MARKS & SPENCER has come to love ‘green’, and see it as the future of the business – and we’re not talking about the controversial former bidder for the company Philip Green either.
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Bar a dip in 2005, the retailer has seen great success in the last five years and doubled profits to nearly £750m.
Yet despite the good times, changes are still required to spur on the business. Group finance director Ian Dyson might not have the profile of M& S’s chief executive Stuart Rose, but over the next five years he will hold a core role in this change.
M&S is totally revamping its stores, supply chain, IT, finance, and everything else in between. On top of that, and integral to all its changes, is Plan A. M&S has given itself until 2012 to be carbon neutral across the UK and Ireland, while also sourcing new eco-friendly partners and trading in a fairer ‘fashion’, a scheme that will cost it £200m. ‘Because there’s no Plan B’, goes the rather earnest marketing spiel.
Dyson, who also holds responsibility for IT and property as well, expects to be kept very busy. ‘We’re dealing with Plan A, finance, IT, property, adding 20% extra floor space, new store designs — moving the business to the next stage of growth gives us a tremendous amount to do. I’m hardly likely to get bored.’
Illustrating corporate social responsibility in the finance department might see some FDs struggle to come up with ways of justifying their contribution, yet Dyson already has concrete examples of finance’s input into the topic.
For example, Dyson led the company in its search for backers of a £400m bond. Plan A and thinking green was at the forefront of the strategy.
‘We did a beauty parade of which bank to use, and their green credentials were a key part of it. Morgan Stanley and Citigroup said it was the first time they’d been asked about that, but to be fair both produced info about what they do,’ Dyson explains.
But Plan A is still in its infancy, and finance’s role in monitoring how the project is implemented and its effect on the business is also in its early days.
Dyson says the impact of the project on profit margins is important and doesn’t necessarily need to be negative.
Taking confectionery off till points as part of its healthy eating objective might worry the food people in the business, says Dyson, but ‘replace them with socks or whatever’ and monitor the results.
While ‘nothing is done for just puritanical reasons’, the projects – of which there are 100 for Plan A — are environmentally and responsibility driven, explains Dyson.
But there are also pragmatic business reasons at play. Dyson says the company believes it will set them apart from competitors, ‘but at the heart of it is a desire to make a difference’.
Business has to react to the big wide world, and Dyson has noticed potential finance students considering joining the company are keen to know M&S’s CSR policies – a mindset that will be familiar to any employers fighting to win the war for finance talent.
All the talk of Plan A could deflect Dyson from the fact that the scheme is there to integrate with the other major changes going on at M&S, regardless of its green agenda.
‘Whatever systems we put in we have to take Plan A into account, it’s not particularly material but the suppliers we use will have to have green credentials.’
Dyson also admitted that the company doesn’t have IT systems in place that can cope with M&S’s plans for expansion.
It’s not so much that the finance systems at M&S have been under-invested in, but investment ‘wasn’t spent in the right way’. Dyson has already undertaken a massive finance systems upgrade project since he joined M&S from Rank Group in 2005.
M&S had 100 disparate finance systems across the business that didn’t t alk to each other. This was addressed with a 16 month SAP financial systems rollout that went live in April. Its point of sale systems are nine years old, and they work, but need to be replaced over the next four years.
‘Don’t take away the impression that our systems don’t work, but we are thinking about how we want to grow and develop new brand systems to leverage greater efficiency wherever we can.’
As Tesco has grown to be one of the biggest retailers on the planet with its groundbreaking supply chain, Dyson admits supply chain is an area where M&S could certainly work more efficiently.
This is particularly compelling as M&S food distribution is becoming increasingly complex, with the expansion of ranges on to BP forecourts at a rate of two petrol stations a week under a franchise deal.
Despite all the change at the company, and in finance specifically where Dyson says he has made the department ‘much more commercially focused’, he is loathe to criticise the previous administration, including previous FD incumbent Alison Reed.
M&S chief Stuart Rose began restructuring the business a year before Dyson came on board, and ‘left’ finance to him. ‘It did need sorting out,’ says Dyson, ‘but it wasn’t as if I inherited a mess’. Nonetheless finance went through wholesale change under Dyson during his first year in charge.
‘We embarked on a big change programme, including systems. Culturally the department was quite bureaucratic and civil service-like. I wanted to break through that and made a lot of changes in a short period of time.’
Feeling the benefit
Dyson believes the changes have paid off. ‘We’re in much better shape. [We recruit] better people, who are much more commercially focused and the standing of finance in the business is night and day when you look at it compared to when I joined two years ago. It was regarded as a blocker, typical negative finance function. It wasn’t regarded as a business partner.’
Dyson says the job has been extremely operational, but refutes suggestions that he is taking a back seat to Rose in terms of influencing the future of the business. ‘There are three of us at the top so that’s a good mix. And you can’t be an FD of a major plc without being strategic.’
The role of an FD is a topic Dyson, a former partner at Arthur Andersen, is passionate about. Dyson likens US reaction about the governance crisis of the early 2000’s to a sledgehammer cracking a nut. Businesses are now embroiled in regulation and governance to their detriment.
The accounting profession has in turn become all about ‘form over substance’, he firmly believes. ‘It affects the accountancy profession, the role of FDs and FCs and ultimately affects the attractiveness of accountancy as a profession.’
The commercial aspects of the job are disappearing and being replaced with box ticking, restricting commerce in its influence. ‘It’s an issue for the profession in the long term. Accounting firms can’t recruit the people they used to, they’re going to banks, private equity, hedge funds and investment management, where the rewards are much greater and the attractiveness of accounting is not quite like what it was.’
But he can’t spend too much time worrying about the profession as a whole – he has enough on his plate at M&S. Thankfully working alongside Rose more than compensates for his heavy workload.
‘Working with Stuart is great, undoubtedly the best exec I’ve ever worked with. Very direct, good fun, clear, motivational. I’ve total respect for his leadership and commercial abilities and we have a lot of fun, there’s balance between enjoyment and respect.’
He’s ‘hardly likely to get bored’ moving the business on to its next stage, as a lean green, corporate machine.
Plan A: the nuts and bolts
Bournemouth, Sri Lanka and North Wales all have one thing in common: they are three of the most important areas for Marks & Spencer in its £200m eco-scheme known as Plan A.
Reaching the objectives of Plan A by 2012, of which there are 100, requires great effort in these three localities.
Bournemouth will be the site of M&S’s first ‘green’ store, which will be powered by renewable electricity, using 25% less energy than the average store and 90% less CO2 than it previously did. The revamp of the store is due to be completed imminently.
Sri Lanka will be home to an ‘eco factory’ producing lingerie for the retail giant, while North Wales has been chosen as the site for furniture upholstery production. Both sites are scheduled to open early next year and have committed to become carbon neutral by 2010 and send no waste to landfill. They will maximise the use of sustainable materials such as Fairtrade and organic cotton, recycled polyester fibre fillings, castor oil-based foam and Forest Stewardship Council-approved timber.
Electric, zero-emission trucks will be used for food deliveries to M&S’s Covent Garden store in London. The trucks can be recharged at depots and stores.
A recent business brainstorming session among M&S’s back-office finance team in Salford Quays heard Plan A and environmental issues as the most discussed issues.
‘We’re playing our part, whether it’s saving paper or other things, and we have a Plan A representative in finance,’ said Dyson.
The issue is even more immediate for Dyson, as potential employees, ‘particularly the 18-25 year olds’, are keen to understand what Plan A is and other CSR issues affecting the way M&S operates.
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