RMIT Graduate School of BusinessSeminar Series 2006

RMIT University Melbourne, Australia27 September 2006

Chris Booth

Lecturer

Graduate School of Business

RMIT University

The crisis of too few managers to manage extraordinary growth

Managing Extraordinary Growth

• In August 2001 Wesfarmers Ltd acquired its rival BBC Hardware House for $AUS2.7 Billion creating a Bunnings network of 371 stores 111 of which were 10,000 square metre warehouse type operations (Walker, 2002). The spectacular growth of the Bunnings Building Supplies business in the late 1990’s built on sales rises of up to 11% per year (Walker, 2002) prompted this major acquisition.

Managing Extraordinary Growth

• The decision by Wesfarmers to acquire BBC Hardware (Walker, 2002) was based on:– Industry sector growth prospects.– Value in ROA for BBC assets streamlined to Bunnings operations style.– The extraordinary success of Bunnings business model for its warehouse

operations built on low cost inputs and “team members” led by capable team oriented and managerially skilled leaders.

• Continued significant growth was anticipated over the next few years particularly in New South Wales and Queensland (Perinotto, 2003; Lloyd, 2003).

Managing Extraordinary Growth• Realising that no amount of external recruitment of managers

could fulfil a need in 2002 to fill 600 management positions led Bunnings to the concept of growing their own leaders, (Byham, Smith and Paese, 2002), developing managers from dedicated team members already in Bunnings operations.

• This presentation considers a story of a partnership in excellence between RMIT University and Wesfarmers Bunnings Building Supplies to build a management development program.

Managing Extraordinary Growth• 1993 - McEwans and RMIT Partner for management training.• 1996 - Wesfarmers Bunnings group purchase McEwans relationship with RMIT

grows.• 1997 - Wesfarmers Bunnings Building Supplies, focus turned to a more

professional team and team leader development approach:– based around the US Home Depot operations model supported by the Disney method of

team development (Capodagli and Jackson, 1999). – team members with leadership potential are internally selected to be trained and mentored

towards the Coordinator role at Bunnings. The approach of succession combined with formal and on the job skilling assumed a “grow your own leaders” model (Byham, Smith and Paese, 2002).

Managing Extraordinary Growth• 2000 - The need for managers skilled in the Bunnings approach to team

culture and operations became more critical.– RMIT was asked to design a program to incorporate managers based both in urban and

regional locations. Incorporating potential participants from outside of Melbourne immediately meant the program needed to be designed for a different delivery mode ie through intensive multiple-day workshop-based program, or by distance education or some other mixed mode of delivery.

– The challenge for the leadership of the School of Management VET became identifying, the value adding in the current program, the leadership and management development needs for Bunnings, the logistics issues of delivery and their impact, and finally the explicit and latent expertise of the learning provider to build and deliver such a cutting edge program.

Managing Extraordinary Growth2.

Set Objectives for Development

- Diploma level applied leader manager competence

1.Articulate Strategic

Imperatives- Bunnings Management

Development meets growth levels6.

Integrate with Human Resource System

- Bunnings Trainee Manager Selection & Mentoring

3.Identify Appropriate Methods

& Approaches- customised work integrated

learning

4.Select Providers & Design

Learning Programs- RMIT strong industry based

applied learning reputation

5.Evaluation of Program

Delivery- Bunnings Performance

& HR Metrics met

7.Evaluation of Strategic

Imperatives, Objectives & HR Systems

- High numbers of graduates in management positions

(45%)

Figure1.RMIT and Bunnings applied example of an integrated approach to planning leadership development (based on Cacioppe, 1998)

Managing Extraordinary Growth • Slytowsky and Wise (2002) point out the nature and difficulties

arising from Growth Crisis from a strategic viewpoint. – They identify that customer relationships in terms of reach and or

unique levels of customer interaction or insight of customer needs can provide leveragable hidden assets to support growth and avoid crisis.

– These later assets, interaction and insight are cornerstones of the Bunnings approach to team building and creating the leadership and management capabilities to coordinate team effort in the Coordinator role in a Bunnings Warehouse operation.

Managing Extraordinary Growth • According to UK qualitative research business skills

development in leadership and management practice have a perceived correlation to improved competitiveness in facing extreme change, (Worrall and Cooper, 2001). – Bunnings Building Supplies recognised this aspect of leadership and

management development as a critical component to competitiveness and has chosen to grow their learning and development programs to build competent leaders from within the organisation.

– The RMIT Bunnings Diploma of Business Management in 2003 had programs across the following Australian States: Victoria, New South Wales, Queensland, South Australia and Western Australia.

Managing Extraordinary Growth • Measures of success for this program though largely qualitative are demonstrable. These

measures include the following:– The long-standing association of the two partners since 1994, the growth in uptake of the program in terms

of multiple intakes and national scope indicate a level of satisfaction, credibility and trust in the partnership by both parties. The program is now run internally by Bunnings but continues with the RMIT Diploma Award.

– In August 2001 prior to the acquisition of BBC Hardware, over 45% of management of Eastern Seaboard operations were graduates or intakes into the RMIT Bunnings Diploma of Business Management.

Critical feedback from Bunnings HQ and career tracking of individual program participants point towards the following:– o High numbers of trainee managers reaching Coordinator (High-level Team Leadership) level in the company

(between 60% and 80%).– o High levels of retention of program participants in the company (65% to 80%)– o High levels of satisfaction from participants in the RMIT component of the program (85% to 95% aggregates to

participant satisfaction of content and process issues) – o A company wide process of specifically selecting program graduates and program participants as major project

managers to lead store integration and act as change agents.– o Significant internal promotions of a select pool of graduates to more senior operational roles in the past four years in

line with succession expectations (Byham, et al, 2002).

Managing Extraordinary Growth • Critical feedback from Bunnings HQ and career tracking of individual program

participants point towards the following:– High numbers of trainee managers reaching Coordinator (High-level Team

Leadership) level in the company (between 60% and 80%).– High levels of retention of program participants in the company (65% to 80%)– High levels of satisfaction from participants in the RMIT component of the program

(85% to 95% aggregates to participant satisfaction of content and process issues) – A company wide process of specifically selecting program graduates and program

participants as major project managers to lead store integration and act as change agents.

– Significant internal promotions of a select pool of graduates to more senior operational roles in the past four years in line with succession expectations (Byham, et al, 2002).

Managing Extraordinary Growth Conclusions• The issues facing a large organisation in managing growth pose a

number of problems at a number of levels – strategic, operational and also at the functional levels, (Slytowsky and Wise, 2002).

• In terms of building management from within to match high growth needs there is support for a “grow your own leaders” concept, (Byham et al, 2002, p 10). This approach has been successfully applied by Bunnings Building Supplies in its continuing organisational growth phase by partnering with RMIT University.

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