Happy's transformation from 180k loss to £165k profit

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

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.

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.

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

  1. What an inspiring blog Henry. So good to read an honest account of a problem and how it was tackled. So pleased to hear that Happy is going from strength to strength. The company and all its staff provide a great service and deserve continued success and happiness.

  2. Henry you are always and inspiration!!! Celebrate you and the teams fantastic achievements! Its a great reminder that even the best managers need to refocus and remember to do and not just say!

  3. Wow!! What an amazing achievement, it just goes to show what can be achieved through teamwork and good values. Wish you and the team and even more prosperous 2019.

  4. This is what I would call ‘transformation’. It’s great that you didn’t go down the restructure/job cutting road that most businesses running at a loss do because you would have missed the underlying issue and treated the the symptom not the cause. An incredible and inspiring share. Thank you.

  5. You’ve given me a really interesting idea about whether to recruit or offer to share work out for a share of the salary… it might work!

  6. Hi Henry

    Great outcome, a turnaround is the hardest thing to achieve,

    So with the trainers did you push down the day rate or are they on fixed contracts so increasing sales lowered their costs as % of revenue?

    1. Thanks, Philip. Actually our associate day rate is higher than it was two years ago. The improvement in utilisation is partly due to higher daily income and partly down to our staff trainers really focusing on their utilisation.

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