Face to face: Swansway Garages' success is built on family values

For the past three years, Swansway Garages has appeared in the Sunday Times’ Best Companies to Work For list, becoming only the third dealer group to do so and its position in the chart of businesses finding favour with the humble employee rather than investors or City bean counters is rising.

Unlike fellow AM100 companies such as Sytner, a name regularly cited in interviews as one to watch by dealer group bosses looking for staff satisfaction and profitability, and Peter Vardy, a relative newcomer to the sector, which often speaks of its employee and community support initiatives while making impressive profits, Swansway seems to have appeared from nowhere.

It may have hit the headlines in a very positive way, starting with its first listing in the ‘cuddly bosses’ list in 2011, but the company insists the journey has been a long, hard one – and it has some distance to go before anyone can feel comfortable talking about small acorns growing into mighty oaks.

A family business, started by Michael Smyth in 2003, Cheshire-based Swansway has more than a dozen dealerships and franchises, predominantly VAG Group, but also Peugeot, Honda and Land Rover, bodyshops, online brokerages and a business selling obsolete parts.

It was started after Smyth had made a success of his first dealer group Radcliffe Road Garage (RRG), creating Europe’s largest Toyota dealer group before selling it in 2000.

Father to three sons, company directors David, John and Peter, Michael (74) – a true patriach who thought about early retirement for one moment 13 years ago – saw the creation of Swansway as the opportunity to fulfil an ambition to “put quality first, with the best brands, sold and serviced in the best centres, run by the best staff”. And Swansway will never be for sale, they all agree.

So, with its laudable aims, why has it taken so long to come to some sort of fruition?

“I can tell you there wasn’t a light bulb moment,”  Peter said. “We always wanted to be where we are now, but we left a company my father had run successfully for 40 years to effectively start afresh and didn’t appreciate how important the culture within a business is – and how long it would take to establish.”

Making it more difficult was the formation of Swansway from three other businesses (see 'The Smyth family and the origins of Swansway Garages').

The mixture of plc, privately-owned and their own latent RRG experience resulted in a “melting pot of cultures”.

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“When we started it was like the four of us against the 200 staff. Sometimes at first we took the approach against opposition to what we wanted as ‘it’s our business, you’ll do it our way’. We weren’t always right and people barked back. It has taken us seven, eight years to get staff who wanted to be Swansway people, not ex-Ryland or ex-LC Charles.”

Swansway could have brought in talent from other groups. RRG would have been an obvious source, but Smyth Snr said no. If the sons were going to make Swansway a success, they had to do it on their own.

John said: “It was tough at the start, particularly when people were approaching us to work at Swansway that we couldn’t say yes to. But we have realised the best way to build a culture is from the ground up, developing people new to the business rather than falling back on employing the mediocre layer of middle management that permeates the industry. You hire them, they don’t fit or don’t perform, undermine what you’re trying to achieve, and you have to work hard to get rid of them.”

How they did that is with family values.

The Smyths like to say that staff are part of their family, with geniune partnerships with its brands. There are two extreme examples of this. First there are annual branch inspections at every dealership. Each centre – and head office – is given two months to prepare to ensure it is up to the group’s and manufacturer’s exacting quality standards. The cost is put at about £12,000 per dealership per year.

Peter said: “When a manufacturer says one of our sites isn’t up to scratch then we jump on it to get things up to scratch. It’s a false economy to procrastinate as you will have to make the changes sooner or later. But the branch inspections means there’s a continuous cycle of standard-setting and improvement.”

As a result, Swansway has the only Audi market area that is fully compliant with its Journey 2020 corporate identity.

At the other extreme, there is a rule that coats cannot be left on the back of chairs. They have to go on coat stands.

“I want our sites to be like our homes. I don’t want to live in a dump or work in one. The coat thing is a fetish, but a very basic requirement,” Peter said.

