Carrot and stick: People lessons from Pret
PRET CAN TEACH US how to motivate staff to delight customers
Note the coloured badges and lanyards: each of these signifies ‘rank
I was once in a meeting with Alex Hynes, now MD of Scotland’s Railway, and he characterised the problem with transport as being one of carrot and stick: “not enough carrot, and not enough stick”.
He’s right. One of the reasons why customer service is poor in our sector (and whatever reassurance we give ourselves from Transport Focus surveys, no-one’s fooled: the customers know that it’s often ropey) is that there are few incentives to be great, and few sanctions for being poor. It’s only as good as it is because lots of lovely people genuinely enjoy helping customers, despite lack of encouragement from the system.
Now before everyone starts bleating about their customer service training programmes, I know that everyone does amazing stuff within the context of the norms within which we operate. Chiltern Railways, my former employer, were leaders in customer service in transport. But if we’re talking about engineering the system to achieve great customer outcomes, then transport isn’t the benchmark.
This article is in two halves: tomorrow I’ll talk about my own experiences in creating a startup with the principles of carrots and sticks built right thorough them.
But today, we explore the company that, more than any other, has achieved extraordinary success (well, until Covid!) through engineering carrots and sticks relentlessly through their organisation: Pret.
Pret, like transport, involves anonymous customers buying directly from humans a product that has to be created fresh daily. It’s logistically complex and involves an army of frontline staff (in Pret’s case, until recently, 13,000). So if Pret can do it, we can do it.
Until Covid walloped them, Pret was one of the astonishing success stories of the last few decades. Pret turned a profit of £7.8m in 2004 but, just 13 years later, their pre-Covid profit was £48.8m – an increase of over 500%. Not bad for a sandwich shop.
How did they pull off this extraordinary achievement? That was a question that I wanted to know the answer to, so I got myself a series of visits to Pret HQ, culminating in a meeting with Clive Schlee, their CEO (who stepped back last year).
What did I learn? the whole place is run on the basis of carrot and stick. As Clive said to me “Pret is run like an army”.
It was fascinating to hear that, as I’ve so often heard transport people describe the culture of bus and rail companies as being like the army. But Pret’s interpretation is very different from the sense in which that term is often used in transport.
Here’s what I learned from my visit to Pret (note that my visit was a little while ago, so things may have changed a bit before Covid hit – and, I’m sure, have changed a lot given the Covid crisis. But what I describe here is what made Pret a success):
Carrots:
There’s a clearly defined career path. You might think that working in a sandwich shop is a flat structure? Wrong! Even within just one branch of Pret, there are 10 different roles. Each of these has a clear pathway. All require bespoke training. Some bring NVQs. From Team Member to General Manager of a store is its own career structure. Compare that with most bus garages or driver depots. Next time you (finally!) get to back to a Prety, you can actually spot where everyone is on that path, as every different role is identified through coloured belts and badges.
Pret spend £1m every year on mystery shopping. There are rigorous service standards. E.g. every customer must be served within 60 seconds of arrival in store, and their drink must be served in a further 90 seconds. If the store mystery shopping score succeeds the average for all stores, everyone in the store earns an extra £1 per hour that week. Note the genius of exceeding the average: around half the company will typically get the bonus each week, so it’s attainable and worth trying for. But the average is constantly moved upwards by everyone’s striving to attain.
Store managers get bonus payments based on a balanced scorecard incorporating mystery shopping, growth, safety and projects. The bonus is up to 30% and paid out quarterly. That means that the manager of an individual sandwich bar can earn £50k just by hitting targets.
60% of head office roles are recruited internally. So once you’ve worked your way up within the store, you can then go and run the wider company. I personally met senior managers that started out serving coffee.
6% of turnover is spent on reward and recognition. This includes a personal entertainment budget for every indivdiual staff member, as well as £3k put behind the bar in pubs every week for staff to have fun
They listen to their people. They achieve 91% response rate in their satisfaction survey. One year, the biggest issue was staff rest areas, so every store was given £500 to solve it in whatever way they saw fit.
Within tight parameters, stores get freedom to select their own product range depending on their results and knowledge of their customers. That’s why not every store sells the same range.
Their stores are genuine teams. Their recruitment process is fascinating. Every single new starter has to spend a day working in store. At the end of the day, the existing store team members vote on whether they want the new colleague. If the new person doesn’t pass the vote, they don’t join. The store team have to work together to hit their targets and achieve their bonus – but everyone knows they only work there because their colleagues voted them in. Amazingly, they even do the same for head office staff. Everyone who joins head office from outside goes through the same day on shift in store and if they don’t pass the vote, they don’t join.
Pret and transport meet: breakfast being delivered to a chartered train carriage at Victoria last year. Photo: Luxury Train Club
Sticks:
There’s an expectation you’ll do well. Anyone doing badly is immediately managed out – whether in store or in head office
What good looks like is entirely transparent. E.g. ‘three strikes and you’re out’ for lateness
The scary flip side to the mystery shopping bonus: as you’ll remember, if the store achieves greater than the average, then everyone in the store recieves a £1 bonus (even if they weren’t involved in the mystery shop). But if the store gets below average, then no-one gets the bonus and everyone is told which named individuals missed targets.
The hospitality industry pays low and has high turnover. Pret’s no different. But their approach ensures that the people who stay are the ones they want. By the time someone gets to store manager, the turnover rate is just 6% and the typical service in head office is 7-15 years.
How they make it work:
No franchising, no subcontracting. They employ their own people, make their own sandwiches, employ their own maintenance teams. Therefore ensuring their culture of excellence permeates the whole customer experience. They don’t have a separate customer service team from operations as they regard them as the same thing.
Walking round Pret stores with Clive Schlee was fascinating: he was intolerant of the smallest issues (litter where it shouldn’t be, lighting not working) but genuinely interested to hear what his staff had to say.
When Clive Schlee says Pret runs like the army, you start to see what he means. Deeply cohesive teams. A culture of high expectations. An intolerance of low standards. Command and control on standards but a willingness to allow individual decision making when appropriate.
I’m not naive. Obviously, Pret’s culture is unique and was formed in a business founded in 1986, not in public services with histories going back centuries. But, equally, the role of the private sector in transport is being questioned more now than for decades. If the private sector is to have a role, shouldn’t it be to bring in innovative ideas such as these? While it may feel a million miles away from where we are now, we won’t get there if we don’t start.
Tomorrow I’ll talk about some of my experiences trying to learn these lessons in Snap.
