How HR keeps on trucking at Leyland Trucks
Peter Crush, April 03, 2018
Leyland Trucks doesn't have problems with retention or skills shortages. But Brexit and diesel bans could be bumps in the road
Ivan Shearer has a confession. Now in his fifth year as HRD of iconic British lorry firm Leyland Trucks, the ex-head of HR at BAE Systems whispers he thinks he’s found the best HR role of his career. “Which is a pity,” he concedes. Now he’s in his 50s Shearer suspects he’ll be retired long before he’s had a chance to reach the average tenure (17 years) at the Lancashire-based firm.
“In my first year here three people reached their 50th year of service, and 25 saw their 40th,” he says. The numbers for staff retention are staggering. Of the 1,000 permanent and agency staff at its one million square foot assembly plant, more than a quarter have been with the business for more than 20 years. Staff attrition is a miniscule 1.5%; excluding those who retired last year only around 15 employees actually left.
The first sign Shearer was at a ‘different’ sort of business was in his interview. “The previous HRD apologised for being a bit hot and bothered,” he reveals. “It was a warm day anyway, but the HR department had bought ice lollies for everyone and had been busy giving them out before they melted!”
As introductions go, Shearer’s opening gambit is disarmingly different to the one you might expect ofa large heavy-engineering firm battling to stay competitive in a skills shortage-ridden world. But everything about Leyland Trucks is ‘different’. And not just its quirky working day (7.20am to 4.10pm).
Union relations are excellent (there is an agreement that no more than 20% of total employees are agency staff), skills shortages are virtually non-existent, and sales are booming. A truck rolls off the assembly line every six minutes. Last year production hit 17,379 units – which is up 2,000 on 2016, and nearly double what it was in 2009.
“Don’t worry, there’s still plenty to do!” laughs Shearer, highlighting an unexpected downside to strong retention. “It’s great that we have really committed people, but the irony is that low attrition and a stable headcount means it actually causes a lack of opportunity.”
In recent times Leyland hasn’t even been able to solve this through providing apprenticeships. “This was again because of low attrition,” he says. “But also because of the aspirations of many of our agency staff. Many have become permanent over time. We did have a graduate scheme, but we wound it down because those were the only people who were tending to leave.”
However, just in the nick of time perhaps has come the apprenticeship levy – and though he had early reservations Shearer argues it’s been one of the best gifts Leyland Trucks could have had.
“Initially we were concerned about the levy, because we weren’t creating new roles fast enough, but we decided it would provide different pathways into the business,” he says. Preston’s College is now the firm’s training provider, offering a variety of apprenticeships typically to a minimum BTEC Level three in engineering, lasting between 36 and 48 months.
Last year 23 apprenticeships were taken on –meaning a third of all new jobs created were actually apprenticeship roles. Augmenting this the business also created its Career Pathways Scheme – which offers full-time training with a range of engineering placements to improve people’s skillsets. Staff can even apply for 100% training, leaving their current role to do a two-year structured rotation.
“We’ve had great success in moving staff through the Pathways programme into key roles within the business,” adds Shearer.
With headcount largely stable, and plant production now mostly determined by the size of the plant rather than the increased efficiency of people, Shearer says apprenticeships are making a big difference. The likelihood is that from this year more apprentices will be brought in than Leyland’s levy-paying contribution would suggest it needs. “This would be win-win; because if we train more than our contribution the government picks up 90% of the training cost,” he says.
But it’s not all rosy. With 35% of total production exported, Brexit hovers ominously on the horizon. “As the UK’s only large-volume truck manufacturer, on the one hand the fall in the pound has made our trucks cost competitive, but on the other imported raw material prices have increased,” he says. “So the business is about how we control costs and diversify our offering.” Just one aspect of this is the assembly plant recently diversifying into building fully-bodied vehicles – of which around 1,000 are now made each year.
“Skills per se don’t keep me awake at night, but we have very niche skills we’re dependent on,” explains Shearer. “If we’re down on headcount – through absence or lack of skilled operators – the line could come to a halt. So that’s why we’ve developed our 3x3 skills matrix: it’s essential that for every job we do we must have at least three people able to do it, while each person themselves has to be able to complete at least three different jobs.”