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Where RRG was run with a “rod of iron” by Michael, Swansway is collaborative; the management is on-site and accessible. Even Michael still spends time in the business, though not full-time.

Everyone in the business has access to the directors, meaning problems are not left to escalate and issues are resolved quickly.

The brothers tell unprintable anecdotes of unscrupulous or dishonest staff and in many cases their point is that staff could have come to them with the problem much quicker than they did to see it resolved.

As a result, Swansway has, for nearly a year, had a free 24-hour phone hotline, operated by a third party, that staff can use, anonymously if they choose, to raise issues and make complaints to the directors. The Smyths don’t want it to take the place of staff being able to talk to them, but it is another avenue of communication.

The communicative approach saw the staff help develop the customer satisfaction charter, or ‘customer delight’, hand in hand with a determination to ensure staff satisfaction.

Swansway took on John Lewis’s former customer services director Andrew McMillan as a consultant to formulate the strategy, finalised in 2011.

The results were three values: caring, honest and proud. So, care for staff and customers and being part of Swansway, being honest and transparent in dealing with customers, suppliers and brand partners, and proud to be part of the group, the team, the “immaculate centres” and Swanway’s performance.

All staff are included in the programme, it’s a part of staff inductions and the words are used on all external communication.

A group customer delight manager, Sue Cook, was appointed in 2011. Her job is to help sales and aftersales teams improve their delivery of the right customer experience, bearing in mind staff are ‘internal customers’.

A demonstration of the ethos was the introduction of ‘customer delight boards’ at all sites. These are a means of communicating positive customer feedback and exchanging best practice, deliberately out of the structured, meeting room environment – “more coffee break and a chat,” say the Smyths – and are much more effective for it.

In the same year as the creation of the customer delight plan, Swansway’s three-site Audi territory came in at number two in the Audi Q Power League with a focus on excellent customer experience. Volkswagen Commercial centres in Preston and Liverpool achieved a one and two ranking in the country.

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An initiative to boost staff satisfaction came from David Smyth. He saw the introduction of ‘Must Know TV’.

Television screens were installed in every canteen, sales and aftersales office. They show daily updates of KPIs, giving a snapshot on how a centre is performing against others in the group.

An anecdote from this is how a valeter spotted used car profit had moved into the red. Peter said: “He reasoned we must have sold a car at a loss and wanted to know why. It’s a great question and he deserved an answer.

“It speaks volumes about a company culture which encourages staff development, not just through the usual methods of training, and questioning by an open door, honest policy where as much information as possible is shared by the family, adding to a feeling of inclusion and caring.”

All line managers take part in account meetings armed with a full set of management accounts on their site every month.

The Smyths shared a number of standards for each department divided into new car sales, used, F&I and add-ons, group fleet, aftersales, marketing, bodyshop, online contract hire and the parts depot.

Each begins with the requirement for “immaculate sites and friendly staff” and often staff empowered wth daily KPI information. Other requirements read:

• focus on achieving manufacturers’ targets
• avoid order taking and sell from stock
• retain margin and sell-up with service plans, F&I and add-ons
• a strict 60-day used car policy
• a used car audit is undertaken each month by one of the Smyths
• buy cars that have been ‘pre-sold’ – “buy wise, sell quick”
• every customer is second-faced by the business manager with the majority of sites having two
• a strong focus on F&I renewals
• workshop profit measured every day
• health check focus on producing more red and amber work sold
• retain ageing vehicles through group service plans and five-year-plus agreements
• strong radio and internet marketing presence, with in-house web design and social media
• focus on staff initiatives, such as a day at the races, running in-centre events, afternoon teas and hanging basket workshops
• ensure a reputation for high quality workmanship in the bodyshops
• employ the travelling SMART van, bringing cosmetic repairs across the group.

 

The Smyths believe the combination of factors – accessible management, knowledge sharing and high customer service standards – have led to a culture of innovation. A Charles Darwin quote is on posters around the business: “it’s not the strongest of the species that survive, not the most intelligent, but the ones most responsive to change.”

