Paul Myners, chairman of Marks and Spencer (M&S), described the company’s successful defence against Philip Green’s recent hostile take-over bid as a “victory for popular capitalism”. The phrase neatly sums up the high-street store’s popularity among its small investors-cum-customers. Few, if any, high street stores can claim such enduring affection among the British public as M&S.
It’s the ‘capitalism’ bit that critics have rightly found fault with in recent years, however. Faced with plunging sales figures and falling profits, M&S underwent a major efficiency drive four years ago, which saw it cut jobs and replace many of its remaining UK suppliers for overseas manufacturers. Neither were popular moves, but they served to keep M&S afloat.
The company’s long standing commitment to community involvement and responsible management also came under the cost-cutting knife. Like the rest of the business, the corporate social responsibility (CSR) team, headed by Ed Williams, was required to justify its existence on commercial grounds. The prestigious Company of the Year accolade, awarded to the retailer by Business in the Community in July, confirms the team’s success re-articulating the philanthropic values of M&S’s Victorian founders in terms of strategic business management and future commercial success.
A modern CSR approach
For M&S, the positive business case concentrates on understanding the needs and wants of its customers better, coupled with maintaining their trust in the quality and integrity of the company’s products. “CSR can help us to draw shoppers to our stores, attract and retain the best staff, make us a partner of choice with suppliers and create value for our shareholders”, M&S’s management confidently assert in the retailer’s first externally assured CSR Report, released in June.
Risk mitigation also remains an important part of the picture. The potential risks for a highly visible retailer like M&S, which sells food, clothing and homewear under its own-brand label, are considerable. As well as the traditional catalogue of consumer-orientated risks (animal rights, chemical use, labour rights, etc), new issues are always emerging from across the company’s portfolio. Data protection is one such example. Genetic modification represents another. Only by integrating its ethical priorities into decision-making across every level of the business, Williams argues, can M&S hope to avoid the panoply of ongoing and hitherto unknown risks faced by a company of its size and visibility.
Risk management still remains an easier argument to win within most companies than the positive case for CSR, but the core principles around which M&S manages its social and environmental responsibilities reflect an admirable aspiration towards becoming more opportunity-focused. Developed by the company’s board-level CSR committee and agreed in 2002, the principles are threefold:
- to take care and act responsibly in delivering high quality products and services
- to create great places to work
- to help make our communities good places in which to live and work.
The first of these is undeniably the make-or-break for M&S, which has struggled to hold on to its core customers in recent years. While investors might not have concentrated as much on M&S’s employment and community policies during the recent Green bid, the two also have a vital role to play in the future success of the company. After all, fashions among high street retailers come and go all the time. The fact that M&S has withstood the years and, even in today’s increasingly competitive marketplace, can still attract ten million customers to its stores every week, owes much to the loyalty its has built up among staff and local communities alike.
Community strategy
M&S has always prided itself on being a good neighbour, ensuring that its day-to-day operations have as positive an impact as possible. Encouraging recycling, recovering shopping trolleys and donating unsold food to local charities mark just some of the everyday activities that are integrated into the management of all its stores. In recent years, it has formalised these good practice models into an overall compliance system against which every store must regularly assess itself.
Likewise with its charitable partnerships, M&S has worked hard over the last three years to bring management rigour and commercial rationale to its community investment programme. Throughout its history, M&S has been a generous charitable benefactor. As a founding member of the Percent Club, the retailer remains committed to reinvesting a sizeable proportion (£7.6 million) of its profits back into the communities where its 398 stores operate. The retailer was also among the six founders of the London Benchmarking Group(http://www.lbg-online.net), established ten years ago to move the debate from straight donations to social outcomes.
What is different about the company’s new community investment programme is that it concentrates on just a few projects rather than a wide range of worthy, but not especially strategic charity partnerships. The programme’s over-riding philosophy – ‘helping others to help themselves’ – encapsulates this move away from philanthropy to sustainable, long-term solutions.
Community programme manager E-J Walker was presented with an opportunity to apply the company’s new strategy of focusing on business benefits and customer concerns when it came to determining which projects to support. At a general level, the relationship between M&S’s priorities as a business and those of the customers it serves is self-evident. Successful retailing requires economically healthy and sustainable communities: ‘healthy back streets make for healthy high streets’, as the well known M&S phrase puts it.
Honing this interdependent relationship into output-driven projects required the six-person community team to identify areas of mutual benefit where M&S could use its resources to maximum effect. With the vast majority of its 67,000 UK and Irish employees living in the vicinity of the stores where they work, common sense as much as business insight led the M&S team to quickly recognise the value it held as a large local employer.
Preparing the workforce of today and tomorrow – what M&S neatly describes as ’employability’ – has therefore emerged as the central plank of the company’s streamlined community strategy. The approach resonated with the company’s customer base when it tested out its new priorities through a series of structured dialogues with consumers.
