Profile: Littlewoods – from family philanthropy to stakeholder company
June 01, 1998
Littlewoods is celebrating its 75th anniversary this year with a major transformation of the business. It was in 1923 when Sir John Moores and two other young Manchester telegraphists started a part-time pools business in Church Street, Liverpool. After a loss in the first season, his two partners dropped out, but Moores persevered, a decision that would make him a millionaire by the age of 35. Littlewoods’ Home Shopping business was launched in 1932 and the first high street store opened in 1937.
By the mid 1990s, Littlewoods had become a £2 billion turnover business and share ownership was cascading down to third generation family members. The Group has undergone a corporate governance review to ensure appropriate separation of management and ownership matters. James Ross joined as a new chairman in 1996, after a career at BP and Cable & Wireless, and a new chief executive, Barry Gibson, from BAA’s retail arm, in 1997. Today only one family member remains a non-executive board director.
Littlewoods is one of Britain’s biggest businesses in private hands, but it is no corner shop. Over 26,000 employees generate profits approaching £100 million. With the company still undergoing profound change, the main business focus is Home Shopping, through catalogues and with plans to expand into TV and electronic shopping. The stores businesses include Littlewoods Stores, selling under the Berkertex ‘own brand’, as well as Index and Hitchens. Its Leisure business continues to operate, through pools, ‘spot the ball’ and charity scratch cards.
The company headquarters remains in Liverpool, where it is now the largest private sector employer, and most of the operational sites are in the north west. A massive culture change programme, Changing with Pride, is underway to ensure the company achieves its new vision, to be Britain’s most admired consumer business. The process of drawing up a mission, drafting a statement of values and emphasising individual employee empowerment will be familiar to others who have also been ‘McKinseyed’.
The effect of this corporate transformation on the community affairs function is, it is only a little exaggerated to say, to truncate into two years the history many large companies travelled over two hundred years: from the personal philanthropy of the early founder to the joint stock corporation managing its stakeholder relationships for long term shareholder value.
Review of strategy
Clarifying and differentiating the role of the family as shareholders from professional management was no less difficult, and arguably harder, in community involvement than in the business as a whole. Under Sir John Moores’ founding strong culture of ‘putting something back’, both the business and the family have long made generous charitable contributions. Sir John Moores’ direct descendants have put much of their personal wealth into charitable foundations. With the company an active funder in its own right, beneficiaries were not always clear who was the donor. When the family was the company, perhaps it did not matter. Now a clear distinction is necessary, with the next generation wanting the business run on a par with its peer group, while continuing with an appropriate level of corporate community investment and with individual shareholders free to make their own personal charitable contributions.
Against that backcloth, a new main board Community Affairs Committee was established in November 1996 under James Ross’s chairmanship, with a Charity Sub-Committee to handle charitable grant making. Jerry Marston joined in May 1997 as the company’s first professional community affairs manager. Six months later the Board approved the Committee’s new community investment strategy.
The new corporate mission includes the commitment to be “a responsible corporate citizen who takes an active part in improving the quality of life in the communities we and our customers live and work in”. Regeneration became the core theme, reflecting the company’s central role on Merseyside. Some support continues to focus on charities and community organisations working with disadvantaged groups and individuals, but employee community involvement is being given much greater encouragement, in a move away from a purely donations based approach.
The strategy review identified new criteria to guide choices in support, such as:
investing significant sums in a smaller number of longer term projects;
emphasising job and wealth creation opportunities, and engaging policy makers in partnership;
bringing not just money but people, skills and other corporate resources in a holistic approach;
seeking value added links with the businesses;
looking for measurable impact.
Community programme
The community contribution is around £2 million a year, with three quarters in cash donations and the balance in employee involvement and gifts in kind.
Flagship projects include:
the Graduate Hothouse, to be run with the Liverpool John Moores University, which nurtures the entrepreneurial skills of undergraduates, keeping them in the region and generating jobs and growth for regeneration; Littlewoods’ support has levered £1.25 million of public funding from the Single Regeneration Budget and the European Regional Development Fund;
A Schools Support programme, which targets a broad range of company support on a limited number of under achieving schools in disadvantaged communities where the potential for turnround is good; input includes funding for technology, volunteer reading teams for literacy and access to training for the school management team (the first school identified is Fatima High School in Everton);
founding sponsorship to enable the Groundwork Trust to establish a much-needed programme in Liverpool;
sponsorship of the recently re-opened Tate Gallery in Liverpool’s Albert Docks, to enable them to run their adult access and education programme, targeted on those with the most difficulty in enjoying and understanding art.
These illustrate the regeneration theme, concentrating on enterprise, education and environment, with arts and culture an important part of the regional mix. They will be familiar to other companies which have refocused their programmes over the last five to ten years. One difference is the continuing size and importance of the charitable grants programme, which deliberately offers small sums to a broad range of ‘less popular’ issues.
Not part of the formal community affairs programme, but very much of positive benefit to the community, is the Charities Trust payroll-giving scheme, which was set up by Littlewoods in 1987 and serves some 400 organisations whose employees raise more than ?4 million a year. In addition, in 1996/97, the Leisure division’s trading generated nearly £20 million for the Foundation for Sport and Arts, £16 million for the Football Trust and £8 million to charities through scratch cards.
Organisation
A team of five, led by Jerry Marston, runs the community affairs department, reporting to group corporate communications director, Gwen Gober. The team includes a newly appointed dedicated employee community involvement manager. Jerry Marston is familiar to many in the CCI world as John Bickell’s predecessor at Allied Dunbar and then leading for three years the high profile development funding charity, Comic Relief.
