Customers, colleagues and corporate calculations

Business management doesn’t involve any complex mathematical formulas. You can’t boil successful corporate leadership down into a sum involving numbers and figures. But there are some general rules of thumb. And one of these could be roughly translated as “corporate success and profitability = customer management + financial stability + happy productive colleagues”. So if you are appointed CEO of a company that is reporting faltering profits, customer service complaints and mass redundancies, clearly you have a job on your hands to make these sums add up. Welcome to the world of Jim Marsh, who took over as CEO of UK telco Cable & Wireless in February.

Only two months prior to Marsh’s appointment, newly-elected C&W Chairman John Pluthero had made plenty of column inches when he announced the company would be reducing its customer base from 30,000 to 3,000 and slashing its workforce. He also made plenty more column inches when a memo to workers was leaked, in which he announced: "Congratulations, we work for an underperforming business in a crappy industry."

Is telecommunications really such a crappy industry? “Our industry has not historically been renowned for giving great customer service,” Marsh says, elaborating on his Chairman’s comments. “It has been institutionalised in the industry that customers request service and they get it when you are ready to give it to them. And that comes from the whole original set up of BT, years and years ago. As a state-run business, it never needed to provide proper customer service because there was nowhere else for people to go. And our industry is still living with that legacy.”

Under his tenure, Cable & Wireless is now focused, he explains, on trying to buck this trend; to provide a very different customer experience that is in line with that you receive in other industries. It aims to provide daily updates, it aims to allow customers to know where they are in the cycle of service delivery – all the things that Marsh suggests the industry has historically failed to do. In the coming months, Marsh will be personally holding workshops with the people on the floor, in the call centres and so on, ensuring that everybody is soaking up the philosophy that “whoever works for Cable & Wireless can give good service to customers if they have the right approach and mindset.”

Restructuring programme

“We absolutely intend to be at the forefront of our industry, changing the way it gives service to customers,” Marsh stresses. And of course, making this task more straightforward, the company now has significantly fewer customers to have to care for these days. The business has sold its consumer ISP Bulldog, which was plagued by customer complaints, and refocused exclusively on top end corporate and Government customers. Overall, it is estimated that Cable & Wireless will be ‘exiting’ some 90 percent of its customers as part of its restructuring programme. Whilst the news that the company is cutting its users so dramatically has been a headline-grabber, particularly because of its possible profit implications, Marsh insists that the move is a natural response to the problems of the past – specifically a lack of focus – and is not as drastic as it may sound.

“We are very clear that the kind of customers that we want to work with in the future are multinational corporations, and we want to provide all of their telecoms needs,” he explains. “A target customer for us will spend more than UK£1million a year on telecoms. But you also have thousands of customers who spend less than UK£1000 a year. So whilst it sounds very dramatic that we are exiting 90 percent of the customers, in reality that 90 percent by number contributed a very small proportion of the profit of the business.”

He continues: “The kind of growth figures that we talk about is not growing the revenue of the business, it is growing the underlying profitability, which is about making sure that we are focused on the right kind of business, not just new business for businesses sake. Interestingly, we don’t have a problem winning new business in the marketplace. We win the vast majority of what we bid for. So, it is the first time in my career that I have moved into a role where winning new business isn’t a big issue. My issue is making sure that we are winning the right kind of business from the right kind of customers.”

People management

Since he raised the topic of his career, a quick recap: a qualified chartered accountant specialising in corporate finance and recovery, Marsh spent time as Head of Strategic Planning at Boots the Chemists and Chief Operating Officer at Atos KPMG Consulting, where he oversaw the business across all its industry sectors, previously becoming a partner at KPMG in 1997. Marsh then joined Energis as Business Development Director, a role that involved overseeing the development and service of all the company’s channels to market, and which would ultimately result in him joining Cable & Wireless when the telco acquired Energis in November 2005.

His experience has seen him acquire not only the kind of acumen that earmarked him as an ideal candidate for the CEO role, but also very clear ideas about people management. Indeed, employee relationship management is held as highly as customer relationship management according to Marsh, who suggests that a mantra of the business is “worship the twin gods of customers and colleagues.” Of course, providing a rewarding, satisfying working environment in a company that is reducing its workforce over time by up to a third, presents its own challenges. Marsh acknowledges this difficulty, but has taken several decisive steps to maintain – and nurture – a team mindset.

One of the first things he did upon stepping into the role, for instance, was give every employee UK£1000 worth of shares in a bid to emphasise that “this is their business too.” “I can’t tell you how helpful that has been in terms of getting people on board,” Marsh says. The structure of the traditional bonus scheme has also been scrapped, so that management get their bonuses in the same way as everybody else. “Either we are all going to achieve our bonus or we are not. Historically that wasn’t the way that it was done, but the principal we are trying to create is one team, with a single focus of turning around this business – and if we do that then everybody will get rewarded.”

Furthermore, where there have been headcount losses, Marsh insists that he has ensured they have been particularly focused towards the senior and executive levels. Since his appointment he has removed 50 percent of the top two levels in the business. “It is a double benefit of streamlining the business, making it easier to make decisions, but also taking out cost,” Marsh explains. “And 50 percent of the cost that we save we explicitly reinvest in more colleagues in the frontline, facing into customers. So we are actually recruiting hundreds and hundreds of people in parallel, working for example in our customer front office providing better service to customers.”

Financial performance

That may counterbalance the possible customer service implications of the job cuts, but how has employee morale fared? “Yes we have had to exit a large number of people from the business but what we find is that if you are very clear with people about why you have to do it, then they accept it and understand it. The reality is that in order to protect the business for up to 3500 people who we are going to have working for us in the future, that means taking some tough decisions for some people. But we’ve got to protect our colleagues. And to repeat ¬– we are very focused on making sure that we are taking those colleagues with us on the journey.”

It’s certainly a time of transition for Cable & Wireless, and such a degree of change is rarely anything less than painful. Marsh’s approach to his task of turning C&W around since his appointment has been decisive and direct. But by taking the company’s focus back to formula – concentrating on the “twin gods” of customers and colleagues – Marsh is confident that the business is better positioned to improve its financial fortunes in the future. Satisfied with the progress that has been made over the past six months, and with the feedback that he has received to date, the CEO believes that the measures executed – harsh measures at times – have been vindicated.

“We are facing into some of the big problems that our industry and our business has historically had,” he explains. “It is very easy for CEOs to say “this is our focus area for the future” but where that really hits the road is where you identify the things that you are not going to do anymore. And being clear on what you are not going to do, I think, is one of the tests of being a good CEO. We are exclusively focused on B2B now, on corporate business, and that is quite a big decision for us. The feedback has been generally good about how we are tackling these difficult issues and making the decisions quickly, and people are starting to see an improvement. But I don’t want to overstate it – we are six months into a three to five year journey, so we are a long way from the line yet.”

Summing up his own formula for the company’s future prosperity, Marsh concludes: “My top priority is to show customers, colleagues and investors how you can make this business a sustainably profitable, growing company that is a great place to work. That impacts on every aspect of a business – on the customers you deal with, the number of people you have, how you work, everything. So that is my key responsibility, to deliver that three to five year vision for the business and deliver the appropriate financial performance that goes with it.” Marsh, and Cable & Wireless, will be hoping that at the end of this term, the numbers add up to success.

“Our industry has not historically been renowned for giving great customer service”

“My issue is making sure that we are winning the right kind of business from the right kind of customers”

“My top priority is to show customers, colleagues and investors how you can make this business a sustainably profitable, growing company that is a great place to work”