Listen, listen, listen.” That’s what Nick Read’s former boss Harriet Green told him when he left Thomas Cook to take up the chief executive post at Nisa eight weeks ago.
“Harriet told me not to make any decisions in my first four weeks,” Read recalls. “She told me ‘do absolutely nothing. Your assessment in days one, two and three will be very different by days 28, 29 and 30.’”
Read took Green’s advice to heart. But now - two months into the role - he’s started making changes. Big changes. Earlier this month, Read axed finance director Simon Webster, IT director Wayne Swallow and format and development director Raj Krishan to create a leaner management board. He also appointed Stewart Smith from Tesco as trading director and Robin Brown from Morrisons as interim FD.
He also sent members last week an independent review by Lord Myners (fresh from his similar review of The Co-op) into the governance of Nisa and the changes considered necessary to ensure a return to growth. That review was commissioned not by Read but by Nisa chairman Christopher Baker, but the report has been welcomed by Read and he is keen to hear member views.
“I want Nisa to be fair, open and transparent for every one of its members,” he explains. “The review is looking into how we can ensure this and it is up to members to decide whether they want to back the report or not. We wanted the review to be completely independent and we specifically told Lord Myners to be hard-hitting and to pull no punches. That is exactly what he has done.”
“It’s been a tough year in the centre and everyone is feeling a bit unloved”
The 48-page review warns of a “breakdown of trust between the members and the centre (Nisa’s Scunthorpe HQ)”. It criticises the size of the board, suggesting the number of member directors should be trimmed (it currently has six but can have up to nine), and warns “the relationship between member directors and the executives is poor, with very little trust”. And in the same vein as his Co-op Group report last year, Myners recommends the adoption of a ‘one member one vote’ democracy.
Read says early feedback has been positive, with strong support already voiced through member forums. Sessions were held at Nisa’s annual exhibition in Stoneleigh, Warwickshire, this week, and Nisa will now gather further feedback before the report is voted on at its Retail Summit in July. It needs 75% membership backing to be passed. “The board is very much in listen mode on this. We want to mobilise members now so we can all understand the changes needed,” Read adds.
Though he has not yet conducted a “top to toe” assessment of the business, Read has identified four key priorities. The first is transparency. He plans to publish the minutes of Nisa’s board meetings so every member can read them, and also to review the company’s terms and conditions - called for by members for years.
“There is a perception different people have different terms - mates’ rates,” he admits. “I want Nisa to be fair for all.” He told members at Stoneleigh he expects to report on his findings by the end of Nisa’s first quarter.
Also on his to-do list is to get the business back in growth after losing its biggest member Costcutter - and with it £500m of business. It has, at least, secured £280m through the arrival of McColl’s. But he wants to drive participation among existing members because, he says, there has been a slight decline in sales to members.
Tied to this is member engagement. “By creating an atmosphere of openness and transparency we will get member loyalty right,” says Read. “I also want to make Nisa as easy to use as possible. This will hopefully drive loyalty.”
And he has promised more work to bring down the price of products by focusing on everyday essentials and KVIs.
Read also wants to “put the pride back” into Nisa: “It’s been a tough year for the business for those in the centre. Everyone is feeling a bit unloved.”
“Hugely exciting business”
The recent management departures hasn’t helped morale at head office, but Read says these were needed to create a slimmed down, simplified board, reducing the number of executives from 10 to seven, while also going some way to reducing head office costs by about £3m this year.
“I needed a more cohesive and leaner management team,” he explains. “So, we had the departures, and I’m not replacing COO Amanda Jones [who left last year].”
He’s also making use of the excess space at Nisa’s giant Scunthorpe distribution centre, which has always had excess capacity. The DC is now holding product for the likes of Superdrug, The Range and Wickes.
Nisa has had a tough few months, but Read insists the mutual is in a good place. “I’ve been here eight weeks now and I absolutely love it,” he says. “It is a hugely exciting business and there is so much variety. I came here with no preconceived ideas at all and I have been so impressed by our members’ passion for their business and their understanding of Nisa. It is really refreshing to see that, and something you would only see in a mutual.”
Being a mutual makes Nisa stand out from its competitors, he believes. “Only at a mutual could you publish the minutes of board meetings,” he adds. “We had a board meeting yesterday and I looked through the minutes this morning. There is nothing in there I don’t want the members to know about. Our difference is critical, so we should embrace that.”
Lord Myners’ recommendations
- Reduce the size of the board of directors to 12 people
- Reduce the number of member directors on the board
- All members should hold one voting share each
- Reform the current proxy vote system to liberate “silent majority”
- Improve the relationship between executive directors and member directors
- Tighten financial controls
- Embrace “fundamental change”