Upside Down Management

John Timpson talked Upside Down Management to kick off Manchester Business School’s (MBS) Vital Topic series this evening.

Having built the Timpson business into a £100m+ turnover and £10m+ annual profit group, John Timpson had plenty of contrarian business ideas to share with the enthralled and packed MBS auditorium.

Built around his Upside Down Management philosophy – that came to him as a lightbulb moment during a failed bid to acquire a competitor – it became “obvious” to Timpson that the key to success was to have:

1. Happy Customers
2. Great Jobs

To achieve this the Upside Down organisational chart was born with customers at the top and Mr Timpson himself at the bottom. From now on, the frontline shop employees would run the business by putting a smile on the faces of customers whilst the management team would serve them. To achieve this, Timpson introduced two new rules:

1. Look the part and put the money in the till
2. You can do anything else to best serve customers

This relaxation initially fell on deaf ears as the employees didn’t trust this new regime, however, a further rule got the wheels of change moving:

1. You can spend up to £500 to settle a customer complaint (without management authorisation)
2. Charge whatever you like – the price list is a guide only

Timpson explained how the key to success of the business is in choosing frontline shop staff who have personality. “You can train for the job but you can’t train for personality”. This is reinforced by an interview assessment form that used by Timpsons which is disinterested in past qualifications and experience and instead focuses on the key personality attributes using a Mr Men style analogy. An approach that has worked wonders for the past 10 years.

John Timpson has a book on his Upside Down Management that you can get from Amazon.

Here are some other fascinating facts from the world of Timpson’s Upside Down Management:

• Staff are actively encouraged to use their initiative and try new ideas. “If the ideas work, tell me. If they don’t work, just stop.”
• Employees are encouraged to let management know if they’ve got themselves into some personal financial difficulty. To help them stay happy and focused on their work, Timpson operates a financial assistance package with £350k currently on loan to staff – “we normally get pretty much all of it back”.
• There are 5 holiday homes available for staff to use for free.
• Employees are invited to submit their Dreams Come True entry once a year and a lucky few have their dreams fulfilled e.g. family reunions, holidays, concerts etc.
• Get rid of poor performing staff quickly.
• Weekly bonus scheme – all staff are eligible for the weekly bonus payment which is based on the store’s sales less the wages paid x 4.5 (“because 4.5 works”). 15% of this profit is shared between store employees each week.
• The proportional share of the 15% weekly bonus is increased for the more highly skilled employees based on (internal) courses attended and completed – “so we have staff pleading to attend Health & Safety courses!”
• All internal manuals contain illustrations rather than words. Staff take the manuals home to absorb – would they do this with folders full of words….?
• A key internal training course is (as you might expect) Customer Care. Participants are asked to nip out to buy bits for the course not knowing that the bulk of the course is spent discussing their experience of shopping for the requested items.
• Most customers are a miserable bunch. Don’t just encourage staff to smile, it is their role to put a smile on the face of their customers.
• No advertising – “our customers do that for us”
• Delegate authority but NOT responsibility. “This is what most external people misunderstand.”
• How to be a great boss = Listen + praise (praise 10 x more than you criticise). Email has placed a premium on the hand written thank you letter (ideally with a hand written envelope and a stamp sent to their home address perhaps with a hand written bonus cheque).
• Avoid meetings. A waste of time.
• Avoid excessive time spent budgeting. Get out on the road to visit your shops and customers to get real-time information.
• Watch cash. Daily.
• Avoid formal salary structures. Review each employee’s remuneration on the anniversary of their joining – this avoids gangs of staff receiving wage appraisals at the same time (and comparing notes).
• No appraisals. Stopped this 25 years ago and best thing ever. Danger with appraisals is that the best staff are encouraged to look at their weaknesses whilst positives are looked for in the weaker staff!
• No head office staff allowed to issue orders. This is upside down management, remember?
• No management head office structure.
• Capital expenditure is the only decision requiring head office input.
• No marketing. No PR.
• A final salary pension scheme that is open to new entrants (!). This rewards loyal employees and is worth the added cost.
• Birthdays – a day off on your birthday.

If you like this, I recommend you listen to this recorded interview in which John Timpson shares more of these ideas. Or you could purchase his book Upside Down Management: A Common Sense Guide to Better Business.

A refreshing talk from an older established business that has a forward thinking approach to doing business – and is doing very nicely out of it too.