PATIENCE WHEATCROFT: The human factor

PATIENCE WHEATCROFT: The human factor - Sir Peter Davis is loading up the packing cases again. This summer he will lead J Sainsbury out of its dingy Southwark headquarters to shiny new offices on the other side of the river.

by PATIENCE WHEATCROFT business and City editor of The Times
Last Updated: 31 Aug 2010

Sir Peter Davis is loading up the packing cases again. This summer he will lead J Sainsbury out of its dingy Southwark headquarters to shiny new offices on the other side of the river.

He is convinced that a change of environment is essential for the change of culture he is set on achieving. Escape from the buildings that have been Sainsbury's home since 1912 will symbolise the demise of the old, autocratic attitudes that led the company first to phenomenal success but then into difficulties. Instead, there will be a flatter, more informal structure and even an element of hot-desking.

Since arriving as chief executive early last year, Sir Peter has made strides to bring the head office operations up to date. One can dismantle embedded ideas of hierarchy by insisting on discussion and debate rather than terse memoranda, but the process is easier if physical barriers can be pulled down.

Stamford Street is a warren of corridors that might have been designed to make internal communications difficult. Executives sit behind closed doors and, until recently, would never venture out without donning a jacket and straightening their tie. After all, they might have bumped into Lord Sainsbury of Preston Candover, who, even after his reign as chairman ended, continued to be a formidable presence.

His successor, David, now Lord Sainsbury of Turville, was so much the opposite of his dictator cousin that the business drifted under his leadership, and continued to do so when the hapless Dino Adriano became CEO. Management took refuge behind closed doors and waited to be told what to do to stop Tesco stealing market share.

Sir Peter is now in the process of rebuilding confidence in the business, both internally and in the City. He has changed many of the top team and speeded up management processes, but he cannot physically knock down enough walls to create the efficient headquarters he wants. So Sainsbury will move to a new development on the site of the former HQ of the Mirror Group at Holborn. The prospect of a non-autocratic, open-plan environment should banish the ghost of Robert Maxwell.

A new HQ represents a fresh start for an organisation. While some managers dread the disruption a change of office will cause, Sir Peter sees it as an energising exercise and he has already proved the theory to his satisfaction twice. As CEO of Reed, he eased the publishing group out of its splendid Piccadilly headquarters into something less grand and more efficient. More recently, he marched Prudential out of its landmark Victorian building on Holborn and into modern premises near the Thames.

Prudential underwent huge transformation in the wake of the personal pensions mis-selling scandal. When Sir Peter took on the chief executive's role he had no idea of the scale of the problem that was to confront him.

What the investigations uncovered, through much of the financial services industry, was an unsavoury, commission-driven culture at odds with the image of the trustworthy man from the Pru. Sir Peter had to change that, and the new headquarters, where light and glass prevail, could be a metaphor for the new mood of transparency he hopes to have left behind at the Pru.

'You cannot change the culture without changing the environment,' he insists. But, although Charles Miller Smith too is soon to move out of a long-established HQ to more modern premises, he does not subscribe to the Davis view. As chairman of ICI, he contends that the business he is now running is different from the one he took over as chief executive in 1995. The company's operations have changed and, with them, the people and the atmosphere.

Leaving the imposing Millbank offices marks the end of the transformation rather than the beginning for quietly spoken Miller Smith. With the help of chief executive Brendan O'Neill, he has completed the painful process of moving ICI out of bulk chemicals and into speciality chemicals. He bought his way out of the cyclical, smokestack end of the industry and into the sweeter-smelling sector, which can take credit for the likes of Dior's 'J'Adore' perfume. In the process, the share price plunged and the dividend had to be cut, but he is adamant that the company would have been in peril without such drastic action and that what he has shaped is a strong business ready to motor.

The new ICI is a much more streamlined organisation than the old one.

It has already shrunk inside Millbank, where four floors around the vast atrium are now occupied by the energy regulator Ofgem. What new ICI needs now is efficient, modern office space tailored to its requirements. So this summer the company moves to Manchester Square and the magnificent heavily sculpted metal doors will close on an industrial era.

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