Sir Philip Green bought BHS for £200m in 2000 and during his tenure Sir Philip took out £400 million in dividends. Many of the directors at that time were home grown. They were loyal and long serving and they knew the business inside out. Above all, they were dedicated to the future success of their business. Sadly, there was a cultural shift in the retail industry when incentives, bonus schemes and cash and share options arrived and from that moment some bosses seemed to lose sight of the public good. They looked for bigger and better jobs and they were replaced by managers who demanded high salaries but who had little retail experience.
BHS then struggled through the recession, was slow to move to online sales and failed to boost customer in-store experience. Sir Philip, chairman of the Arcadia Group, kept the stores afloat by loans from his empire, which includes Top Shop, Burton and Miss Selfridge. But, he decided to sell it last year for just £1 to Dominic Chappell; a former racing driver who had been declared bankrupt on more than one occasion and who had no retail knowledge. Now 20,000 staff on the BHS pension scheme and 11,000 employees have an uncertain future as the company has a £571 million deficit and it is unlikely that a new buyer with the Midas touch will be found in time to offer them a life line.
If you apply the failed BHS model to accountants and lawyers, you will quickly realise that the best way for a partnership to improve its profitability is for the partners to put the business first. Partners should not treat their firms like lifestyle businesses; they should be focusing on driving the business forward. Some firms, however, do not technically make a profit; they simply pass the money they make on to the partners who then distribute it amongst themselves. Would it be better for them to plough the money back into the business so that they can respond to the market shift and the competition, either by responding to on line developments or by improving customer experience to sustain and accelerate growth, whilst keeping their clients happy?
If you become self interested, you will betray your customers’ trust and your lack of response to their perceived need will damage your relationships beyond repair. Remember! It’s all about the customer. Not you. Not your firm. You must listen to them as they know what they want. And if you don’t provide them with the answer, then they will desert you and look elsewhere!