Don’t you just wish you could be one of those people who can say: “Since I was nine I’ve had a life plan” and then actually managed to stick to it? Well, David Smith is one of those people. An early event in his life put the former people director of Asda on a set course. “My grandfather died when I was nine,” Smith says. “He was 65 and a half, and as a child I thought that being retired for six months and then no longer being around was not great. So I’ve always said that I would come out of the traditional full-time executive role in my fifties.”

On 31 January, Smith left Asda after an eventful 15 years spanning the Archie Norman and Allan Leighton turnaround from ailing grocer to the UK’s second-largest retailer, the Wal-Mart takeover, acclaim in the Sunday Times 100 Best Companies to Work For list, and healthy growth where others have wilted in the current recession.

It was tough to leave behind, says Smith, but his life plan moves on to a portfolio existence including several private chapters (walking, painting and photography in his beloved Lake District) alongside professional ones: the conference speaker circuit, writing a book, and non-executive and consultancy roles. “Having been in corporate life for 34 years, I want to deploy some of that knowledge, skills and expertise in other places,” he says.

Go back 34 years and you would find Smith working in personnel in a very different Britain. If you were to list the toughest HR jobs you could think of, then “industrial relations in the mining industry during the miners’ strike” has got to be close to the top.

Working for British Coal in the north of England in the 1970s and 1980s “made me the man that I am”, says Smith. He enjoyed a thorough training and generalist HR experience in what was “a very paternalistic environment”. When the strikes came, it was devastating: “You saw fathers and sons never speak to each other from that day ’til this. You saw physical conflict, communities in decline… it taught me a lot about how humanity operates, and how organisations behave at points of major change.”

He believes, in retrospect, that the crisis was a necessary one: “If Britain hadn’t faced down that industrial relations grip, then this country would not have been as productive as it has been in the following decades.” It’s a view that not everyone would share, but Smith at least speaks from direct experience. “You tended to think: ‘Why is it in my back yard?’, but it had to be held in somebody’s.” The forgotten role that he and his colleagues played was one of outplacement, advising miners on “techniques about how to present themselves to the market, how to be interviewed, to put themselves forward for new careers. There was a lot of proactive work that went on.”

With the industry in terminal decline, the end for Smith’s own job was fast approaching too. While still at British Coal, he studied for an MBA with Henley Business School via distance learning “as a means of updating myself on what was going on in business, and getting some new skills in my kitbag”.

At this time, an Asda headhunter gave Smith a tape recording of Archie Norman speaking at a conference. The turnaround the former finance director of Kingfisher retail group was attempting at Asda – which had gone from having a billion-pound surplus to a billion-pound debt – and the forming of a new team to renew the business was something Smith wanted to be part of.

“I came in initially to manage the union relationships. But it quickly became a cultural change programme to take the business forward,” he says. Despite moving into another industry, he learnt that “human resources [management] is one of those skills that stands in its own right wherever you go”.

The buzz in Asda at that time was palpable, he says. The scale of the task meant that “no one questioned the fact that things had to change”. The top 200 executives from the former regime “had been swept out” and replaced by a diverse range of talent. Smith believes that “quality people are drawn to a turnaround business” because of the combination of being able to make a name for themselves, make a difference and make money.

Asda became well known for such personalities, whom Smith refers to as the “adventurer executive type”, and several went on to populate the senior cadre of UK business: Allan Leighton, previously CEO and managing director, became chairman of Royal Mail; Richard Baker, the former marketing chief, left to become CEO of Boots; and Justin King, the former managing director of hypermarkets, took the helm at Sainsbury’s.

For the man responsible for leadership development at the company this is a source of pride. Rather than cursing the loss of such talent, Smith believes it highlights a clear point of difference. “If you want the stability model look at Tesco and [its CEO] Terry Leahy, who has been there a long time. That model says continuity is good, there’s not much change, it’s successful over a long period.

“But the Asda model has not been about dead men’s shoes: people have known that there’s a chance of getting the top jobs, which inspires them to invest more of themselves in the business.” A quick glance at Smith’s CV shows that he for one has taken the opportunities that have come his way.

Yet this story of the great British turnaround ultimately becomes one of a takeover by Wal-Mart, the biggest retailer in the world. In 1999, a Safeway merger was barred by the regulators and while a merger with Kingfisher seemed inevitable, the “adventurer execs” were not happy with terms that seemingly favoured Kingfisher. At the last minute, Leighton recommended Wal-Mart’s surprise £6.7 billion takeover bid to shareholders, and the deal was done.

“Even though it was clearly the takeover of a UK business by a US giant, it felt much more like a merger [than the Kingfisher bid],” says Smith, who feels it has been a mature relationship, with Asda largely left to run itself in the Asda way. Besides, Norman had based many of Asda’s cost-saving and service ideas on the Wal-Mart model.

