MANAGEMENT : Doing it the Logica Way
Roger Trapp reports on a successful British computer company that knows how to make the most of its greatest asset - its staff
Thursday 23 March 1995
Jim McKenna, the group personnel director, who arrived 18 months ago from GEC-Marconi with the new managing director and chief executive, Martin Read, points out that the company quoted since 1983 had seen growth slow and profitability slip.
It will come as little surprise to GEC watchers that Dr Read has used the disciplines acquired at his old company to tackle the latter. Results for the six months to 31 December 1994 show earnings per share up 42 per cent and profits ahead nearly as much, at £7.2m on a turnover rising 15 per cent to £122m. But few would expect that he and his senior colleagues see an important lever for the former in the sort of "touchy-feely" initiative that would be unlikely to see the light of day in Lord Weinstock's organisation.
There is nothing particularly original about the name of this programme, the Logica Way. ICL, the British computer company now owned by Fujitsu of Japan, has a "way" of its own, meaning a code of principles designed to demonstrate the "way we do things around here". In addition, Hewlett- Packard of the US is notorious for inculcating the thinking of its founders among its worldwide staff. But Mr McKenna is convinced the project can help the company achieve a significantadvantage over its rivals in the intensely competitive markets in which it operates.
"You look at the cost structures, but you also look at how to expand the company and at the behaviours that affect it. You've got to look at all three at the same time to push it forward," he explains, adding that it is no good thinking each can be dealt with in separate phases.
Bearing in mind that in a service industry the only real assets "go home at night", the new management team decided that the company's ability to move these human resources around the world to where they were needed was of critical importance.
Clients such as Ford or Reuters were not unduly concerned about where the expertise was coming from; they just wanted it to be of the same standard, whether the work was being done in Britain or the Far East. Similarly, a bank that wanted to install a trading floor (one of Logica's specialities) in London would probably like to use the same team when it repeated the exercise in New York or Frankfurt.
But to enable the company to meet such demands required changing a culture that had led to the setting up of what one insider calls "lots of mini- Logica UKs" around the world. Instead, it is seeking to create an atmosphere in which all 3,600 personnel spread among 17 countries feel that they work for a single organisation.
"We're trying to integrate the company far more effectively than we've done in the past," says Mr McKenna. "The customer should just see Logica rather than, say, Logica UK or Logica Switzerland."
But he admits that it is quite difficult telling managers in overseas offices that they do not just have the people in that territory at their disposal but can also call upon all 3,600 around the world. He also acknowledges that there will inevitably be conflicts when certain specialist teams will be required to be in two places at once.
But he suggests that the company's reward system for managers - under which a part of the bonus is governed by their ability to be good "corporate citizens" helps to demonstrate the importance the senior executives are attaching to the concept.
Help is also on the way on the practical side with the building of a "resource management system" - basically, a database listing all the skills and abilities acquired by the organisation's staff. It is designed to tell managers who is doing what where and when they will become available for another task.
Mr McKenna and his team are also seeking to emphasise the increasingly global nature of the business through changes to the remuneration system. Since the Logica Way was rolled out three to four months ago, all staff transferred to foreign operations are made subject to the same terms and conditions as those they are working alongside. This not only makes commercial sense for the company, it also reduces the chances of resentments building up among staff in the host countries, he says.
Though it can lead to effective cuts in pay - particularly when Americans come to Britain - Mr McKenna prefers not to see it that way. The important thing is earning power, he adds.
Though he is anxious to do away with the idea that foreign postings are a way of acquiring nest eggs - as has been the case with many companies in the past - Mr McKenna still sees a strong demand for overseas postings. With a workforce where - thanks to a recruitment policy that has brought upwards of 150 new graduates into the company every year, even through the recession - the average age is about 28, Logica sees providing foreign travel as an important factor in persuading ambitious and talented staff to stay. If they know where this fits into their career development, so much the better.
Not that conventional training in management skills and the technical ability which is the company's lifeblood has been neglected. Both areas have seen budgets raised, and there is close monitoring, Mr McKenna says, to ensure that the money is being spent. But though the courses are typically international in make-up, to reinforce the global aspirations, not all the training is formal. Extensive use is also being made of coaching and giving guidance to managers faced with dealing with the increasingly harsh business environment.
Mr McKenna insists that, while the Logica Way includes a vision and something that looks like a mission statement, it is no passing fad. "It will be an ongoing process. We hope it will be ingrained as a way of life," he says.
He also stresses that there is a strong commercial element to it. Pointing out that success depended on the ability to satisfy simultaneously the demands of shareholders, staff, customers and industry partners, he says the ultimate judgement on the worth of the programme will come in sustained growth.
"We've got to achieve predictability that shareholders know they'll get a return this year, next year and the year after."
Many companies' senior executives are spending a lot of time debating how best to achieve that, he adds. But Logica is unusual in spreading the discussion to the mass of the workforce because it acknowledges that everybody has an important contact with the customer.
"The real benefit will come from a snowball rolling down the hill with everybody on board."
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