Westwood Works 1903-2003
These notes have been prepared by John Peake (Group Planning Director from 1966 to 1969 and later Chairman of the Baker Perkins Group). They describe a series of events of which the average Baker Perkins employee would have been totally unaware but which had a profound effect on the fortunes of the Group. John Peake points out that, alongside the other articles on Group Services the heading should perhaps be Group Planning but, to be pedantic, the subject is not group planning - it should be Strategic Planning, or, more often used colloquially, Long Range Planning.
In the autumn of 1966, it had become clear that there was a need to carry out a thorough review of the strategy of the Group to determine its future direction as a whole and not just as the sum of its parts. At that stage, the financial performance of the Group was quite respectable with profits in 1965 of 16.1% of net assets. However, the results of the UK subsidiaries were well below that and had been declining.
The situation was much more complex than in 1954 when the Future Development Committee had been formed. [Augustus Muir – History of Baker Perkins - p155 onwards – “The wider vision”]. At that time, there were two main companies, Baker Perkins Ltd and Forgrove. Twelve years later there were some 20 companies serving significantly more markets albeit with Baker Perkins Ltd and Forgrove, shortly to acquire Rose Brothers, still dominating the scene.
The work of the Future Development Committee in 1954 had consumed a great deal of the time of those concerned but the review now contemplated would demand far more effort of Group and subsidiary company managers. In view of this, it was decided to employ the management consultants Urwick Orr & Partners (UOP). Not only would they be able to supply the additional experienced manpower required but they would also introduce a valuable element of objectivity to their assessments and recommendations.
UOP were appointed in September 1966. Their assignment was to establish a procedure with which to prepare plans for the Group as a whole and its subsidiaries. Such plans should then be capable of being updated in the future to provide the longer-term setting within which the existing budgetary control procedures would operate.
J.M. Peake was appointed Group Planning Director to work with the consultants to introduce the required procedure and to prepare the first and subsequent Group plans. He reported to A.I. Baker as Chairman of the Board of Management.
These decisions had been discussed the annual Managing Directors conference earlier that month.
All this was taking place at the time when it had been decided to dissolve the BP Ltd Board of Management with effect from 1st January 1967 (Muir p200). Peake was heavily involved with the resulting reorganisation and was not able to concentrate on his new appointment until several months later.
The first phase of UOP’s work was carried by J Mullock working with the managements of the UK manufacturing subsidiaries. His task was to review the companies’ performances and identify their strengths and weaknesses. He was also to agree with them areas of immediate action on profit improvement and provide help in preparing short term plans to achieve the required results.
Before making his visits, Mullock had already gone on record with the view that savings of £700,000 could be made by reducing costs. He had also reckoned that further savings could be made by reducing working capital by £2,300,000. He had made his conclusions by comparing the operating ratios of the companies concerned with each other and with those of BP Inc. based on their 1965 statistics. These ratios included those between direct and indirect manufacturing costs and the levels of stocks, work in progress and debtors in relation to sales volume.
He had also noted that the total invoiced sales for December were 50% higher than those in November, (see A Change in the Financial Year-End).
Mullock first visited Forgrove, Steele & Cowlishaw, Halley, Douglas Rownson and Jaxons and reported on them in February 1967. BP Ltd naturally took the majority of the remaining time. His final report summarising the findings of all the companies concerned was made in November 1967.
In the meantime, R.F. Jones had carried out similar work for UOP with the Export Company as well as the Holding Company and its services to the subsidiaries. A key part of the latter investigation was to consider its organisation and gauge the degree with which it was fulfilling the objectives set for it when it was formed some three years earlier.
Jones reported on his findings in July and August.
The second phase of the assignment to establish the required planning procedure began in October, just prior to that the Holding Company management organisation had been changed. Instead of a board of management, there was a line management structure whereby R.H.Wilkins became responsible for the UK subsidiaries and their managing directors reported to him. Similarly, J.F.M. Braithwaite became responsible for the overseas companies and the Export Company. (Muir p 200) A.I. Baker, as non executive chairman of the Board of Directors, had no line management responsibility but continued to run Group Personnel and Training as well as Group Planning. W.S.B. Sampson continued with all financial matters and became responsible for all the other Group Services.
The aim was to produce the first plan to cover the years 1968-72 for the UK companies in skeleton form in April and the overseas companies in July. The first full plan for the Group would be complete in September having built on the experience of the two first attempts.
Management by Objectives, which was considered a valuable associated discipline, had by this time been introduced throughout the Group. (See Management by Objectives).
For each company to generate a plan that was suitable for consolidation with those of all the other companies a common framework was required; this was particularly needed for the financial statistics. It was inherent in the drill that each business should consider all the elements which would determine its future performance. To that end guide lines in the form of questionnaires with suggested responses were also issued and advisory meetings held. These requirements and aids were issued at the end of 1967.
The importance of paying attention to market standing as well as innovation and product development was emphasised and companies were asked to concentrate first on markets and products. The essence of the plans was obviously the projection of results. These were to be broken down into their main constituents such as sales, production and design and development expenses in relation to sales volume together with capital expenditure and personnel factors. Companies were particularly asked to report on any action taken on profit improvement or cost reduction which might have been agreed during UOP’s earlier visits
With all these requirements R.H.Wilkins made it clear that the apparently formidable initial task should be viewed as a preliminary run with many assumptions which would need cross checking and updating later. It would not be surprising if all the necessary information was unavailable at the start.
The companies were asked to respond by the end of January or early February. J.M. Peake would then consolidate them as a group during February for A.I. Baker in early March and circulation later that month to the Holding Company Board.
Thereafter the first “sub plans”, i.e. market standing, innovation and product factors, physical and financial resources etc., were to be completed by the end of May and the remainder by the end of June. The resulting consolidation, by that time including the overseas companies would then be considered on a Group basis and the first Group plan issued to the Holding Company Board in September and to the Managing Directors conference following soon after.
It might well be asked – how was all this planning viewed by the managers who had to do it? It would be fair to say that the need for more and better longer term planning was generally accepted. However, there were mixed feelings at the time regarding the extent of the procedure installed which some considered to be “over the top”. Management by Objectives probably generated the same reaction.
Over the years, the discipline was simplified and developed to suit different situations. At least the formidable task referred to by Wilkins was eased somewhat as successive plans could be built on the previous ones without going back to square one. However, the fundamental questions on markets and products continued to be as critical and difficult as ever.
In common with the experience of other organisations, there was a tendency for some plans to be over optimistic. In those the profitability, which might even decline in the short term, would be justified by significant improvements in the later years; the resulting graphs of profits were known as “hockey sticks”. Dare it be suggested that any company submitted a hockey stick plan to relieve the pressure from the Holding Company for the time being. How to deal hockey sticks in successive years was a problem for the Group Executive Vice Chairmen!
J.M. Peake was transferred to Australia in October 1969 after the second plan had been dealt with and his place was taken by G. Ramsden, seconded from Rose Forgrove where he had been production director.
All content © the Website Authors unless stated otherwise.