In terms of people management, Smith argues, Asda has actually influenced its owner. The “stores of learning” concept, for example, described by Smith as a turning point in Asda’s approach to learning and development, has since been taken on by Wal-Mart. Introduced in 1998, it was a reaction against the “throw them in at the deep end” style of management training that prevailed in retail, Smith says. While many could swim, large numbers would sink and it was becoming expensive. Instead, Smith introduced a system whereby the high-performing stores were identified and new management recruits would have an eight-week induction at one of them, learning the culture through shadowing and classroom-based learning before “getting anywhere near” their actual job. “The failure rate of managers is now so low it is unbelievably different,” Smith says.

In addition, Smith instilled an open and communicative management culture. “Management is not only about planning, organising and controlling work. It is also about giving people a vision, making people feel involved, and part of that is making sure people are regularly communicated with and inspired by what’s going on.” He asked that every manager knew at least three personal things about their direct reports, including store managers who may have up to 900. “If they have five children under six or whatever, you need to know about that pressure. That will make a big difference in terms of their performance and their long-term loyalty.”

This open communication doesn’t so much filter down to the shopfloor workers as flow up from them. Of the long list of Asda’s innovative human resources ideas, such as grandparents’ leave, assessment days, daily bonding huddles or the adoption of a servant-leadership model, many have come from the shopfloor, says Smith, who has always made it a priority to talk to shopfloor employees at least once a week.

“I was talking to people on a shopfloor a few years ago about absence management and a lady said to me: ‘Look, David, when I ring in ill, invariably it’s not me that’s ill, it’s one of my children.’” Her idea was to allow colleagues to share telephone numbers and, in such circumstances, call to see if anyone could take their shift for them. Smith loved the idea and it was implemented business-wide. Part of being a low-cost business is fostering innovation in-house rather than bringing in the consultants, he argues (somewhat against his current vocation).

It was the company culture that enabled Asda to debut in the Sunday Times 100 Best Companies to Work For list in fifth place in 2001. Some eyebrows were raised at the time, but Smith wasn’t at all surprised: “My internal measurements moved from satisfaction scores in the sixties at the time of the turnaround, to 90 per cent today – it’s been a straight line increase upwards.” In 2002, Asda topped the Sunday Times list.

But it hasn’t all been plain sailing. In 2005, Asda had growing pains similar to those prior to the Wal-Mart takeover. A bid for Safeway was again rejected by the regulators, and the online offering and Asda Living, its homeware store, were yet to take off. The decision was made to address the surplus overhead that had accrued and about 1,400 managers were laid off. The GMB union angrily described the cull as brutal and attacked Smith’s team. One disgruntled ex-employee wrote on an online reviews site: “Asda: worst union-hating company to work for.” Wal-Mart’s negative industrial relations reputation merely helped to fan the flames.

Smith stands by his decisions. He says the management lay-offs, and the recruitment drive for more than 2,000 shopfloor workers that followed were part of business’s “normal, organic growth”. He views the union dispute, which led to some depot strikes, as being driven by the GMB’s desire to address declining membership by targeting large employers, coinciding with a tricky patch for Asda.

Whatever went on then, in early 2009 Smith leaves Asda in a very strong position. It owns more stores and employs more people than ever and in January posted its record year-on-year growth rate. Despite, or perhaps because of, the highly competitive nature of the market, Smith says he’s going to “miss it like hell”. But he’s got a life plan to stick to.

“I wanted to leave when Asda was doing well. [Now] there’s a track record behind it, it’s a great place to work and it’s won loads of awards for it. It’s done some really innovative things, it’s got a good reputation: that’s my shift over.”

‘The profession needs business nous’
“There are too many people who go into HR who aren’t cut out for it. I fundamentally believe that you must understand how the business works, and a lot of HR people don’t.

“It’s about the competence of people who can influence CEOs and boards and have credibility. I don’t think it’s necessarily about whether you have a generalist or a specialist background; there should be diversity.

“I think the future of HR is exciting and strong, but it really is about the calibre of people that do it. You want a situation where some of the very best people want to do HR.”


The CV
Name: David Smith, chartered FCIPD
Education: 1996: MBA, Henley Business School
1980: BA in business, Sheffield Hallam University
Career 2009-present: Portfolio career as author/speaker/consultant/non-executive director
Asda 2006-09: People director (including IT and loss prevention)
2002-06: People director (including information systems)
2000-02: People director – joins executive board
1996-2000: Retail people director – joins operating board
1994-96: Head of colleague relations
- British Coal 1976-94: Various personnel roles including industrial relations
- 2003-05 CIPD: Vice-president, organisations and resourcing
Personal information/interests: Enjoys mountain walking, photography, landscape painting and learning the guitar