Whitbread: change and continuity

April 01, 2002

Every Monday morning Jerry Marston leaves his home in south-west France, drives to the airport, takes a plane to Stansted, before getting another car to his office in Luton. This is impressive stuff. A thirty minute commute on South West trains is generally enough to get most of us scanning the ‘new jobs’ pages.

But the three-hour round trip doesn’t seem to faze the new community investment director at Whitbread. He’s upbeat, enthusiastic and full of plans for the future. Well, why shouldn’t he be? Doesn’t he have the dream job? He works for a company that boasts a 260-year heritage that most would kill for. Whitbread’s reputation for community involvement is one of the most well earned and best known. It boasts the Whitbread annual volunteering awards, which are about as close to ‘Oscars’ night as the field gets. It’s tempting to wonder why someone sitting on such a nest egg should bother travelling into work at all!

But hold off any jealous thoughts. The image of the hands-off manager directing affairs from the veranda between sips of Chardonnay is an appealing one, but it couldn’t be further from the truth. Jerry’s first year in the job has been a relentless one – which makes his present high spirits even more remarkable.

Jerry’s weekly commute is, in fact, a fitting picture of the elaborate journey that Whitbread itself has been on in recent years.

In 1998, Whitbread was a FTSE 100 company. It owned 1,730 pubs and counted Stella and Boddingtons among its leading brands. Like Dirty Den, though, Whitbread is no longer in the pub trade. Nor is it listed among the UK’s top 100 companies.

Instead, a heady spate of investments and acquisitions has seen the company reinvent itself as a leading player in the fast-growth leisure business. Now reconfigured and reenergized, Whitbread operates as three virtually autonomous businesses; restaurants, hotels and health and fitness clubs.

Whitbread’s restaurant arm has always been strong. Since establishing the successful Beefeater brand back in 1975, the company has introduced wellknown chains like Pizza Hut and TGI Fridays to the UK market. More recently, it has upped its presence on the high-street with brands like Costa, Café Rouge and Bella Pasta.

Its hotel business is nothing to be sniffed at either. Creator of Travel Inn some fifteen years ago, the company secured the UK rights to the Marriott brand in 1995. It now boasts 60 Marriott hotels, in large part due to the £578 million acquisition of Swallow Group in 2000, making Whitbread the country’s second biggest hotelier. The health and fitness division operates under the David Lloyd Leisure brand, which in 2001 had over 260,000 members in close to 100 clubs around the UK.

The company is emerging leaner and fitter from the experience, but what has been the impact for Whitbread’s appraoch to corporate community investment (CCI)?

Overall responsibility for Whitbread’s CCI programme sits with the Community Investment Policy Committee, chaired by the group chief executive, David Thomas. The Committee, which meets quarterly, also includes the directors of group human resources, corporate affairs and community investment. Most significantly for the newlystructured company, one senior representative from each of Whitbread’s three business divisions – Whitbread Hotels, Whitbread Restaurants and David Lloyd Leisure – also sits on the Committee.

The makeup of the Committee is no accident. It demonstrates two important features of the company’s current approach to CCI. Firstly, it has buy-in from the highest level. Secondly, it is owned and directed by the separate business divisions.

The day-to-day management and implementation of the CCI programme falls to Jerry and his community investment team of eight. This includes an environmental manager, communications manager, three managers and two support staff. Again, the structure of the CCI team is designed to reflect the flow of the business towards greater divisional autonomy. Previously, CCI was run from corporate centre and managed according to regions. The semi-devolved structure of the new system places greater emphasis on the divisions to implement CCI in a way that is appropriate to the individual businesses.

Each of the three divisional CCI managers comes from within the separate businesses, essentially on a two-year internal secondment into the team. They all bring previous managerial experience into the job and, most importantly, a ready network of contacts within the individual businesses.

“I think it’s fair to say that CCI has come on substantially from where it was twelve months ago”. This is the diplomatic answer of someone who is running well over his yearly quota of Power Point presentations. The blunt truth is that CCI at Whitbread has gone through the mill. Concerns about CCI losing its way and questions about CCI’s benefit to the businesses prompted an external review of the whole programme. The recommendations came back in November 2000. The verdict: refocus. So refocus Whitbread has. And, like the rest of the business, CCI is looking slimmer and trimmer for it. Slimmer by £1 million a year (this, it should be noted, is relative to the diminution of the company’s size as whole and does not compromise Whitbread’s membership of the Per Cent Club). The trimness is found in the cuts to overheads, the devolution of responsibility to the divisions, and the emphasis on brand-owned programmes. All of this is neatly wrapped up in the team’s new mantra: “to make a significant and measurable contribution to the profitability of Whitbread businesses, and to share value, through exemplary corporate citizenship.” An emphasis on the business case for CCI is not new to Whitbread, as Briefing’s first profile of the company in 1991 bears out. Then, as now, the drivers for CCI included: gaining competitive advantage from improved corporate reputation; better retention and development of staff; and greater consumer affinity.

