Why are First Direct’s employees so highly motivated?

September 2009 Company Profile First Direct

First Direct staff answer thousands of queries a day in a vast call centre… yet the online bank tops polls for employee loyalty. Why are its workers so highly motivated?

Consumers don’t like call centres—it’s an indisputable fact. The anecdotal evidence is everywhere, but more scientifically, an ICM poll found that four out of five UK consumers feel “stressed and frustrated” at having to deal with them.

And almost two-thirds say they “loathe” the experience. Little wonder then that life on the other end of the line can be pretty miserable. The average call centre employee is more likely to phone in sick than any other worker. Company loyalty is rare: staff turnover runs at around 25 per cent each year across the industry, but it isn’t unheard of to come across levels of 100 per cent.

Job satisfaction does exist, though, and so does loyalty. In Stourton, West Yorkshire, an industrial satellite conspicuous by its stark contrast to the glitz and polish of nearby Leeds, lies the headquarters of First Direct, the phone and online bank owned by HSBC. It’s an incongruous setting for one of Britain’s brightest call centres, where hatred and loathing are out, replaced by happiness and high levels of motivation.

“We allow our people to be themselves,” says chief executive Matt Colebrook. “We have always celebrated the original nature of individuals.” In fact, he adds, “we celebrate here a lot”.

September 2009 Company Profile First DirectColebrook says Director probably shouldn’t print the fact that the HR team spent yesterday dressed up in safari gear, inexplicably towing stuffed monkeys around the office. But the atmosphere he describes feels very much like the antithesis of a traditional call centre. “We have a blast,” he says, surveying the vast shop floor. “We’re a bit quirky.”

In between all the fun, First Direct’s call centre staff receive an average of 10 calls every hour—or around 28,000 conversations each weekday. Not many people’s idea of a blast, but management must be doing something right. At 14 per cent, staff turnover is way below the industry norm. Happy employees are good to have around if you want satisfied customers. Last year, a GfK NOP survey recognised First Direct as the best call centre in the UK for customer service. This year, it won the Your Money award for best online bank.

And while many customers seem satisfied, some look obsessed. Every year, the company receives calls wishing staff a happy Christmas. Some customers call daily, often with personal rather than banking matters. “That’s not great commercially,” says Stewart Bromley, the company’s head of people experience, “but it’s about being there for the customer. We’re not a typical bank.”

When First Direct launched, it was not conventional in any sense. It began trading in 1989 as the antidote to what then parent company Midland Bank perceived as customer disaffection. “A lot of people were fed up with clearing banks,” recalls Sir Kit McMahon, Midland’s chairman at the time. “They were seen as heavy-handed, bureaucratic, unhelpful and unimaginative. We deliberately recruited non-bankers [from the] services industry. This was a bank that wasn’t run by bankers.”

Under the leadership of Mike Harris, who later went on to launch Egg, First Direct grew into a thriving business, adding 100,000 customers in its first two years and breaking even by year five—an impressive achievement for a bank without a High Street presence. At the heart of the business was a pledge to treat employees as individuals, not purely out of altruism, but as a defined marketing strategy: the people were the product.

Bromley says the idea “from day one” was to use peer support and employee engagement to drive customer service. “The brand is based on people’s perception and experience of dealing with us as a business,” he explains. “Employee engagement is absolutely critical, and I don’t say that lightly.”

First Direct wanted its staff to exude friendliness, confidence and competence. Qualities you only sporadically experienced face to face at your local branch had to be transmitted down the phone line. “You can tell if someone’s smiling at the other end of the phone,” says Bromley. “We wanted customers to feel that our reps were smiling, that they were engaged, that they knew what they were doing and that they had ownership and accountability.”

The Department for Business, Innovation & Skills (BIS) believes competent, engaged employees will be a key factor in leading the UK out of recession. Last month, David MacLeod and Nita Clarke delivered a report entitled Engaging for Success: enhancing performance through employee engagement. It studies the effects of a fully engaged workforce on performance, finding best practice in organisations spanning from the London Ambulance Service to Microsoft.

MacLeod uncovered 56 definitions of employee engagement, but settled on “unlocking people’s potential, enabling them to be the best they can be”. The interesting thing, he says, is that many workers have no idea how good that is.

The benefits are perfectly quantifiable, MacLeod points out. Aside from various studies pointing to boosted productivity, employee engagement is also vital for innovation. According to research, 59 per cent of engaged employees say that work brings out their most creative ideas. Only three per cent of disengaged workers say the same.

