UK: Ninety-five per cent of this man's staff say they love working for him. What's his secret?
By Sue Beenstock. Wednesday, 01 April 1998
UK: Ninety-five per cent of this man's staff say they love working for him. What's his secret? - Julian Richer has perfected the art of staff motivation. It's simple but effective.
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Julian Richer has perfected the art of staff motivation. It's simple but effective.
There's a story Julian Richer likes to tell of the day many years ago when a member of staff came to hand in his notice. No one in Richer Sounds' hi-fi empire had ever done such a thing before. But this man was different. He was going to join the church. He had weighed up working for Richer Sounds or God, and God had won. Since then, of course, a few other staff - sorry, that should be colleagues, for they're all equals here - have quit, and like any benevolent boss, Richer is slightly peeved.
As far as he's concerned, Richer Sounds is all about people being friendly, helpful and honest. Surely even heaven itself can't be that different?
This, in a nutshell, is what Julian Richer calls the Richer Way: make sure your staff are happy in order to give good customer service, increase turnover, reduce complaints, cut theft and absenteeism. You've got a huge payback financially, adds the 38-year-old Richer, 'never mind the fact that you sleep better at night as a chief executive.' In the last four years, bosses at Sears, the Halifax and Asda have hired Richer to help them instigate some of his motivational schemes.
His methods of creating a happy workforce are numerous and legendary, including free access for staff to seven holiday homes in the UK and Paris (regardless of sales performance), trips on the Orient Express for staff who come up with the best ideas, a fiver every month to each employee so they can go down to the pub and brainstorm, and use of a Bentley or Jag for a month for the best performing shop.
A bit gimmicky, perhaps? He laughs: 'I prefer the word innovative. Take the cars, the colleagues love them, and the holiday homes are rarely empty.
People may say that's a gimmick. But if they're used, they work, and people can say what the hell they like. "Gimmicky" sounds like a cheap trick, but I'm very sincere about my philosophy. You've got to keep the buzz going and work at making it as much fun as possible. That's no gimmick. Ha!'
His indignation is perhaps justified. True, he has had several business failures, including most recently a £400,000 stumble when he invested in a friend's keyboard shop: 'That was very painful, the friendship is in a delicate state.' But Richer has been in 'the biz', as he calls it, for 19 years and his tiny hi-fi stores, splattered with Day-Glo labels in the cheaper ends of town, have achieved extraordinary sales per square foot, with his London Bridge shop boasting the highest sales density in the world. According to Verdict Research, Richer Sounds averages £5,500 per square foot, compared with PC World's £630 and Currys' £520. 'He's on another planet as far as any other electrical retailer is concerned,' says Clive Vaughan, research manager at Verdict. All this has helped provide Richer with a mansion in Yorkshire, an annual salary of £650,000, 27 hi-fi stores and the chairmanship of another 10 companies (of which he controls nine). His latest joint venture, buying into ailing digital camera store, Tecno, with 26 outlets, could finally see him heading a quoted company.
With all this in the bag, Richer really doesn't have anything to prove.
What motivates him, he says, is his love of the job. 'I don't want to sit on a beach all day,' he insists. 'I love the biz, I really enjoy it.'
That enthusiasm and candour have fired the imagination of many of Richer's fans, gained through his work in consulting. 'We saw someone with novel ideas who understood people,' says John Lee, group personnel and services director at the Halifax. Lee may have recoiled when he saw Richer Sounds' cluttered shops, but his confidence paid off as he watched Richer turn the bank's traditional, moribund staff suggestion scheme on its head.
'We'd never have had the balls to do it without him,' says Lee. 'He got senior managers to encourage their teams to come up with ideas, then set up a small team to handle them quickly. Everyone gets a reply signed by the chief executive or a director - the good ones have undoubtedly made or saved money. It's been phenomenal.' With over 50,000 suggestions in less than two years from 37,000 staff, Lee is convinced he has the most successful scheme in the country. Others would dispute his claim, including Asda executive chairman Archie Norman. It was Norman who set Richer off on the consultancy road, after jotting down some of Richer's pearls of wisdom during dinner at a friend's house. 'Julian was so impressed that anyone would do that,' Norman recalls, 'and he agreed to come as a consultant.' Since then, Richer has had a significant impact on Asda, instigating among other things, a staff suggestion scheme and establishing an adopt-a-product policy that's claimed to boost sales by 3,000%: 'It's true!' insists Andrea Vowles, whose very job title, head of colleague promotions, smacks of the Richer treatment.
