Without a doubt, the Post Office is intrinsically linked to the fabric of our nation. Indeed, today 99% of the population live within three miles of one. “People care deeply about it even if they don’t use it that much,” says group people director Neil Hayward when we meet. Yet, perhaps surprisingly, the Post Office has not made a profit in more than 25 years. And while many see it as synonymous with Royal Mail, the latter was actually floated on the stock market in 2012 by the then Secretary of State, Vince Cable, while the Post Office remained in public ownership.
“When we were part of Royal Mail group, there was a tendency – across society and inside the organisation – to believe the government would keep writing a cheque to ensure the Post Office’s existence,” reveals Hayward. “In the age of austerity, no government can make that commitment.”
The challenge facing the network is tough: government subsidy has been reduced from £200 million per year to £50 million by 2017. “We need to fill the space with genuine revenue or cut costs to ensure we break even despite the loss of government support,” explains Hayward. “We need to get this business to a commercially break-even state by 2018.”
So Hayward’s remit is largely to help change the way the business runs amid these new economic realities, while building for the future and protecting the best points of the legacy. “History will judge our success – it will be too difficult to claw it back if the next five years aren’t successful,” he acknowledges.
During his 18-month tenure, Hayward has worked hard to make change happen – removing roadblocks, licensing innovation and experimentation and improving the senior leadership team’s bench strength. “I never signed up to be chief policeman or chief process officer, I am a change agent,” he asserts.
A fork in the road moment
As Britain’s largest retail network, the Post Office comprises 11,634 UK branches – 10 times the number of Sainsbury’s stores.Just 326 branches (the ‘Crown’ network) are directly managed by the Post Office. The remaining 11,308 are run on an agency or franchise basis by individual postmasters (who typically manage a local convenience retail business) or multiple retail businesses (think WHSmith, Co-op and McColl’s).
While many branches have undertaken significant makeovers, moving towards digitisation and empowering customers with self-service machines, the transformation is not only aesthetic, it must come from within.
Enter Hayward – who says his responsibility is much broader than HR; overseeing corporate comms and public affairs; managing key stakeholders including unions, plus network strategy and development.
After stints at the likes of Standard Chartered Bank, Serco, the Ministry of Justice and BT, Hayward was hired in February 2014 when the Post Office assessed the change challenge and created a group people director role.
Top of his agenda is to ensure the business is commercially sustainable, while navigating complex implications. He explains: “If this were a plc, the non-profitable bits would be shut, but we have to maintain access so we can’t make it smaller unless there is a political decision.”
Career to date
- 2014 – present: Group people director, Post Office
- 2012 – 2014: Group director, employee relations & performance, BT Group
- 2011 – 2012: Group HR director, SThree
- 2009 – 2011: Group HR director, Ministry of Justice
- 2007 – 2009: Group head of people strategy & product management, Standard Chartered Bank
- 2004 – 2007: Group HR director, Gallaher Group plc
- 1999 – 2004: Group HR & change director, Serco Group plc
- 1998 – 1999: Group HR director, Booker plc
- 1997 – 1998: International HR director, Redland plc
- 1990 – 1996: Personnel director, Heckett MultiServ plc
- 1986 – 1990: Various HR roles, Midland Bank
Reducing headcount, retaining dignity
Having such a broad remit means Hayward is at the heart of the organisation’s thinking and execution – which excites him. “Last year, we cut operating losses from £90 million to £60 million. This year we hope for £60 million to £30 million. It’s a massive turnaround challenge,” he says.
The Post Office employed 7,845 people in April 2014 and 6,878 in March 2015 – a reduction of 967 posts in a year, which contributed to a c£20 million cut in staff costs, Hayward says. In reality, churn has been deeper, but capacity was built back by “upgrading the quality of people that we employ”.
Headcount reductions have occurred across the board – from the customer support centre/head office, contact centres, in the Crown Network and supply chain (Post Office runs its own distribution logistics business covering all 11,634 branches – mainly delivering cash).