“Getting innovation through organisations demands people to be completely committed,” says MacLeod. More pertinent to First Direct, which relies heavily on reputation, “67 per cent of engaged employees advocate their organisation”. Only a tiny fraction of disengaged staff make the same effort.

Jayne Carrington is managing director of HR consultancy Right Management. Her company’s research into employee engagement shows “44 per cent higher retention, 56 per cent customer loyalty, 50 per cent more productivity”—and all in a business likely to be “33 per cent more profitable”. It’s a compelling set of figures.

Carrington says reputation receives a boost from engaged employees because they radiate positivity for the brand. First Direct’s efforts to place engaged employees at the heart of its business has “paid dividends in terms of reputation and shareholder value,” she says. “Two colleagues said when talking about First Direct, ‘they are brilliant, I love them’. That advocacy, that customer loyalty and the reputation First Direct has, comes through their staff.”

September 2009 Company Profile First DirectTo measure levels of engagement, First Direct employees are surveyed annually by HR group Kenexa. Senior consultant Christian Roome says that the bank’s engagement scores “stomp all over” the competition, making its staff among the most engaged in the financial sector. They also compare well across the wider economy.

“First Direct’s scores are excellent,” Roome says. “What I would draw attention to is not just the fact that the scores are high, but that they have driven change year on year. Engagement isn’t a static concept. What’s important is that you do something with the feedback-you are constantly seeking to improve.”

Roome says leadership is a key part of an engaged workforce. “Employees need to feel as if the business at a senior level takes their opinions seriously. That leadership is taking responsibility and taking the business in the right direction. That’s the culture of First Direct. People feel like they are fully involved.”

The bank isn’t Britain’s only advocate of employee engagement. On an equal plain is supermarket group Sainsbury’s, which owes much of its resurgence under Justin King to mastery of human resources. Sainsbury’s employs 150,000 people in 800 locations, which, says King, makes it difficult for true engagement to occur naturally. You have to work “very hard” at it, he explains.

“Our starting point is that everybody wants to come to work looking to do a good job”. But why is it that some people don’t do a good job? He offers three explanations: “Either they don’t know what a good job looks like, they don’t have the tools to do a good job, or they don’t have the context.” King says organisations spend a “tremendous amount of time” on the first two, but rarely provide staff with context, or “giving people a real reason for why they are doing what they’re doing”.

Context at First Direct is supplied by “direction” sessions, annual presentations delivered by Colebrook to all 3,500 employees. To ensure the message stays meaningful to such a large number of staff, the company splits the sessions into 26 groups. Colebrook addresses each group personally.

It takes him two weeks to complete the presentations, plus two weeks of “solid preparation”. Isn’t that more time than the average CEO spends talking to shareholders? “I look at my people as my shareholders,” he replies. “The leadership team, the board, personally delivering the First Direct vision for the next year. I think that’s pretty inspiring.”

Rather less motivating is the job of engaging a shrinking workforce. When companies do well, it’s easier to make employees feel they are a valuable part of the set-up. The threat of redundancies, from which First Direct is not immune, upsets that balance. Carrington says engagement depends on maintaining high levels of respect, especially for departing employees.

“They call it the survivor syndrome,” she says. Those left behind will be more engaged if departing colleagues were treated fairly. “The key is having trusted leaders that have the capacity to listen and who are straightforward in their communications. Act with credibility.”

First Direct made 70 staff redundant in March. “We’ve had to make some tough calls,” says Colebrook, “but when you are able to communicate clearly why you’re doing it, because the vision was set out clearly at the front end of the year, people understand it.”

He says there’s a strong feeling of togetherness at the bank. “It’s a humbling experience to lead First Direct. Not many CEOs would work here. There’s a huge element of humility in what I do.” The hierarchy is pretty flat, too. “People come up to me and talk with me as an individual and as a peer rather than as a chief executive of a rather large business.”

Engagement is a two-way street, says Carrington. “Managers often feel that because they are engaged, everybody else is engaged. They see everything through rose-coloured glasses-‘why are people not happy? I’m happy, sitting at the top, with my nice car and nice lifestyle’.”

At First Direct, management sits alongside staff. “People see me on the floor,” Colebrook says, and on the way to work, too. “There are no special car parking arrangements. I use the bus with everybody else. That’s quite unusual in banking.”


By David Woodward

About author

Director Magazine

Director Magazine

Director is the magazine for business leaders. Free to IoD members and available to purchase through subscription, each edition is full of insightful interviews with entrepreneurs and company directors.

No comments

Time limit is exhausted. Please reload the CAPTCHA.