Richer cites working with Norman at Asda as one of the most satisfying aspects of his career. 'I don't advise people because I need the money, I do it because I enjoy working on a bigger stage. Here were superstores with a middle-aged, unmotivated, part-time workforce sitting on the check-outs on shitty wages. To get 70,000 people doing something that originated from an idea of yours is phenomenally satisfying. It proved to me that the philosophy can be interpreted across the board.'
Archie Norman is convinced Richer's style is fundamental to the Richer Sounds business: 'Julian is more important to the business than he would let on. He has gone to lengths to create a system that works without him, but to a great extent, his business is his personality.' Richer is quick to deny that suggestion and has at last confronted the thought of weaning himself away from Richer Sounds and appointing a successor. 'One must be realistic. I can't prevent myself dying, unfortunately, and one has to be responsible'. His successor-elect is managing director David Robinson, 31, who has worked for Richer since he was a 16-year-old salesman.
Robinson chairs the newly established management board of Richer Sounds, which meets every week. 'I don't even sit on that,' grumbles Richer. 'I went to the first one and they had to lever me out of the room with a shoehorn. David is a very talented guy, albeit his style is very different from mine, but I hope the company culture is in the people who remain, and not in me. It would be different, but I'd like to think it would continue.' With sales of his book, The Richer Way, already at 25,000 and conferences, videos and a recruitment service launched in March, Richer's confidence seems justified. Then, 14 months ago he launched Richer Consulting, dedicated to preaching his gospel. His policy of only appointing internally means all eight consultants are former Richer Sounds staff, most having worked for him since they left school.
The managing director, Kate Donaghy, is a rare animal in the Richer empire.
For a start she's a woman ('It's wonderful, I'm very short of women,' says Richer) and second, she's never worked in one of the stores. But as a former lawyer and head-hunter, Donaghy's proved adept at bringing top clients, like the Halifax and BAA, to Richer's door. She describes herself as a 'Richer groupie' and almost explodes with enthusiasm: 'He speaks so entirely from experience. Motivating staff to deliver good service is screamingly obvious, but there is a refreshing openness and honesty to his style. And the main thing is that it actually works.'
Unfortunately, this rosy picture is tarnished by Richer Sounds' disappointing performance last year: operating profit fell 12% to £1,694,000 and there will, as a consequence, be some reorganisation in the accounts department where Richer hopes introducing EPOS (electronic point of sale) will reap significant returns. 'But I'll bend over backwards to keep people,' he says. 'I once gave a warehouse man a job in accounts after he had come to me to hand in his notice because of a bad back.' Could that have contributed to overstaffing in the department? No comment.
With his diverse business interests - in addition to the hi-fi and consulting, there's a men's clothes shop in Bristol and a restaurant in Islington - there must be a danger of Richer spreading himself too thinly. 'I think he has one business and some hobbies,' says Norman. 'It's sensible as long as they're successful, but I think he underestimates the potential of Richer Sounds. It's a natural tendency among entertainers to want to involve themselves in other things and not depend on one business.'
Richer is unapologetic: 'It's my small-business mentality; I like being a big fish in a small pond.' He insists there's little room for expansion in the UK hi-fi market and, happily unfettered by shareholders, he can please himself what he does with his businesses and how he expands. 'Joint ventures are the name of the game. I finance good people who I've known for years, who understand the culture and want to go back to their home country or emigrate,' he says.
That policy has given him a toehold in Amsterdam and Ireland, and Richer expects six to eight stores in Holland within five years and a gradual move to Germany after that. Quick expansion is not attractive. 'We don't have to expand quickly to beat the competition and,' he adds, 'my ego and ambition don't need satisfying that much.' Floating Richer Sounds is therefore out of the question. 'I'm a maverick and I like independence.