Continuing the Moores family’s community involvement philosophy, senior management is committed to spearheading the company’s drive to meet the obligations which its leadership role on Merseyside demands: James Ross is the regional champion for private sector involvement in the government’s New Deal and chairs the New Deal Employers’ Coalition on Merseyside; finance director, Jim Michie, has just taken on the chair of Merseyside TEC; and retail operations director, Mike Wynne, chairs the new private sector led Liverpool City Partnership.
Future development
This more strategic policy, with a proactive and visible role in the City and the region, has increased expectations in the community that the company can help, resulting in more direct appeals; yet the switch from a reactive, charitable approach limits the availability of general resources. The challenge is to communicate effectively that the company is actually achieving more by being strategic, and that community involvement is much more than being charitable.
The second major future challenge is internal. The aim is a dramatic increase in employee community involvement, building on the company’s historical culture and the caring values of the founding family. The new culture change programme, with its emphasis on individual empowerment and initiative, offers a platform for action, and Jerry Marston’s success at Allied Dunbar gives him the ideal experience. But many companies would say you can’t get ECI going, when staff perceive a threat to their own jobs from corporate restructuring, sell-offs and closures. The worry is that practical realities overcome any chance for ECI to contribute to that process of change, by showing the company continues to be a caring responsible citizen.
Yet if Littlewoods can achieve what others have proved reluctant to attempt, (and evaluate the results and publicise the process), it can not just offer a case study for the sector as a whole; it will also honour Sir John Moores’ memory, confirming his passionate belief that care for the community is good for business too.
Benchmarks
The Littlewoods Organisation
Chairman: James Ross
Chief executive: Barry Gibson
Turnover: £2.28 billion
Pre-tax profit: £85.2 million
Employees: 27,000
Year end: April 30, 1997
Community contribution: £2 million
Percentage of profit: 2.3%
Per head of staff: £74
Policy focus: regeneration, support for disadvantaged groups, employee involvement, regional leadership
Flagship projects:
1. Graduate Hothouse
2. Schools support
3. regional institutions
Employee involvement: major programme to increase involvement being planned; matched fundraising and payroll giving in place
Management: community affairs department part of corporate communications; coordinators in each business division
Contact: Jerry Marston, community affairs manager
Address: 100 Old Hall Street, Liverpool L70 1AB
Phone: 0151 235 2713
Marks & Spencer
Chairman: Sir Richard Greenbury
Deputy chairman: Keith Oates
Turnover: £7.8 billion
Pre-tax profit: £1.1 billion
Employees: 68,208
Year end: March 31, 1997
Community contribution: £9.8 million
Percentage of profit: 0.89%
Per head of staff: £144
Policy focus: health and care, community development, environment and arts & heritage
Flagship projects:
1. Extensive staff secondment programme, with short community assignments and participation on the Princes Trust Volunteer programme.
2. Health and Care Funding including, for example, ?70,000 over 2 years to Mencap to support Family Advisor Services.
3. Community development funding including, for example, ?15,000 to support the national training programme for Foyer Federation staff helping young homeless people.
Employee involvement: Staff secondment represents 27% of contribution with 35 staff on full time secondments and over 200 on 100-hour community assignments. Employee fundraising worth ?400,000 was also matched.
Management: Community Involvement Committee includes six main Board Directors. Nine staff administer the programme. Stores have a small budget for local initiatives, managed by staff committees.
Contact: Yvonne Pennicott, manager, community involvement
Address: Michael House, Baker Street, London W1A 1DN
Phone: 0171 935 4422
Great Universal Stores
Chairman: Lord Wolfson of Sunningdale
Deputy chairmen: Eric Barnes and Victor Blank
Turnover: £2.9 billion
Pre-tax profit: £571 million
Employees: 36,002
Year end: March 31, 1997
Community contribution: £30,000 charitable donations plus contributions at corporate and site level and donations in-kind and of employee time. From 1998, the new GUS Home Shopping Charitable Trust has a budget of £50,000.
Percentage of profit: 0.005%
Per head of staff: 83 pence
Policy focus: at the centre, educational activity, people who are severely deprived and medical research.
Flagship projects:
1. Corporate support for Christie’s Cancer Hospital, Manchester, including help in producing a leaflet for Christmas merchandise.
2. The company and employees have helped with the call centres for Comic Relief and Children in Need.
3. Catalogues provide free space for a charity in each edition, for advertising and purchase of merchandise with all money going to the charity.
Employee involvement: Activity at a local, site level encouraged including volunteering to staff charity call centres. Fundraising is sometimes matched.
Management: Main budget is managed at the centre, with each site controlling around ?1,000 (cash or kind).
Contact: Lucy Morrison, GUS marketing
Address: Universal House, Devonshire Street, Manchester M60 1XA
Phone: 0161 273 3282
Camelot
Chairman: Sir George Russell
Chief executive: Tim Holley
Turnover: £4.7 billion
Pre-tax profit: £70.8 million
Employees: 667
Year end: March 31, 1997
Community contribution: £6.7 million, including ?5 million to the Camelot Foundation.
Percentage of profit: 9.5%
Per head of staff: £10,045
Policy focus: The Foundation supports organisations which help disabled and disadvantaged people play a fuller part in the workplace and their communities.
Flagship projects:
1. Community Support Programme, covering small local self-help groups eg. £6,000 to Minority Ethnic Learning Disability Initiative.
2. Charitable Projects Programme, covering major innovative projects eg. £195,000 to Release, the drugs advice and information agency to establish a national specialist education consultancy.
3. Employee Participation Programme, providing double match funding totalling over £200,000.
Employee involvement: in addition to double match funding, employee can take half a day every four weeks paid leave for charity.
Management: Foundation Director, Aletheia Gentle, supported by seven staff.
Contact: Aletheia Gentle, director, The Camelot Foundation
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