace staff, not to mention the impact on customers and the GAP team.” Iain Anderson reminded the Conference of the statement from the HR Director at Vodafone that ‘the most effective retention strategy is a great manager, not an HR policy or process.’ This same executive is also quoted as saying, ‘people join great companies, they leave bad managers.’ In order to improve the issue of staff retention and build a winning team, Iain encourages GAP’s depot management team to “get to know your teams, treat each one with fairness, be polite, never threaten them, be direct with them, outline the opportunities available to them within the company, have fun together and…buy them fish and chips occasionally.” More food for thought. Leadership Older brother Douglas Anderson gave a presentation on ‘Leadership’. He argued “good leaders value their people, identify the company’s values and consistently demonstrate them, create a vision for the team and garner support for that vision. They empower people to make decisions, identify performance criteria and regularly provide constructive feedback against those criteria, foster a sense of unease about the current context with a view to promoting change and innovation, encourage teamwork within and across teams and maintain open channels of communication.” On the subject of great leaders, Douglas stated, “the foundation stone of a great leader is cultural intelligence – the person must be able to ‘walk the talk.’ Such a leader must be able to prioritise by understanding what is really happening by sorting the big issues from the trivial. They must have genuine self-confidence and be flexible to cope with shades of grey because very little in life and leadership is black and white. They must live with tension and manage conflict, have the wisdom and humility to admit when someone else is right and have a warm heart and thick skin to give the impression of a nice guy, but don’t mess with me.” “We aim to satisfy our customers” Keen to learn from the experience of other specialist hire companies, GAP invited Khaled Shahbo, from Enterprise Rent-A-Car, to provide the keynote address on developing and maintaining a culture of customer service. “Enterprise does not see itself as just a car rental firm - it is a business that provides a service. Our focus is the same as other service companies – we aim to satisfy our customers. “Enterprise wanted to know what customers wanted and, in 1994, created a simple questionnaire, with only two questions, in order to get a good response. First, it asks customers to rate their experience with Enterprise. Second, it asks if they would use the service again. The results were used to build the Enterprise Service Quality Index (ESQi). This is a measure by which each Enterprise branch is now judged. We learnt that 'completely satisfied' customers were three times more likely to use the business again. The survey showed that customer satisfaction had a direct influence on repeat business. This, in turn, has a direct impact on sales and profits. “Since 1996 we have has used ESQi to reward branches for good service. We also used it to see who should be promoted. We only promote from within, so this was a huge incentive to do well. Customers often see more value in good service than in lower prices. ESQi shows that customers particularly valued the attitude of employees, as well as the speed of the transaction and the cleanliness of the car. ESQi helps Enterprise to reward employees for knowing what customers want and giving it to them. Our No.1 position is a direct result of this good customer service.” “Delivering better performance” Obviously keen to highlight recent national contracts that it had won from competitors and to hear how satisfied these customers were, GAP invited two customers to discuss their working partnership. Keith Aldrich, Divisional Procurement Manager, of Accord Highways, explained how GAP had recently won its Supply Chain Award from over 1,500 providers. In awarding the five year, £8m contract, Keith explains “GAP was not the cheapest on price. It offered a similar ethos to Accord and delivered a better performance, considerably reducing our down time. “It took us six months to understand what GAP is all about. The company has aligned itself with our business growth to deliver exceptional service. In particular, by opening new depots in Oxford and Exeter to supply our business, GAP has demonstrated that it is prepared to invest heavily to ensure our satisfaction. We particularly like its online ordering system that allows us to hire from a central hire desk.” As National Logistics Manager for National Grid, Roger Aspin “lives health and safety every minute of the day. Our 23 Last Mile logistics centres, located in central and eastern England, provide a ‘one stop shop’ facility for our gas and electrical engineers. These local distribution centres that hold National Grid’s own equipment allow our engineers to quickly draw down materials to deal with emergency repairs and general maintenance. “We must have a one hour service to enable us to get equipment out to the teams as quickly as possible. The previous hirer under the limited contract did not meet these levels of service. We chose GAP because it is passionate about hire and wants to work with us in a collaborative way. It brings a fresh set of ideas to National Grid that help us to improve our service and reduce costs.” Awarded in February this year, and trading since April, this contract is worth £1.5m annually over three and a half years. In the first quarter of this financial year, the Directors are convinced that the company has already taken on board many of the themes discussed at the Conference. Commenting on current and future trading, Douglas Anderson states, “new and relocated depots are now making a significant contribution and, with the latest contract wins coming on stream, the first quarter of this year would indicate we are firmly back on our historic growth track of 15-20% annually after a slightly disappointing performance last year. I made the rather bold statement in 2000, when our turnover was £25m, that we would achieve £100m by 2009. I am very pleased to report that, with the tremendous support from all our staff, customers and suppliers, we will now exceed this goal.’’ • Executive Hire News › Archives › August 2007 › Executive Report › Exceeding its goal
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