It's my train set. Anyway, the City wouldn't want it because there's no growth in the UK, we're already the biggest.' Richer is far more open-minded about floating Tecno. The purchase is the result of his dining-club friendships with Charles Dunstone and David Ross of the Carphone Warehouse, and Luke Johnson of PizzaExpress.
The foursome have also got their eye on another high street plc, where, like Tecno, staff will get the Richer package of motivational carrots and sticks.
Richer claims that he himself is lazy and becomes alarmed when his staff work overtime. But for all his much-vaunted loathing of macho work culture, this doesn't mean that he is swanning round the Yorkshire Dales when everyone else is working. He provides free consultancy to five charities, is a director of the Big Issue and chairs the Persula Foundation, the repository for 5% of profits from Richer's entire business portfolio. Ideas about how to spend the foundation's money come from Richer Sounds staff. The concept of the foundation is central to his co-operative spirit, says Richer, but not to company branding.
That may work for his friend Anita Roddick - 'she's fantastic,' he says, 'working on a world scale and wanting to make a difference,' - but for Richer to go that route would be 'naff, ghastly and tacky'.
'We're very quiet about it,' he says. 'We don't sponsor anything, we never link it to Richer Sounds. We don't ever want to be accused of riding on the back of it.' In fact, says Richer, smoothing a hand over his lustrous locks, he loathes personal publicity. 'I know I'm an easy story for personal profiles but I don't want people just to write about the fact that I'm long-haired and I'm rich and eccentric ... it's very flattering to have my philosophy written about.' It's also the reassurance he seems to crave, as he confirms that life at the top can be lonely and thankless. 'A lot of people are envious, and very few people say to me "well done" or write me a letter.'
He regrets that his parents aren't alive to see where the son who rejected accountancy is now, but otherwise, he says, the company's annual attitude survey is his most valued pat on the back. 'My whole biz is about people.
And when 95% say they love working for us, that means a lot. That's what I care about.'
RAPID RISE OF A TEENAGE ENTREPRENEUR
In 1974 little Julian Richer, aged 143/4 and probably not much taller than today's 5ft 7in, was a familiar figure in his Clifton College uniform, roaming Bristol's second-hand hi-fi shops. He had his first big break with the energy crisis the year before, when he bought a case of candles in Bristol for £3 and sold it for £15 in London. Then he bought a turntable for a tenner, did it up - and flogged it for £22. By the time he was 17, Richer had three people working on commission. Academic work had never excited him, but sales did. So instead of becoming an accountant, as his parents had hoped, Richer jumped at the chance of working in a London hi-fi store. Within five weeks of becoming a salesman he was a store manager and five months later he was group retail manager looking after five stores.
At 19, he spotted just the sort of shop he was looking for - a poky space at London Bridge, passed by 70,000 commuters each day. He borrowed £20,000 from the shop's then owner, stocked up on end-of-line hi-fi separates, and within the year had re-paid the debt. With a few glitches, that's how it went on for six years or so: Richer Sounds piled 'em high, flogged 'em cheap, yet also had some novel ideas about staff perks.
Both Richer's parents worked for Marks & Spencer, and he grew up hearing about a benevolent chairman. 'They knew he really cared about his staff, there was a staff canteen, a hairdresser. In those days that was all new,' Richer says. Then there was the socialist housemaster at Clifton: 'I listened to him, he was a great, great man, I'm still in touch with him.' But the final springboard came 12 years ago when Richer read Tom Peters' 'In Search of Excellence', 'which blew my mind'. Richer recognised many of his own ideas in the book. 'The reasons why these businesses were successful were down to things I'd being doing myself,' he says, 'all on my tod.' Encouraged, he put every aspect of the way he treated customers and staff under the microscope. 'I took a knife to the biz and said right, let's stick our necks out and innovate. I didn't have any shareholders, so I could do what I wanted in terms of wacky ideas.' Those ideas include handing £3 to staff who score an 'excellent' from the customer survey, docking £3 for poor scores, giving a £100 incentive to staff who want to stop smoking, and the suggestion scheme, which now generates more ideas per employee than any other in the UK.