In a year in which a major restructuring has resulted in 1,400 redundancies, does Asda’s smiley-face brand image really reflect the mood within the company? Rachel Barnes reports

Asda has had a pretty stormy 2005, what with the negative headlines, an increasingly tough trading environment and the fact that, in Andy Bond, the company is now on its fourth boss in five years.
All of this has undoubtedly had an impact on staff morale, which hit new depths with the June announcement that 200 head office jobs and 1,200 junior managerial in-store positions were to go.
“That was the lowest point,” acknowledges Asda people director David Smith.
However, he insists, since then morale has improved dramatically.
For one, Asda has been named the second best big company to work for by the Sunday Times this year and, in its monthly internal staff surveys, morale scores are now at a two-year high, according to Smith. He adds that the mood is nowhere near as bad as in the early 1990s when senior executives were leaving in their droves.
“It doesn’t compare with some of the years in the early ’90s when Asda was in financial difficulties. Obviously it has been a difficult year, but morale is holding up remarkably well.”
Though there has been movement at the top, it is unlikely to have destabilised the company, agrees Verdict Research analyst Gavin Rothwell.
On the contrary, the good track record of promotion of people within the company and the relatively few senior additions from outside has meant that members of the new executive board are well known to staff in head office and in-store.
Bond is also felt by insiders to be the right man for the job. One head office employee says: “People did like Tony DeNunzio, but he was a finance man, whereas Andy is a man of the people. He’s been here since 1994 and people know and respect him. He’s seen as one of our own.”
It was inevitable that Bond would attract flak at the beginning, she adds. “It was easy to put the blame on Andy after the restructure, but he’s had to be tough. Times are tougher for everyone and Asda’s having to work harder to get the figures looking good.”
Although morale is picking up again and it’s “far from a case of people
wanting to jump ship”, she admits that the bad press has impacted staff. “If someone reads a story in the papers, they’ll often not know if it’s accurate. If they read that staff have been sacked by e-mail, they could well believe it.”
That headline was just one of several through the year that didn’t tell the full story. Rather than being sacked by e-mail, some staff received a message telling them a meeting had been scheduled, but this applied to everyone involved in the restructure from role changes as well as redundancies. When the tabloids found out that Asda was offering staff an extra unpaid day of holiday, rather than commend flexible working, it labelled Asda as stingy for not picking up the £5m tab for paid leave. And when the press got hold of the story that Asda had reduced its staff Christmas discount from last year in certain categories, the resulting uproar among staff forced Asda to reinstate the full offer.
However, although Smith says bad press is a concern, he is adamant that store staff aren’t becoming disaffected. “We pride ourselves in telling colleagues the truth when we know a story is coming out. We e-mail store managers and they have huddles every day and can brief colleagues.
“People are very resilient. In the past month we’ve been to every store to prepare for Christmas and we’ve seen how positive colleagues are,” adds Smith.
He insists that a line has now been drawn under the summer redundancies.
So what now for Asda? If Bond’s and Sainsbury chief executive Justin King’s remarks this year are to be believed, then it’s a real possibility that Asda could slip down the food chain, allowing Sainsbury to regain its number two spot.
The biggest drop in morale at Sainsbury came when it lost its supermarket crown to Tesco in 1995. And this was compounded in 2003 when it was overtaken by Asda.
For Asda, while improving morale is on the to-do list, precious management resources are being diverted, says Verdict’s Rothwell. “It’s another added hurdle for management to deal with when they could be concentrating on bigger issues.”