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When David Smith joined ASDA in 1994 it was at rock bottom and lagged behind in fourth place in the UK’s supermarket rankings. It is now the second largest supermarket chain in the UK after Tesco. Engaging Asda’s employees was a big part of this turnaround and it has been named one of the Top UK Places to Work by The Sunday Times for five years running.

Employee engagement, Smith is convinced, “does make a performance difference that’s absolutely material and substantial and can be a huge piece of competitive edge.” It defines your culture, which he warned, leaks out of an organisation and to your customers “for good or for bad.”

On a recent train journey, Smith described that he had witnessed a “long rant” between two buffet car staff. Listening to their complaints, Smith and any other customers in the immediate vicinity were left with a “pretty poor impression of this railway company.” Rotas were poorly organised, there was little career progression and it was nigh on impossible to become a guard, which was what they aspired to. These employees were so disengaged that it was them, not the customers, who alighted the train first: “Would you want those people as your employees?” asked Smith.

Asda employs 175,000 people so it is “large and impersonal.” The work is not particularly well paid, it is repetitive and physically tiring. If it’s “not about money, not about job content […] How come,” asked Smith, “Asda was voted best place to work in The Sunday Times survey by its own employees? How come it’s the largest business that’s ever been in the top 100? How come it’s been in the top 50 for five years when none of the other big companies in retail […] have ever been in the top of that index?”

Smith explained there are seven “simple, practical, ordinary, common sense” principles that he followed to create a culture of engagement at Asda. The first was “Hire for attitude” because as an HR professional, “the most important decision you make is the people you bring into an organisation.”

One of the steps Smith took to ensure that they were bringing the right people into Asda was to start hiring “gregarious, outgoing, friendly people.” This was an unusual step in the retail industry, which had historically hired for skill. Asda introduced half day assessment centres to recruit the right people for the shop floor who could then be trained so that they had the skills necessary to do the job.

The second principle for better employee engagement is “Communicate, Communicate, Communicate.” Smith believes that most businesses communicate poorly and this disengages their employees who feel “out of the loop.”

We are bombarded with information daily, so the challenge for any business is to ensure that the information they transmit is the information that people absorb. One way to do this is through repetition; the news for example, repeats stories three times because “they realise that if they say it once you’ll have missed it.” Another effective way of communicating is by “being more tabloid,” said Smith. Asda started using headlines and colour pictures to communicate with their employees and although this met with resistance because it was thought of as childish, it was clear that it was a better way of communicating than using lots of text because things started to happen. It proved that a picture really is worth a thousand words.

Face-to-face connection is also essential and Asda introduced five minute briefings at the start of everyone’s shift. The result was that every Asda employee felt “in the loop” and better communication led to better engagement: “Tell people as much as you can as early as you can,” Smith told the LBF, “because the more people know […] the more they care.”

“The flip side of communicating is listening,” Smith said moving onto his third principle. People are taught how to present themselves but there are no courses out there that teach people how to listen. Smith revealed that he thinks it ironic that “we’ve got one mouth and two ears and we use them in inverse proportion.”

As a manager, the problem with not listening enough is that you exist on a “diet of good news.” This diet is only occasionally disrupted with a massive “googly” but the important little things tend to go ignored.

During his time as People Director, Smith ensured that he visited the shop floor to listen to both the managers and the workers. One employee told Smith, “When I ring in sick I’m usually not ill.” He realised that absence was often caused by inflexibility and unwillingness of managers to allow shift swapping, leaving employees with other responsibilities little choice but to take sick leave. Asda introduced flexible working and absence was reduced by 20%.

Listening to people shows respect and this is crucial to good “Leadership and Management”, Smith’s fourth principle. Smith believes that leadership should be encouraged at all levels and criticised the hierarchical military model that Asda followed when he joined them in the 90’s. This model, he argued, was very “directive [….], not very warm” and subsequently, “rubbish” for engagement.

Instead, Smith championed a model of “challenge and involve” above the “command and control” model adopted from the military. Smith maintains that if you challenge and involve employees they feel valued and well treated. Through thinking about how you want your leaders to behave you can move the organisation towards a management model that improves employee engagement levels.

The fifth principle is “Performance Management,” summed up: “Remove your under performers and push your talent.” Managers, said Smith, don’t like difficult conversations but “if you’re avoiding the whole performance management thing, there’s a big issue.” Avoidance “leaks down the organisation” meaning people respect you less as a manager, they won’t work as hard for you and ultimately, warned Smith, “engagement will go down.”

“Recognition” is Smith’s sixth principle and by this, he explained, he doesn’t mean remuneration. Recent research by MIT suggests that the only type of work that responds positively to bonuses is “piece work” and for anything else they can be counterproductive. Money “is not the stuff that motivates us,” and Smith insists, it wasn’t money that led to greater levels of employee engagement within Asda.

“Motivating your people” argued Smith “is definitely tied up in how your managers recognise.” At Asda he introduced formal ways for managers to recognise their staff so that it would become part of the company culture. For example, Asda has its very own Oscar ceremony every year to recognise people in store.

Finally, Smith encouraged the LBF to create a company culture of “fun, buzz and community” saying that “work made fun gets done.” He believes that people should have fun at work and that there is nothing wrong with bringing, “your whole self into the workplace.”

To illustrate his point and conclude he told the story of a “lovely guy” called Len who joined Asda aged 60 after retiring from the dockyards. Len didn’t need to work but was bored and had heard that Asda were a good company to work for. Len is gregarious and brought his personality to the workplace, engaging with customers in the car park where he collected trollies. Len was concerned about people misusing the disabled car parking spaces and so he protected them for the customers who actually needed them, leading to Asda being recognised with a National Disability Award.

Employees like Len are so valuable to any business because they care. Bringing the right people into the organisation, listening to them and recognising what they do well may sound like common sense but, suggested Smith, companies don’t always manage this and integrate these simple things into their culture. Consider how well your company follows these seven simple principles, Smith concluded, “Rate yourself on a scale of 0 to 10.”