Cattles was a large financial services group with three main operating businesses: Welcome Financial Services (WFS) - monthly direct debit loan repayments; Shopacheck Financial Services (SFS) - focusing on home-collected credit; and The Lewis Group (TLG) - a buyer and collector of consumer debt.
The business had to undertake a major financial restructuring after identifying that its bad debt provision was understated by around £700m. At the time there were 5,000 employees and more than 2,500 self-employed agents and collectors.
Most of the senior executive team left the business and it was agreed with creditors that Welcome would 'collect out' its outstanding loan book, while Shopacheck would be nursed back to health and returned to growth, and The Lewis Group re-positioned strategically to focus on collecting debt for third parties .
The board of Welcome was reformed and a restructuring plan put in place. Collinson Grant's Jon Park joined as Cattles Human Resources Director on an interim basis. He was one of a small group of people who ran the Welcome business day-to-day while other directors focused on the financial restructuring, legal matters and regulatory concerns. There were conflicting priorities to reduce costs quickly, to maintain performance (in collecting debt) and to create the correct conditions for the two remaining businesses to prosper. The task was not made any easier when the current human resources team clearly had inappropriate skills and the wrong mindset for the situation that the business found itself in.
Jon worked with the board for more than two years. His achievements included managing:
- to retain the right skills and motivate WFS' employees to collect outstanding loans efficiently and lawfully
- to cut payroll costs, assess performance and make employees understand their changing roles. Poor performers in all three businesses were removed
- to devolve HR functions to the three businesses. Jon led initiatives to evaluate what activities were actually adding value, which led to jobs being cut from 50 to 15. Payroll was outsourced from a central unit to a cheaper, more appropriate provider. Complicated benefits packages, one of which added more than £1m per annum to costs, were removed
- along with Robert East the new Chief Executive, to use new management information to challenge and change the Welcome business strategy which had been focused on centralised collection activities and to subsequently use the information to make decisions to close those branches which were performing worst or were least compliant in the way they collected cash.
The number of employees at WFS was reduced from 3,500 to 800. Motivating people who were facing redundancy was a significant challenge. At Cattles it was compounded because many employees had become shareholders when the business was doing well and were members of the final salary scheme which had to be closed, and others also lost significant amounts of their savings. The redundancy programme was legally complex and led to many applications to the employment tribunal. A high proportion of these cases failed. Employees soon realised that the company would contest unfair dismissal claims and usually win.
There were other unexpected problems. The group had to respond to the Information Commissioner when sensitive data on 1.4 million customers and 1,800 current and former employees went missing. It also had to take on a new team of 200 people to handle complaints about mis-sold Payment Protection Insurance.
Despite the turbulent times the business went through, the attrition rate among employees was remarkably low. Employees were looked after and rewarded fairly and communication was effective. The measures Jon introduced helped to reduce costs by several million pounds and enabled the business to meet consistently the creditors' targets for debt collection. The business was stable and in good shape when he left.
In commenting on Jon's assignment, Robert East said:
"Jon played a key role in helping shape the business strategy and driving a transformation agenda across the Group and in HR particularly, where motivating and keeping employees engaged at a time of great uncertainty for them personally was critical to eventual success. His knowledge, commitment and determination were key to the progress made".