How We Transformed Happy from a £180k Loss to a £165k Profit in One Year

In: BlogDate: Jan 09, 2019By: Henry Stewart

18 months ago things were not looking good at Happy. In 2017, we made a loss of £180k. Rather than cutting costs, we took a look at our culture and values, and transformed the business. Here’s how we did it.

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At the end of 2018, Happy won the Employer Brand and Values Award at the Business Culture Awards. It is one that I am particularly proud of. The judges’ feedback was:

"This was such a compelling submission. The stakes were so high. Happy had six months to turn their business around. Instead of cutting costs/reducing and scaling things back, they decided to bravely look at their core values to see how they could use them to make a real positive change happen. Largely their approach was around empowering their teams, delegation, empowerment and taking responsibility."

Let me be open and transparent. 18 months ago things were not looking good at Happy. After 29 years as an independent training provider, we were making losses and were six months from running out of money.

One option would have been to cut costs and try to keep going. But instead we went back to the culture. To be honest, we had let things slip and were not fully implementing the principles we espouse and that are covered in The Happy Manifesto.

The effect has been a transformation. We have gone from a £180k loss in 2017 to a £165k profit in 2018. Sales rose 24%, cost of sales fell as a % of income and fixed costs were also reduced. Our year end is September and the new financial year is looking strong. Staff happiness is at a 10 year high and our Net Promoter Score (measuring customer satisfaction) is at its highest ever.

We now have strong reserves, are investing in new IT systems and a new website, have a substantial pot for salary increases and will be paying a hefty profit-related-pay Channukah bonus this month.

So how did we achieve the change?

Transparency: First, we were completely transparent. Staff were fully informed of the financial situation. I shared all the figures openly and used a Lego game to visually explain how incoming revenue is distributed, to ensure all staff understood. The company openly debated what could happen and explored how to turn things around with regular meetings for staff to propose initiatives to improve the situation.

Bottom-up responsibility: The Managing Director of the IT training side of the business left. He was not replaced. Instead, I said to all staff “if you want to take on one of his responsibilities, go for it”. A range of people stepped up to take on activities, while some of his tasks simply didn’t continue.

Job ownership: No one was told what to do. Instead questions were asked by management and staff and the team were encouraged to find the solution. Staff had ownership and freedom to make all decisions within their area of responsibility. For example, the team decided to increase certain key prices, without consulting senior management.

Multipliers: Managers adopted “multiplier” principles, based on challenge and support to enable people to be truly fulfilled. Senior leaders sought to get out of the way to provide the space for people to thrive.

Ownership of the metrics: The key metric for a training business is trainer utilisation (how much of the cost of a course goes on the trainer). Previously the MD had produced quarterly reports and told trainers how they were doing, well after the fact. Trainers were now asked to take full responsibility and complete a spreadsheet each month to report back on their utilisation. It focused them and support staff, using the information they needed and reduced the proportion of trainer cost from 42% to 29% (on its own increasing profit by £96,000).

Staff also created more commercial awareness by sharing weekly revenue reports with the full team, and the teams developed their own targets and worked to them.

Working to strengths: The aim at Happy is for all staff to find joy in at least 80% of their work. Generally, this means people working to their strengths and doing what they are good at. If it doesn’t give them joy, everyone is encouraged to find a different way of doing it or find somebody in the team for whom it does give joy.

Delegate to teams: Previously managers delegated to individuals. Now they delegate to the team and the people in the team work out who is best placed to do a task.

Openness: The strategy group (previously only CHO, MD and department managers) is now open for any member of staff to attend if they wish to. All reports are shared with all staff.

“It was amazing to see. Everyone was fully engaged and we managed to turn the company around by working from the ground up.”

John Horsman, Account Manager and Facilities Manager at Happy

We teach other organisations how to improve their businesses, based on the ideas in my book The Happy Manifesto. It is a great irony that we had slipped in our own company from those values. But it is a fabulous endorsement of everything we believe in that the company turn around is the result of putting those values – of trust and freedom and belief in people – into practice.

Above all it has shown one key thing: trusting people works.

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Henry Stewart, Founder and Chief Happiness Officer

Henry is founder and Chief Happiness Officer of Happy Ltd, originally set up as Happy Computers in 1987. Inspired by Ricardo Semler’s book Maverick, he has built a company which has won multiple awards for some of the best customer service in the country and being one of the UK’s best places to work.

Henry was listed in the Guru Radar of the Thinkers 50 list of the most influential management thinkers in the world. "He is one of the thinkers who we believe will shape the future of business," explained list compiler Stuart Crainer.

His first book, Relax, was published in 2009. His second book, the Happy Manifesto, was published in 2013 and was short-listed for Business Book of the Year.

You can find Henry on LinkedIn and follow @happyhenry on Twitter.

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