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The parts depot is one example the Smyths say demonstrates a willingness to listen to staff, take risks and innovate. It was the brain child of Benn Conn, once parts manager at the group’s Stafford Audi site and Phil Drury, head of business at the same site.

In 2005 Conn started to sell old parts stock on eBay, selling “leftover and oddball” parts to a willing audience and cleansing the group stock. He then realised there was more of an opportunity than washing through old parts, but that other dealers were looking for a route to offload the same.

The directors didn’t take full notice of what was happening until they noticed the margins being made in Stafford’s parts’ department were way in excess of the expected 25-35% on 14,000 parts sold per month through a ‘platinum power’ Ebay seller account across Europe.

When they did, the re-selling business was taken out of Stafford Audi and given a brand name Parts Depot at a head office compound. Its two founders were made directors.

Like the culture, stand-out profitability has taken time to grow. It took until 2010 for Swansway’s return on sale to exceed 1% (1.52%) and in 2011 it went to 0.85%.

In 2012 Swansway made £3.3 million before tax. It believes it could make £4.5-5m this year – or £6m with every existing site “firing on all cylinders”.

Published results show the group making £1.6m in Q1 2013.

Understandably, staff turnover has fallen from 25% at the last Best Companies To Work For assessment to 18% – 15% is Swanway’s realistic target.

“Motor retail is based on sales. So while you have marketing and accounts departments with long-standing staff, with salespeople you can count the time in post in months. I like to think of a business where the sales staff had been there as long as the other departments and how amazing our sales would be,” said John.

Peter added: “We’re not finished with the culture yet. I don’t know if we ever will be, but the impact of the ground-up approach we had to take with Swansway is beginning to pay off in any number of ways you want to measure it: staff and customer satisfaction, staff turnover, manufacturer CI and CSI scoring and our profitability.”

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From reception to fleet sales manager

One of those to benefit from Swansway’s ‘ground up’ approach to staff development is Sarah Eccles.

As a receptionist during the formation of Swansway and the amalgamation of the businesses that were the starting blocks of the company, Eccles was ‘left behind’.

But the Smyths recognised she had a personality they could foster. She moved into the fleet department in a sales admin role. She is now group fleet sales manager.

“It became our mission to succeed with her in the fleet department because we felt it was us against the world down to the way Sarah and the business she was in being left to sink or swim,” said Peter Smyth.

“In the beginning I would call the leasing companies and be honest with them and say I had been given a golden opportunity and what did they want from me, what would help you.” Eccles said. “I was naïve, but like a retail customer, they appreciate and respect the honesty and the willingness to deliver what they need.”

This attitude has seen Swansway achieve preferred supplier status with Lex Autolease, ALD, Hitachi, Lokers and Alphabet and win nine awards from leasing companies and manufacturers. Fleet sales exceed 2,000 units per annum.

The online brokerage business UChoose Contracts, created in 2010, sold in excess of 300 units last year.

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The Smyth family and the origins of Swansway Garages

Michael Smyth, today’s chairman, started the business with a petrol pump and repair shop in 1967.

He founded Radcliffe Retail Garage (RRG Group) becoming Europe’s largest Toyota dealer group before selling it to the Marubeni Corporation in 2000.

RRG also operated 15 forecourts, becoming Esso’s largest privately owned retailer until selling out to the oil firm in the 1990s. It also established Elton Vehicle Contracts contract hire firm which was sold to Abbey National in the same decade.

After the sale of RRG Michael and sons David, John and Peter started Swansway in 2003 when the family acquired LC Charles Volkswagen and Seat, Charles Audi (in Crewe) and two Ryland Audi sites in Stafford and Stoke. They determined the business would never be sold.

