Trucker with big off-road talents – interview with Edward Roderick
Christian Salvesen does much more than move goods. It is one of the top logistics suppliers in Europe and needs fresh talent. By Roger Eglin
On seeing Christian Salvesen's big lorries cruising the motorways, many people may think it is just another trucking company. But they would be wrong.
The group, set up in Edinburgh in 1846 by two Norwegian brothers as a shipping agent and timber merchant, is now one of the largest logistics suppliers in Europe, employing 15,000 staff and operating in nine countries.
It specialises in managing supply-chains for big manufacturers and retailers, using advanced technology to optimise inventories and ensure that goods are available precisely when needed. Customers include Carrefour, Ikea, Aldi, Danone, Unilever, Tesco, Ford and General Motors.
One of Salvesen's tasks is making sure that the 47,000 British Airways staff who wear uniforms are always smart and well turned out. The logistics company has to organise two depots, one at Heathrow and one at Gatwick, plus a number of outstations, that issue some 450,000 garments a year.
If this sounds an impressive operation, take a look at another big customer – Marks & Spencer. It has two purpose-built distribution centres, each of which can hold Pounds 60m of stock. The centres receive and dispatch goods worth Pounds 500m a year. Efficiency is at a premium. Marks & Spencer operates on the Japanese-inspired just-in time system, and 85% of the deliveries to stores take place on the same day the order was placed.
The extraordinary feature of Salvesen is that when the present chief executive, Edward Roderick, joined in 1996 as a senior executive, the intake of skilled people was a meagre three graduate recruits a year. And few of them stayed long.
By the time Roderick became chief executive in l997, the company was living on its reputation and lacking direction. Some 80% of its business came from Britain.
Roderick says it ignored the obvious fact "that the larger part of Europe's population is on the other side of the Channel".
This was not the only target the company was missing. Salvesen lacked the kind of presence it should have had in the important industrial market. This was being reshaped by the rise of the big food superstores and the steady increase in the size of manufacturing units. These rapid changes needed monitoring closely.
Demerging its power-generation business gave Salvesen greater independence and provided an opportunity to refocus. But to fulfil Roderick's vision of a 50-50 split between its business in Britain and on the Continent – and similarly with the consumer and industrial markets – was not easy. A number of acquisitions, supplemented by organic growth, had to be made.
The company's success in the l980s had created a complacent and inward-looking culture. Roderick says: "People were repeating themselves, not looking outside to see how things had changed, and this was reflected in falling profitability and reduced return on capital. Our people were not customer focused or profit focused."
Breaking out of this straitjacket and achieving success meant beefing up the management. The starting point, says Roderick, was a thorough review of the talent in the company. "We had to spend more time looking at people – what we had, how good they were, whether we should continue to develop them, who should stay and who should be let go."
The review quickly concluded, says Roderick, that Salvesen "was not fast enough filling the business up with brains from the bottom. We needed to raise the quality of the intake."
But enthusing graduates about a career in logistics was not easy. Changing the company's direction was akin to coaxing a large oil tanker to change course, says Roderick. Drawing together all the company's operations under the Salvesen brand helped to make it better known with graduates. Today the company recruits about 25 graduates a year and has a retention rate of 80%.
Another move was to hold what Roderick calls "a star chamber review" to overcome years of underinvestment in management. Twice a year the heads of the group's businesses and their personnel staff were asked to make presentations of their operations and review the people in them. This allowed top management to get a good fix on the available talent and where it was being blocked from asserting itself.
These reviews showed that while the group had many good people, a number of them had development needs that required outside help. Salvesen's talented staff ranged from former truck drivers and warehousemen to aspiring senior managers. Some of these people had undergone no training since joining from school while others wanted to take MBAs. The company wanted at least 20 good managers a year and this meant developing people who had left school at 16 and had received no training at all.
Salvesen chose Henley Management College for its ability to create courses that reflected the needs of the business, for the quality of its academic teaching and for its pragmatic approach.
The development plan is taken very seriously. Through what has proved a difficult period for the business, Roderick has been committing more than Pounds 1m a year to training, saying this is essential to position the business for the future.
The Salvesen programme built up progressively, starting with the diploma course, which represented parts 1 and 2 of the Henley MBA. A general management programme and another course acting as a bridge to the MBA programme were to be added later.
The company is progressively achieving its goals. The Continent now provides 45% of turnover, and industrial markets such as cars, chemicals, DIY and paper and packaging have grown a lot despite difficult trading conditions.
Roderick admits that Salvesen's profitability needs to improve, but the fact that the company is a frequent target of takeover speculation gives an indication of how its potential is regarded these days.
(C) The Sunday Times, 2003