There have been difficult decisions, but Hayward believes the people implications of change have been well handled. “Staff have left having been treated with dignity and respect,” he says, adding that the consultation process with employees has been re-engineered, to include better guidance for managers.
Reframing union relationships
Unions are an important stakeholder, with 85% of front-line Post Office employees and 40% of management involved. Hayward aims to work with unions to facilitate change where possible, and to try to “eradicate the legacy of more difficult industrial relations and agreements” linked to when the Post Office was owned by Royal Mail.
“In the past, management were often unable to act without threat of industrial action, and Royal Mail Group telling [the Post Office] to give way. Now the business is independent, that’s changed.
“Our employee relations strategy is to manage third-party relationships with unions well and respectfully, making sure we do take their views into account before we make decisions but ultimately what matters is whether our employees believe us or not when we talk to them about why things need to change and what we are doing,” he explains.
And things are moving in the right direction. Hayward says that, in the past year, employee
engagement rose from 58% to 62%, with an 89% turnout. “It’s a vote of confidence which shows the effort that went into explaining to colleagues why things were changing,” he says.
Building the talent pipeline
Recruitment has been transformed. A pipeline is being built to recruit new hires – using online video interviewing to slash costs.
When Hayward joined, the Post Office was struggling to recruit and retain finance and mortgage specialists, he recalls, despite this being a growth area for the business. “We hadn’t sold the organisation properly or matched skill sets and people efficiently. Time to hire was slow and money was being wasted. We needed to hire differently and better.”
Hayward gathered his HR and comms teams to brainstorm a solution. The result? A recruitment video featuring current staff, which went viral. “We had more than 700 applicants to a recruitment event within weeks of launching the campaign,” he enthuses. “It resulted in better quality, one-third of the cycle time of traditional recruitment methods and significantly reduced costs [it cost £12,000].”
For Hayward, this is an example of something different which emerged from a crisis – by giving the cross-functional team the freedom to “think the unthinkable” and permission to do it, he’s proved results can be achieved quickly.
Creating a culture of innovation
While Hayward relishes the “highly collaborative” working environment (“the public interest is always at heart”), eradicating the hierarchy and bureaucracy that has characterised decision-making at the Post Office is proving harder – which he says is partly down to a “hangover” from the affiliation with Royal Mail.“People aren’t used to being given responsibility and accountability and trusted to get on with it.”
Making changes like increasing delegated authority for spending limits, crowdsourcing ideas for cost-cutting innovations from employees, and ensuring leaders are more visible has created a sense of liberation among staff.
“People feel they are being listened to. We are making symbolic change happen around giving people the ability to do more,” he says.
A new head office building has also freed up the culture of the business. Nobody has a fixed desk, and staff are ‘huggers’ (mainly office-based) or ‘hoppers’ (mainly home workers).
Getting serious about talent
Next, Hayward wants to refresh the performance and talent cycle, and “get serious” about succession planning and talent pools. He hopes to introduce a rolling talent assessment to give managers access to real-time performance data.
“I’m sick of running backwards appraisals. I’m not interested in creating paperwork for cupboards or electronic archiving. I want to look at talent potential and say to managers: ‘what are you doing about it, right here, right now?’”
He has bolstered the top team with a new CFO, general counsel and business transformation director. Investments in growing leadership capacity to underpin the business transformation are a priority, including the creation of a senior leadership development programme and an online learning academy.
Looking to the future
While proud of progress made during his tenure, Hayward emphasises it’s “at least a three to five-year conversation” and the only certainty is the culture will transform as the journey continues.
“It’s impossible to see how the Post Office can achieve this transformation strategy unless my functions deliver their part,” he says.
Doing something different characterises Hayward’s leadership style, and this mindset fuels his passion for work. “I come to work to learn something, make a difference and have fun,” he adds.
“When you get sucked into ‘the way we do things round here’ and stop being able to step back, think differently and challenge is the point when the role becomes care and maintenance – and I’m just not interested in that.”