Theo Paphitis began his career at the age of 16 as a tea boy with Lloyd’s
of London insurance brokers. After gaining experience in retailing and
finance he started his own company at the age of 23 and since then has
specialised in buying up and turning round ailing companies, including the
stationer Ryman and the Contessa and La Senza lingerie chains. He recently
bought 61 Stationery Box stores. Paphitis is one of the dragons in BBC2’s
Dragons’ Den. In the third of a five-part series, he looks at how to take
care of employees
Size doesn’t really matter when you are starting a business. You can start a
business on your own. But at some point you will have to take on staff and
that is when you may encounter problems. All of a sudden you are managing
people as well as a business. And just because you had a good business idea,
it doesn’t mean you have suddenly acquired people management skills. The law
on working practices is now so extensive — as well as complicated — that you
have to consider everybody’s requirements.
How do you do this? Up to now you may have been happily launching your
business and product with a tight-knit group of people totally oblivious to
working-practice directives, discrimination laws, health-and-safety issues,
thinking that these things are not in the slightest bit important. They are
other people’s problems, aren’t they?
Wrong. They are your problems now. And they are only going to grow along with
your business. So it is imperative that you acquire people management skills
and knowledge of legislation pretty fast.
The good news is that some of the ridiculous parts of EU directives can be
neutralised by an understanding and appreciation of your staff and
colleagues. Basically, this means keeping them as happy and as motivated as
you can. You have a head start here — because people want to belong. It is
an integral part of human nature.
Your staff will want to be seen to belong to the organisation and they also
want recognition of their importance within the organisation. In any
business I buy the first thing I do is bring in as many of the staff as
possible for a get-together, presentation and overnight stay with an
activity such as tenpin bowling — and copious amounts of alcohol. The first
thing I ask our store managers when addressing them at such an event is: who
do they think the most important person in this business is?
I put the question to the floor and the answer is always the same — the
customer. Not so, I say. Then they point to me. Wrong again, I say.
Eventually I have to tell them the answer — and I point to all of them, the
workforce. They are the most important people in this business. My job is to
make their working environment as easy to understand, practical and
stress-free as possible. I want them to look forward to coming to work
irrespective of any problems they may have at home. I want them to feel they
are valued and will be listened to. If I am able to achieve this I can
guarantee that the customer will get the best possible service.
This is an important part of our group ethos — making the customer No 1 by
virtue of appreciating your frontline foot soldiers. After all, it is they
and not you who have direct contact with customers.
Motivating staff is not just about making them feel wanted. Tangible rewards
are just as important. Short-term incentives as well as long-term incentives
go a long way to help staff focus on their work. For instance, we
immediately put in place weekly bonuses instead of the monthly bonuses that
many companies have. Why? Very simply, if someone has a bad week they know
it will be impossible to hit their monthly bonus and so they will feel
demotivated. By having weekly bonus schemes you are allowing someone who has
a bad week to start afresh the following week with the real possibility that
they can still achieve their target — and their bonus.
In addition, we look at longer-term incentives over two or three months —
normally a week on a Caribbean island with yours truly — which resulted last
year in me taking 130 of my store and head-office staff to St Lucia for a
holiday of a lifetime. This year 150 staff will visit Mauritius as a reward
for our Christmas sales drive, in which we had fantastic like-for-like sales
growth as opposed to the declines that many of our competitors suffered.
Of course, there is a downside for staff — they have to spend a week with me.
But the upside is that I get to know them even better.
