IN SOME WAYS, Julian Richer is a typical market-trader-made-good. He was wheeling and dealing as a schoolboy, even selling candles during the miners’ strike of 1974. Then he discovered the market for hi-fi equipment, initially managing other people’s stores, before opening his own shop at the tender age of 19. He opted for the trappings of wealth, buying his first Rolls-Royce at 23. After a difficult period when he admits that he confused revenue growth for profit, he built up a successful high-street chain of 52 stores, which he named Richer Sounds.
If this tale seems all too familiar, in other ways the 60-year-old Mr Richer is an atypical entrepreneur. That became clear in May when he announced he was selling a majority stake in the company to a trust owned by the staff, and remitting around 40% of the proceeds in the form of a cash bonus to colleagues. For every year of service, they received £1,000 ($1,230). His gesture reflected the management philosophy he has developed over his 40-year business career.
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Mr Richer says that the penny initially dropped for him when he read “In Search of Excellence”, a business bestseller by Tom Peters and Robert Waterman which came out in 1982. The top-performing companies described in the book had two common features, Mr Richer noticed: they treated both customers and their employees well.
In “The Ethical Capitalist”, one of his two books on management, Mr Richer writes that “organisations that create a culture based on fairness, honesty and respect reap the rewards.” They attract motivated staff “who are there for the long haul”. High staff turnover, he says, is a sign that something is fundamentally wrong. And he cites his firm’s turnover rate of 11% a year, compared with an industry average of 25%, as a sign of success. Richer Sounds also tries to promote from within. Each of the other nine board members has risen through the ranks.
How does he keep staff loyal? One way is to survey morale every week. Employees rate it, anonymously, on a ten-point scale. Store managers report the average and the lowest score. If there is a two, the company will investigate. Mr Richer regularly visits his stores to talk to staff.
Another tactic is to ensure staff have the time to learn about the latest equipment in stock. The shops open at noon so that there is time for staff training without dragging people out of bed unreasonably early. Nor is Mr Richer a fan of the long-hours culture; if an employee has to take a telephone call on their day off, they get a £20 hassle bonus.
More generous perks are available. Workers can stay at one of the group’s holiday homes; over 70% make use of this perk once a year. The only charge they face is £10 per night per adult, and £5 per child. The British authorities treats such holidays as a taxable benefit but the company covers this cost as well.
Mr Richer believes this cuddly approach results in happier customers. He does not like high-pressure sales tactics, preferring repeat buyers; bonuses are based on surveys of shoppers’ satisfaction as well as sales. On top of the bonus, workers get a monthly profit share, based on each store’s performance, and an annual share of the group profit.
It is tempting to think that such benign ways can only work at a relatively small company (his sales were £157m in the year to April 2019). However, Mr Richer is a consultant to larger retailers and says that some of his suggestions worked well at Asda, a supermarket chain, in the 1990s. Last year he started advising Marks & Spencer, a British retail group, though its continued troubles suggest there is a lot more work to do.
What prompted his decision to transfer the bulk of his stake to staff? Mr Richer says he was approaching the age when his father died and he did not want his wife to deal with the hassle caused by his own demise. As far as money was concerned, he says, “we have more than enough already”. His remaining 40% stake in the group will bring plenty of dividend income. Though he retains the role of managing director, he now takes the same salary as his personal assistant.
There is plenty in Mr Richer’s philosophy which Bartleby salutes. For example, he dislikes long meetings which waste everybody’s time; the typical board meeting lasts an hour. Best of all, however, he disproves the stereotype that entrepreneurs have to be ruthless in order to achieve success. Treating people well can work, too.■