Monday 21 Oct 2013
William Hill HRD: Backing a winning business
When he joined William Hill, shop staff were still calculating winnings on pen and paper, but now David Russell is overseeing rapid change at a multichannel business with big global ambitions.
When William Hill founded his bookmaker in 1934, gambling was something people only did behind closed doors. It wasn't regulated and bookies weren't even legally obliged to pay up. Fast forward 80 years and William Hill is a familiar name on the high street, and is a trusted brand for those who enjoy a flutter. In fact, says HR director David Russell, only the Post Office has more high street branches. "And at the rate they're closing, maybe we'll be the biggest soon," he adds.
Of course, the ability to trade on the high street isn't the only thing to have changed the gambling industry since Hill launched his company. In 1934, the punter would send a cheque several weeks before an event and wait to receive his winnings, or not, depending on his luck. Now customers can place a bet instantly, online or via their mobile phone, as well as in store.
Russell has been with the company since 2001, just before it floated on the London Stock Exchange, and in those 12 years the pace of change has been staggering. "The business has been continually changing," he says. "We've gone through huge technology changes in the shops. There used to be a camera, and when people placed a bet, it was photographed. If the horse won, the manager was in the back calculating the winnings with a red pen. It was a completely paper-based, non-automated process."
Things are very different now. For the frontline teams, it's less about the maths skills and more about the people skills. "Previously, people were employed because they could do arithmetic gymnastics, and if they could talk to the customer, that was a bonus," Russell recalls. "Now the processing is automated, so interaction with, and service to, the customer is everything."
Then there's the march of online and mobile. William Hill was an early settler on the internet, with an online presence as early as 1999. "It was ground-breaking, but the problem with doing things early is you go out of date," says Russell. So in 2008, the company entered into a joint venture with Israeli software company Playtech to remedy its fading online fortunes. It's a bet that has paid off - in the first half of 2013, net revenue from the online division grew by 18%.
However, competition is fierce and new gaming companies seem to spring up weekly. "There is a lot of competition," says Russell. "What the customer likes about us is we are truly multichannel and they can use whichever channel is appropriate at the time: in the shop, online or on their mobile." Almost half of online customers also use the shops. The smoking ban and the new clear, as opposed to frosted, glass windows mean they are more appealing than a few years ago.
"Human contact is still important," says Russell. "In pre-technology days, it was all about location, but customer service is now more important to people. We want to be known for it." The average shop manager has 14 years' service - William Hill is a brand that inspires employee as well as customer loyalty, says Russell. "There's a clear career structure and it's a community-based model," he continues. "It's a high-energy environment. We are driven by results the shop manager can't control. If Cardiff beat Man City (as happened on 25 August), it's great for us, but we can't control it. We can control the experience the customer has and the turnover, ensuring the customer chooses us over our competitors."
As a business, William Hill is a curious blend of the traditional - the local betting shop where the manager knows the regulars' names - and the cutting edge. With online gaming worth more than £2 billion in the UK in 2012 and the growth of live betting, it needs the skills to innovate rapidly. "The live markets have changed things enormously," says Russell. "Whereas 10 years ago you put £20 on the result of a football match, now you place 10 £2 bets over the course of the game. We are trading in the same way the City trades. Prices are calculated on statistical modelling and a machine that gets data fed into it."
The need for online skills means the company has decided to open an office in Shoreditch, within London's 'Silicon Roundabout'. It's admittedly an odd location for this heritage company, a FTSE 100 stalwart rather than a hi-tech start-up. "It wasn't popular with some as there is a high cost attached," admits Russell. "But there are a lot of challenges around finding the mobile and technology skills we need. We've had to face up to the fact the skills are there. The market is developing so fast, you've got to be investing in it."
Shoreditch is only a few miles from William Hill's London HQ, but a long way removed from Nevada and Sydney. The British brand is going global, and growing through aggressive acquisition in some of the world's biggest gambling markets. The UK business was transferred to Gibraltar in 2009 for tax purposes, an offshoring that involved the transfer from Leeds of 120 people, about 80% of whom have stayed since. And William Hill also has offices carrying out back-office and customer support functions in the Bulgarian capital Sofia, Tel Aviv and Manila.
Last year, the company entered the USA, buying and stitching together three small businesses in Nevada. "We anticipate USA gambling regulation will change [gambling is currently legally restricted], so having a seat there is strategically important to us," says Russell. And this March, William Hill headed Down Under after acquiring the Australian operations of online bookie Sportingbet in a £459 million deal. Last month, it bolstered its presence there with the acquisition of Tomwaterhouse.com.
"We are positioning ourselves strategically in English-speaking and regulated markets - places where we can make a living in an honest and socially responsible way," explains Russell. "We are honourable about what we do and how we do business. For most people, betting is a leisure pursuit and we are only interested in those people. I might spend £50 going to the theatre this week; someone else might spend £50 on betting."
Going global brings a series of HR challenges for Russell and his CEO Ralph Topping to grapple with. First, acquisitions require careful change management. "In Nevada, we had three businesses - so we had three of everything," Russell explains. "You have to go through a whole selection process, share out jobs and take people out. It's a big, complex change programme."
Bringing generous reward and recognition strategies helps engender goodwill, he adds. "When we turned up in Sydney, telling everyone they would now get their birthday off work led to a lot of goodwill and engagement. And that costs very little." The competition for six people to win tickets to Wimbledon was slightly more extravagant.
Then there's the balancing act between organisational consistency and cultural sensitivity. "We are trying to have a philosophy of local businesses being run by local people, but we have developed a cadre of people who can go in, offer support and manage the change programme and integration," says Russell. "Businesses can have a reputation of turning up and saying 'we know best'. But in my experience, that's not a foundation on which you can build."
The next step is trying to get some alignment across the globe without it being overly centrally controlled. "People mobility is a challenge, as is setting up reward, succession and recruitment that work in a more global way," says Russell. A new international HR director will assist, and the company plans to develop cross-country teams for projects, such as its CSR work in Africa, to help build engagement and a truly international employer brand.
"We've got to keep our feet on the ground," Russell acknowledges. "We might stretch across the globe, but we aren't global compared to many. We need globalisation of the HR function without losing our roots in pragmatism and practicality."
Russell himself is the epitome of pragmatism and practicality: a no-nonsense Scot who has strategically transformed the company's HR function, and earned himself a place on the HR Most Influential ranking, but who is still willing to get his hands dirty with basic process. "When I arrived, HR was rather overly welfare- and service-oriented and sat 'outside the room'," he recalls. "People were definitely not high on the agenda and the function was fragmented." Now, however, it has become a "critical influencer" at the heart of business decision-making.
It's not all highfalutin strategy though. "There's strategic input, but there's the day-to-day as well," says Russell. "HR does not deserve to be at the big table if it doesn't do the day-to-day properly. A lot of people want to strategise, but if people are not getting recruited, or paid, or don't feel good about working for you, you haven't earned the right to be playing at the big table."
Having a CEO who has worked his way up from behind the counter to running the company, and who really "gets the people stuff", has helped HR play a more influential role. But with Topping committed only until the end of 2015, the next phase for William Hill looks more uncertain.
"Succession is a challenge," Russell admits. "We have gone from being a UK business to an international one, so why would we have a fantastic succession plan in place for all these businesses? Ralph and I probably wouldn't get our jobs if we applied today. The business has to face up to the fact that it's going into a new phase. Retention will become even more critical, and managing that transition is vitally important." With more than a decade of successful change management at William Hill behind him, Russell being the man for the job seems a fairly safe bet.