Some six years ago, the restaurant chain Nandos carried out research to find out why sales at some of its restaurants grew faster than at others. After detailed analysis, the company concluded that one factor explained the difference: how happy the staff were, as measured in the firm's annual staff survey. Of course, Nandos still wanted to maximise growth and profits. But the way to achieve this aim, it decided, was not to concentrate directly on those elements but instead to target the underlying factor of employee contentment. It changed the managers' bonus structure so that it was 50% based on their achieving staff engagement. The message for them was: 'Your key focus should be on making your staff happy.'
A similar story is told by David Smith, who as 'people director' was head of personnel management at Asda from 1994 to 2009. At its low point in 1990, Asda had found itself just 10 days away from bankruptcy. But by 2002, it was rated by the Sunday Times as the best place to work in the UK. Today it has 170,000 employees and annual sales of £18bn. How did Asda achieve this? According to Smith, it was by focusing on its people. 'We had 360 separate P&Ls and I have done the calculations,' he explains. 'There is an absolute positive correlation between staff engagement and profitability. If a branch can achieve an engagement level of 94%, I guarantee that the profits will grow exponentially.'
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