Swansway now has 15 dealerships, mainly through acquiring failing businesses. It holds franchises with Audi (3), Volkswagen (2), Volkswagen Commercial Vehicles (4), Seat (1), Peugeot (1), Honda (3) and Land Rover (1).

It also has two bodyshops, two online-only brokerage services, Uchoose Contracts and Stable Vehicle Contracts and an online obsolete parts re-seller, Parts Depot.

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Recruitment process

For as long as it’s taken Swansway to define and instil its culture it has sought to establish an effective recruitment policy.

Leading the development is group HR manager Sarah Dyson.

She realised the company had been recruiting in the traditional, less then productive way of taking on people from within the sector that had been passed or moved on from ‘dealership to dealership’ and being satisfied with mediocrity, negatively affecting performance and staff turnover.

So last year she led the change.

Now recruitment starts with an online form of 12 “killer questions”, inspired by the cornerstones of pride, honesty and care.

Based on multiple choice, they include ‘Tell us about a workplace conflict you’ve experienced. How did you approach it?’; ‘If we were to phone a previous supervisor of yours now, what one or two words would they use to describe you?’ and ‘What have you done in the past few years to earn a better income?’.

The second stage is a more traditional questionnaire on experience, driving licence points, willingness to work weekends and IT literacy.

After vetting, applicants are then invited to send in a CV.

They are then given a telephone interview, focusing on the group’s values. So, ‘give an example of the last time you gave good customer service’, and ‘when you have coached a team member through a difficult time?’.

“There are three screening processes before we meet anyone,” Dyson said. “And a manager hasn’t looked at a CV.

“We’re looking for behaviours rather than a response at a given moment.”

The next stage is an induction, a half-day, where they take part in group exercises and role play.

A group scenario: ‘you are four sales executives and your company has a reward scheme. Without choosing a leader, decide a winner and a reserve for the prize holiday.’

At points during the 30-minute exercise, the group is given ‘disruptive’ information (such as one of those in the reward scheme wants to resign). Applicants are assessed during the resulting discussions.

An interview and the role play form part of the half-day.

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Sunday Times Best Companies To Work For: Swansway’s successes

The Sunday Times citation survey findings:

“When an employee at family-run Swansway Group became ill and was unable to drive, the company recruited a driver to take him from site to site so he could still carry out his job.

Swansway tackled long, unsociable hours in the sales department with flexible part-time working for sales executives and introduced a Monday to Friday-only corporate sales role.

Supporting staff is one of the principles of Swansway.

The organisation is run on strong values (84% of staff agree) and staff have a great deal of faith in Michael Smyth, the chairman (83%). Smyth picks up litter if he sees it and rolls up his sleeves and mucks in where needed. So do his three sons Peter, David and John, who have followed him into the business, and staff have confidence in the leadership skills of senior management (79%).

The Swansway Academy ensures that the 546 staff, who work at 15 sites across the north west, the West Midlands and Wales, get all the training they need as well as time off to study. Coaching and job shadowing opportunities, management training programmes and e-learning courses are available.

Employees believe they can make a valuable contribution to the firm’s success (87%) and think they have a positive future ahead of them here (78%). With almost 40% of workers clocking up five years and more with the business, that seems a safe bet.

Swansway sponsors local children’s football teams in Cheshire. Each department has a social budget for weekends away, meals out or trips to the local pub. Managers ensure that employees have the resources they need to do a good job (81%) and staff say what is expected of them at work is made completely clear (79%). Boredom is not a problem (78%).

Sales executives earn £30,000 a year and perks include an extra day off for employees on their birthday. Free chauffeur-driven wedding cars help staff to celebrate their special day, as well as cars to take their children to their school proms.

Exceptional work is rewarded with treats such as a day at Chester races (including £100 betting money) and a rally race day at Oulton Park. Swansway has an executive box at Manchester United Football Club and runs a payroll lottery for each match, with the lucky winner getting two tickets. Under a new initiative, staff can get a £1,000 bonus if business targets are met.