58 Business The EconomistOctober 5th 2019
2Bartleby From rags to Richer
Economist.com/blogs/bartlebyI
n some ways, Julian Richer is a typical
market-trader-made-good. He was
wheeling and dealing as a schoolboy,
even selling candles during the miners’
strike of 1974. Then he discovered the
market for hi-fi equipment, initially
managing other people’s stores, before
opening his own shop at the tender age
of 19. He opted for the trappings of
wealth, buying his first Rolls-Royce at 23.
After a difficult period when he admits
that he confused revenue growth for
profit, he built up a successful high-
street chain of 52 stores, which he named
Richer Sounds.
If this tale seems all too familiar, in
other ways the 60-year-old Mr Richer is
an atypical entrepreneur. That became
clear in May when he announced he was
selling a majority stake in the company
to a trust owned by the staff, and remit-
ting around 40% of the proceeds in the
form of a cash bonus to colleagues. For
every year of service, they received
£1,000 ($1,230). His gesture reflected the
management philosophy he has devel-
oped over his 40-year business career.
Mr Richer says that the penny initially
dropped for him when he read “In Search
of Excellence”, a business bestseller by
Tom Peters and Robert Waterman which
came out in 1982. The top-performing
companies described in the book had
two common features, Mr Richer no-
ticed: they treated both customers and
their employees well.
In “The Ethical Capitalist”, one of his
two books on management, Mr Richer
writes that “organisations that create a
culture based on fairness, honesty and
respect reap the rewards.” They attract
motivated staff “who are there for the
long haul”. High staff turnover, he says, is
a sign that something is fundamentally
wrong. And he cites his firm’s turnoverrate of 11% a year, compared with an in-
dustry average of 25%, as a sign of success.
Richer Sounds also tries to promote from
within. Each of the other nine board mem-
bers has risen through the ranks.
How does he keep staff loyal? One way
is to survey morale every week. Employees
rate it, anonymously, on a ten-point scale.
Store managers report the average and the
lowest score. If there is a two, the company
will investigate. Mr Richer regularly visits
his stores to talk to staff.
Another tactic is to ensure staff have
the time to learn about the latest equip-
ment in stock. The shops open at noon so
that there is time for staff training without
dragging people out of bed unreasonably
early. Nor is Mr Richer a fan of the long-
hours culture; if an employee has to take a
telephone call on their day off, they get a
£20 hassle bonus.
More generous perks are available.
Workers can stay at one of the group’s
holiday homes; over 70% make use of this
perk once a year. The only charge they face
is £10 per night per adult, and £5 per child.
The British authorities treats such holi-days as a taxable benefit but the company
covers this cost as well.
Mr Richer believes this cuddly ap-
proach results in happier customers. He
does not like high-pressure sales tactics,
preferring repeat buyers; bonuses are
based on surveys of shoppers’ satisfac-
tion as well as sales. On top of the bonus,
workers get a monthly profit share, based
on each store’s performance, and an
annual share of the group profit.
It is tempting to think that such be-
nign ways can only work at a relatively
small company (his sales were £157m in
the year to April 2019). However, Mr
Richer is a consultant to larger retailers
and says that some of his suggestions
worked well at Asda, a supermarket
chain, in the 1990s. Last year he started
advising Marks & Spencer, a British retail
group, though its continued troubles
suggest there is a lot more work to do.
What prompted his decision to trans-
fer the bulk of his stake to staff? Mr Rich-
er says he was approaching the age when
his father died and he did not want his
wife to deal with the hassle caused by his
own demise. As far as money was con-
cerned, he says, “we have more than
enough already”. His remaining 40%
stake in the group will bring plenty of
dividend income. Though he retains the
role of managing director, he now takes
the same salary as his personal assistant.
There is plenty in Mr Richer’s philoso-
phy which Bartleby salutes. For example,
he dislikes long meetings which waste
everybody’s time; the typical board meet-
ing lasts an hour. Best of all, however, he
disproves the stereotype that entrepre-
neurs have to be ruthless in order to
achieve success. Treating people well can
work, too.A success story built on treating people wella mini-conglomerate. He fixes phones,
sells accessories, blends juice, hires out
chairs and offers mobile money services,
with the help of four people. He says online
conversations with a volunteer mentor in
Spain prompted him to expand into whole-
sale and door-to-door deliveries. This of-
fered a way to market his existing busi-
nesses to new customers. It may also
reduce risk.
The mentoring was arranged by Grow
Movement, an ngo that pairs volunteer
consultants from all over the world with
small businesses in Africa. A forthcomingstudy finds that entrepreneurs who re-
ceived this long-distance coaching in-
creased their monthly sales by a quarter.
They did so not by changing their business
practices, such as accounting, but by
changing their entire business. One statio-
ner describes how he started making his
own exercise books, which was cheaper
than buying them. A rural businessman
selling liquid soap and fertiliser decided to
expand into solar lights, water filters and
cooking stoves after his mentor prodded
him to look for unmet needs.
As elsewhere, however, most Africansuccess stories involve a lucky break. Ms
Buyondo’s came when a savings group at
church lent her money and two teachers
agreed to work for deferred pay. Mike Duff
mentored Mr Zziwa. He recalls how chance
encounters and nuggets of advice while
studying at the London School of Econom-
ics helped his own career (he now runs an
eco-retreat). He describes his Skype con-
versations with Mr Zziwa as the “uberisa-
tion” of good fortune. Mr Elumelu talks of
his foundation trying to “institutionalise
luck”. Starting a business will always be a
game of chance. 7