With part-built lorries suspended from a slow-moving rail it’s easy to see why attendance is a key metric. “Previously I’ve worked in businesses where HR is all about being ‘HRy’ – all about processes, policies, administration and glossy brochures,” says Shearer. “Here it’s beautifully simple. HR is here to support building 80 trucks a day. Everything we do is to make sure this happens.”
This very clear output explains why, for instance, an absence management process will kick in after only two absences in a 12-month period. It works though. Leyland’s absence rate is less than 3%. “The key is empowerment so we try to have self-managed teams,” says Shearer. “There are around 30 teams on our vehicle assembly line, each with around 12 people, and each team has a designated key operator and deputy key operator with direct responsibility for their team’s productivity.”
The payback for what might be seen by some as running an overly tight ship is excellent benefits – in particular Leyland Trucks still runs a defined benefit pension scheme open to new joiners. But a perk that arguably trumps even this is its unique salary and holiday arrangement.
“Employees work a standard 40-hour week, but are paid for 37 hours,” he explains. “It means staff are building up an extra three hours per week, which they get given back in the form of holiday.”
He continues: “Over a year this builds up to an extra 17 days off, meaning that when added to their existing holiday and bank holiday entitlement the average member of assembly line-based staff has between 50 and 51 days’ holiday per year.”
While holiday is naturally phased over the year to ensure the right skills are always available within the business, this perk goes down particularly well – as a quick glance at Glassdoor reveals. “To us these sorts of policies are simply being mindful of the fact that we have an output target, and that we can never be complacent about the way people feel,” says Shearer.
“While we are currently enjoying a period of growing orders we can never assume it’s a given. While we have many repeat customers, such as Royal Mail, we can certainly never take orders for granted and just sit back expecting a rolling cycle of replacement orders to keep coming through.”
A recent innovation has been encouraging more clients to visit the factory, in addition to the scores of school visits the plant is more used to handling. In 2017 some 41 visits from secondary schools and sixth form colleges were arranged – giving more than 1,000 students their first look at manufacturing.
“Not only do site visits reinforce our ‘Building Britain’ campaign – which reminds buyers visiting us that despite building DAF [a Dutch company] trucks we are still British through and through – but what clients also see are the people that literally build their trucks for them and their attention to detail and quality,” he says. Our teams of builders are so passionate about their jobs, and they talk so enthusiastically about what they do and the pride it gives them, that these people are becoming our greatest salespeople too.”
It’s not surprising this passion exists. Leyland Trucks has been continuously building for more than 120 years, which means that locally several generations of families have not just grown up with the brand, they’ve been dependent on it for their livelihoods. While the business itself has had a rather chequered management past (it merged with DAF in 1987, only to call in the receivers in 1993, which then saw a management buyout, before its eventual acquisition by PACCAR in 1996), belief in the product itself has never faltered. It also means that when new recruits do come in they must demonstrate Leyland ‘values’.
Shearer says: “Academic standard is obviously one very important component in our hiring strategy, but far more important is the ability for new people to fit straight into a team. We want people with a spark about them that says they’ll go the extra mile.”
All in all, Leyland Trucks has now built around a million vehicles; nearly 450,000 from the current facility that opened in 1980. The business is owned by US truck company PACCAR, but builds solely for DAF. But things are now changing fast. Historically a business using diesel engines, it’s already beginning to think about government proclamations to ban diesel engines by 2040. In theory it should mean every truck on the UK’s roads will need replacing or converting at some point – which could be hugely lucrative.
“You can be assured our engineering team has an eye on the future,” says Shearer. “It’s also a challenge for HR as technology advances and new business development means we spend a lot of time thinking about our skill needs in years to come.”
So Leyland Trucks is very much at the forefront of tomorrow’s world. Recently the government announced £8.1 million for researching and trialling small convoys of self-driving lorries, and these will use DAF trucks.
The ultimate key to Leyland’s ongoing success with its workforce is its overarching down-to-earth Lancashire ethos. “For me it all comes down to authenticity,” summarises Shearer. “When we win quality awards we provide a pie and peas lunch as a form of recognition. Managers also carry ‘star chips’ (like casino chips). If they spot great work they’ll hand them out and staff can redeem them for a meal.”
He adds: “When I first got here I remember getting – let’s call it ‘coaching’ – for using phrases like ‘development interventions’. My team were like ‘you mean training’.
“It’s good to be reminded HR is all about helping the business achieve its goals and not HR jargon.”