It is unarguable that the last decade has seen the company deliver on the first. The second two, however, are proving tougher nuts to crack. What’s more, the shift in funding arrangements (each business division now proportionally contributes to the annual CCI budget of £1.5 million going forward) adds extra pressure to link CCI activities to the needs and priorities of the business.

Enough of the Power Point strategizing, though. March sees Jerry and his team rolling out the new-look CCI programme.

The differences may not initially be as obvious as one may expect. Whitbread’s hallmark focus on employee involvement and education continues. Many of the flagship programmes also stay the same. The Whitbread Volunteer Action Awards will continue for example, although they are now being administered by the National Centre for Volunteering.

The integration of environmental issues into the CCI package represents an interesting move. But again, the emphasis is on improvement and greater brand ownership, not on producing a clutter of new programmes from corporate centre. The team is busy, therefore, talking with its partners about how to keep its flagship initiatives, like Whitbread Action Earth and Whitbread CARE (Community Action by Re-cycling Equipment), fresh and relevant.

This is not baby and bath-water stuff, then. Call it filtration, perhaps. The programme’s yardstick is fittingly short and sweet: “Supporting young people to achieve their potential”. Whitbread has always run programmes for young people. What is new is the shift in priority. The reinvention of Whitbread as a leisure business finds it with a workforce and a client base who fit firmly in the youth camp, predominantly between the ages of 14 and 28. The link back to the business is clear. Sport is another area where Whitbread is in a position to build on its past successes. Since 1999, coaches from David Lloyd Leisure tennis clubs have regularly been going into schools to teach local children tennis. 8,000 young people are now playing on a weekly basis at David Lloyd Leisure centres. The correlation is not lost on the senior management of the business. Identical reasoning now sees the same management spearheading the new Sport Relief programme, launched in early April.

The ball is now rolling again. This is a significant accomplishment by Jerry and his team. Whether it picks up speed or gathers moss, however, only time will tell. The make or break will be whether the different businesses buy it. And relevance and results will be what determines that particular question.

Only genuine engagement and ownership of all the three business divisions can ensure the programme’s continued relevance. This looks great on the Power Point slides, but how does it work in practice? The new set-up of CCI management at Whitbread goes some way to providing the answers. Perhaps the most significant aspect of the reshuffle is the introduction of a dedicated communications manager to the CCI team. Successfully pushing for CCI to have a place on the company intranet is just one example of the key role that communications will have in garnering employee support for the new programme. The company’s first environment report has also just come out. Roll on! As for results, it is still very early days. What is certain, however, is that the measurement toolkit will not be far away. The value CCI brings to Whitbread’s apprenticeship scheme is just the kind of tangible business benefit that the CCI team will be looking to prove. The two apprenticeship schemes – one a general scheme, which Marriott leads, and the other specifically designed for chefs – are mainstream training programmes. What CCI can add is its links with key organisations that work with young people. Not only is the team working to deepen the company’s relationship with the training colleges, but its close association with youth organisations like The Prince’s Trust and Weston Spirit is proving a vital asset to the programme’s design and profile. Above all, it has encouraged a number of excluded young people who would normally fall outside the programme’s typical catchment to apply.

The demonstrable impact that applying CCI best practice to the quality of the new apprentices needs time to determine. However, in an industry that is beleaguered by high staff turnover rates, any impact on the recruitment or retention of employees will represent a very real bottom-line saving to the business. Despite the transformation in Whitbread’s business over the last decade, some things remain the same. “Grappling with the managerial consequences of making community involvement integral to business operations” was where the Briefing left the company in 1991. CCI at Whitbread has come on a long way since then. But ‘grapple’ the team still must. Ten years ago, when Whitbread first began talking in terms of strategic business benefit, Briefing wished the team well on its journey: “If they succeed, they will certainly have experience others can learn from”. The challenge – and the prize – remain ongoing. Now there, perhaps, is the clue to why someone might be willing to commute across the Channel every week.

Corporate Citizenship Briefing, issue no: 63 – April, 2002

Jerry’s career began in the South Pacific in 1973, where he worked for 8 years in overseas administration. Over the last 15 years he has worked for four UK companies in community affairs/social responsibility roles; at Allied Dunbar (Zurich Financial Services) where he developed their award winning employee volunteering programmes; with Littlewoods and Kingfisher, and most recently Whitbread, in every case taking on the challenge of transforming their community programmes in line with new business priorities. In the mid 90s he headed up Comic Relief through two Red Nose Days, and is currently advising on the establishment of Comic Relief Australia. A Trustee of the charity KidsOut and a board member of Corporate Responsibility Group, Jerry is a weekend commuter to France, where his culinary and gardening skills are increasing in direct proportion to his waistline.