Marks & Start
As such, M&S launched a flagship programme in February this year which is designed to provide work experience to people facing difficulties in finding employment. The Marks & Start initiative concentrates on people with disabilities, parents wanting to return to work and other groups facing barriers to employment, in addition to those in long-term unemployment
“Marks & Start shows how our community activity is becoming increasingly embedded. It’s not making some passive commitment to the cause of employability. It’s actually us as a business putting our money where our mouth is and integrating employability into our business operations”, Williams says.
While it is still in its early days, all the indications suggest M&S is onto a winner. In the first three months of the programme, for example, one in four of the parents who have completed the scheme have gone into sustained employment – five per cent over the initial target set for the programme.
The conversion rate between those undergoing work placements and going into full time work, either with M&S or elsewhere, is a straightforward indicator of success and relatively easy to measure. Harder to capture, however, are awareness levels among M&S customers. Working closely with the consumer research department, Walker plans to track consumer awareness over the duration of the programme and hopes to be able to draw out positive shifts in brand perception. Identifying a clear correlation between the Marks & Start programme and key marketing indicators such as loyalty, footfall or even purchasing preferences may be a long shot, but the simple attempt to do so indicates an admirable business-focused approach that will undoubtedly feed into other areas of the project’s management.
In addition to the short-term outputs of the programme, M&S is also attempting to analyse its longer-term social impacts. Walker is working closely with Forum for the Future on a new accounting model that will attempt to identify these wider impacts for society. The project remains at a very early stage, but the programme has already attracted the interest of public policy makers as a potential model for delivering on the government’s employment and skills objectives.
Volunteering
The most demonstrable business benefit of the Marks & Start scheme is the opportunity it offers to M&S employees, any of whom can volunteer to act as mentors (known as ‘buddies’ within M&S) to the work experience candidates during their placement.
One interesting difference between the Marks & Start programme and other employee involvement projects is that it enables staff to volunteer as part of their day-to-day jobs, rather than outside the business environment. Not only does this help M&S to keep more of the ancillary benefits from volunteering in-house, but it also appeals to employees who might be uncomfortable volunteering off-site.
Walker also emphasises the personal development opportunities that the ‘buddy’ programme offers. Every volunteer on the Marks & Start project is required to get their line manager’s support so as to ensure that the experience is factored into their personal development assessment. The community team at M&S has also trialled a coaching programme for prospective ‘buddies’ in its Cambridge store.
Most recently, M&S has used community involvement as a means to facilitate its move from London’s Baker Street, where its headquarters have been based for the last fifty years, to a newly regenerated location in Paddington. After consulting with local stakeholders, the community team arranged a series of tours around the local area aimed at introducing M&S employees to their new neighbourhood. “I cannot overstate the impact internally of these tours”, says Williams, “they have engaged people in a way that’s created a real ‘buzz’ about the move”.
Each tour was led by an M&S director, who was subsequently tasked with producing and implementing an ‘action plan’ that would develop mutually beneficial relationships with key local people. The plans, which range from schemes to improve lone parent’s job seeking skills to workshops for the unemployed, are reviewed by M&S’s community team every quarter. Continuing to secure top-level buy-in and involvement will be crucial for the success of M&S’s move towards an integrated, business-focused community strategy in the future.
Going Forward
Bearing in mind the progress that M&S has made over the last four years, it was regrettable that the announcement of BITC’s top award should have coincided with the climax of the Green bid. Aside from the unfortunate timing, the two events augur well for M&S’s CSR team in the long run.
As Company of the Year, M&S has the opportunity to communicate its belief that corporate responsibility must be ‘built in’ not ‘bolted on’. As far as the take-over affair goes, M&S’s investors confirmed to the retailer’s new management the importance they place on what the company stands for. So while M&S faces yet another round of cost cutting, the assurance is there that this will not come at the expense of its principles.
The CSR and community teams, as with every other department in the company, face a period in which every penny of their budgets will be closely counted. The recent announcement that M&S is suspending its involvement in the Cares and Seeing is Believing programmes provides clear evidence that the belt-fastening under Stuart Rose is already kicking in. Nor does it come as a surprise to discover that the retailer plans to discontinue its top-up payments for payroll giving, in line with the Treasury’s decision to do the same. This is common business sense, something the CSR team has learned well over the last few years as it has strived to bring focus to its raft of programmes.
Sceptics might continue to argue that M&S’s obsession with “doing the right thing” increases costs and causes it to become a sluggish competitor on the high street. Yet from another perspective, a business-focused approach to CSR could be the one thing that helps build the relationships and trust necessary to see that this famous retailer remains a popular bet well into the future.