In the HR Changers podcast hosted by Talent Place, we spoke with Marek Piechocki, co-founder and CEO of one of the fastest growing apparel companies in Central and Eastern Europe – LPP. The company has been developing clothing brands for more than 30 years: Reserved, Mohito, House, Cropp, Sinsay, available in nearly 40 markets worldwide. Among other things, the LPP CEO told us about LPP’s organizational culture and why the company engages teams in the responsible development of its business. He also explained how the crises it has gone through had made them an efficiently running organization.
Looking for opportunities in a volatile market situation
During the political and economic changes of the 1990s. an opportunity has arisen for the creation and development of enterprises. Goods were in short supply, there were not many clothing brands, distributors, manufacturers on the market. In fact, anyone could open a business at that time – all it took was an idea and persistence in action. Marek Piechocki believes that he has taken advantage of the opportunity provided by the political transformation and the implementation of the free market economy in Poland. From the beginning, many people participated in the creation of LPP. In the early years, the company’s primary goal was to grow rapidly and look for opportunities to invest further. According to Marek Piechocki, he has not paid dividends from his business for more than 20 years.
Bosses, managers, management – we can only devote 10-12 hours a day to work. We can’t do everything on our own, so it’s important to infect people with passion, to show the possibilities. No matter how big the crisis, you need to value your employees. They devote their whole life, mind and thoughts to work. We are supposed to fight and ensure their commitment. They need to be aware that they are doing a more important thing than just doing a job from 8 am to 4 pm. I believe the success of this company is people who feel they can change the world. And we give them the space and opportunities to implement these changes.– Marek Piechocki, CEO of LPP.
Many people at LPP have been working for more than 25 years. They co-founded the company and it is largely thanks to them that it is recognized and continues to grow rapidly. As a token of appreciation for their work, the company presents Swiss watches to those who have worked at the company for 10 years at its annual gala. The event was first organized in 2003 and the tradition continues today. The same approach applies to the anniversary of 25 years of seniority – employees are then invited for dinner, at which they receive branded watches from Mark Piechocki.
Management model vs. business development
The entrepreneur shared in the HR Changers podcast that at LPP they decided to use a flat management structure and delegate responsibilities to lower levels in the structure so that each employee is aware of what is in his or her area of responsibility.
Other factors besides the management model influence the company’s success. The foundation, of course, is the people who make it up. The entrepreneur recounted that he has 19 people under him who he believes are very prudent, independent, and he can possibly advise them. In LPP’s organizational culture, employees in product departments in each retail brand are divided into smaller teams of a dozen or so. Each of them decides for himself what and how he sells. These specialists know very well what, for example, has a take in the store or what order to place first. This gives them the ability to react quickly, and at the same time reinforces their sense of influence over the business. They are the ones who make the decisions. Similarly, in the situation of creating a collection, it is the team that proposes the design or cut, not the product manager or CEO. They are helpful when the need arises and communicate with the team.
This model of organizational management requires a huge amount of trust in people. Not everyone has the courage to bestow it on others. Everywhere a similar model is used, there are discussions about managers being unable to delegate responsibility to their teams or unwilling to take responsibility for group decisions. It’s important to strike a balance, because it will enable teams to make better collections.
We all live off the fact that customers love our clothes. If they sell it means we did it right. If the team creates things that customers love, then you have to let them do more of it and… stay out of the way. – says Marek Piechocki.
When interference is needed in one of the teams, only then can a product manager, for example, appear. One team can handle the challenges without the advice of a supervisor, but there will also be some that need more help from their boss. Support is key, it’s worth asking, talking, helping, training – and that’s also the manager’s role – being supportive.
Business survival in times of crisis
The pandemic has forced the world to create new solutions and develop existing ones faster. For many months, the Internet became the only shopping channel for clothing or electronics. Turnover in online commerce has increased many times overnight, and logistics departments have received an incredibly heavy workload. There was a need to transform current distribution centres or merge certain departments to keep up with the growth of e-commerce. Commitment and cooperation were essential to get through the tough times. Taking care of employees, valuing them and “thinking of them as people, not just another number that comes and goes,” not only in quiet times but especially in times of turbulence, is a moment of truth for organizations.
Many businesses in the pandemic laid off their employees, but there were some that chose to keep most of their jobs. However, maintaining liquidity sometimes necessitates staff reductions.
How do you make decisions in times of so much uncertainty?
In crisis situations, the focus must be on saving the company, as it gives jobs to those employed. Even if we face an arch-difficult decision to part with a certain group of people, say 5% or 10% of the staff, it is always a painful experience. However, looking from the other side, the overriding goal is to protect that 90 – 95 %.
If there is downsizing, I have this belief that it is the most vulnerable who are worried, however. A manager will not part with those he cares about. Also, as we talk about management, I believe in the fact that there is no manager who gets rid of his good people. Each of us, each employee – myself included – should improve our competence. And if someone makes an effort, I am convinced that no one will say goodbye to him, no matter how difficult the times were. – Marek Piechocki, CEO of LPP
In the age of companies during the pandemic, there were discussions about voluntarily giving up wages for 1-2 months. As discussed by board members, managers, by applying and giving up at least part of their income, companies could save jobs and retain employees. For example, thanks to such treatment, LPP gave its employees massive raises of 10-20% at the end of 2021, depending on the position. As a way of thanking employees for their previous help and concern for the company, their welfare must also be taken care of.
Help not only to the company, but also outside the company
Business in crisis time should continue CSR activities if they have the opportunity. LPP in the early days of the pandemic created the #lpphelps campaign in which it supported medical facilities and those most in need in the fight against the COVID-19 epidemic. The company has allocated nearly 5.7 million zlotys for this purpose, donating, among other things. One million protective masks for more than 300 medical facilities nationwide. In addition, thanks to cooperation with nearly 50 organizations, more than 27,000 cotton masks and 1,660 protective aprons, sewn directly by LPP employees, were delivered to those most in need.
Changes still visible today – omnichannel
Development prompts innovative solutions, automation of work. The pandemic further accelerated these activities. Today, the main channel of communication is the Internet, which continues to grow. Companies are developing their sites, promoting the brand on social media. They optimize the purchasing process and delivery to reach every customer segment with a product or service. Omnichannel and such activities require investment.
The big investments we made in digitizing the company a couple of years earlier – in 2017 or 2018 we started implementing RFID, or electronic tags next to clothing, so we knew what was in each store. Today, we are able to process most of our orders from the stores. If a customer orders something and it turns out that it is no longer in stock – but is in some showroom, then the order is redirected to the store, which packs and ships the product directly to the recipient. Today it actually doesn’t matter where the goods are shipped from, what matters is that they reach the customer and the customer is satisfied with them.– Marek Piechocki, CEO of LPP
We live in the digital age. The introduction of automation, digitized databases, corporate intranet platforms saves work and people’s time. This allows it to be used for other activities and for finding new solutions.
How do you build a company without losing your original assumptions and approach to organizational culture?
Everyone needs to remember where they came from. We are different from each other, regardless of the position each of us holds. Nevertheless, whether a boss or an intern, everyone should behave the same according to the company’s accepted values. We are ambassadors of organizational culture.
In order to grow and take on new people, we need to expand departments, such as. HR. If training, profitability, development of people are taken care of – then employees will love their work. It’s a win-win – the people, as well as the company, are then climbing.