An interview with Peter Kelly, founder of Softcat

by Bee Heller
November 29, 2016

At The Pioneers we love meeting people who manage their businesses differently. I recently interviewed Peter Kelly, founder of IT infrastructure provider Softcat, about his approach to managing people.

Peter founded Softcat in 1993. 23 years later the business now employs over 850 people and has an annual revenue in excess of £650m. Peter is now fully retired but in his time with Softcat the business won countless awards for ‘best place to work’ and in 2016 alone received three Great Place to Work awards.

We spoke about motivations, standing out from the crowd and accepting when to fit in.

Bee Heller: Why did you set up Softcat?

Peter Kelly: I previously worked for Rank Xerox and really hated the dog eat dog culture. Sales guys were ranked against each other and beating everyone else’s sales was what made you king. At the end of every week we were asked: “how many sales have you done this week?” and “how many are you going to do next week?”. If you didn’t hit your targets, you were out of a job there and then.

At the same time as I was experiencing this autocratic culture at work I was becoming disillusioned with my local church. It seemed to me that every authority figure in my life was dictating what I should do and how I should behave. I was craving autonomy and a sense of control of my own life.

I started Softcat to create a company where people would enjoy coming to work. I wanted it to be a place where people would socialise and be friends with their colleagues. I wanted to give people opportunities and for them to feel like they were in control of their lives and futures.

BH: What innovative management practices did you try?

PK: We had democratically elected managers decided by an annual vote. Even my position was up for election. We also voted on people’s pay rises every year. We gave everyone three data points: what salary the person is currently on; what salary they think they should be on; and what salary their manager thinks they should be on. We would have a cap on the total pot of money available for pay rises and everyone would vote on what each person should receive. On average we would only spend 20% of the total available pot. People wanted the rest of the money to be reinvested in the business. This democratic approach was important to me because I wanted people to feel they could influence company decisions and that it was a company that worked for them not just for senior leaders.

New joiners had the freedom to choose which team they joined, creating teams of people with common interests outside of their day to day work. The majority of people at Softcat work in sales which can often lead to a very individual and competitive culture but this self-selecting teams approach created strong social ties and an environment where people wanted to help each other out.

Our recruitment strategy was about giving people opportunities. We hired graduates rather than experienced sales people and helped them learn and develop quickly. We also hired people with disabilities, learning difficulties and ex-prisoners who we knew could flourish if given the opportunity. It was expected that ‘old-hands’ would help the newbies out and this worked well as a kind of ‘pay it forward’ culture. On-boarding was everyone’s responsibility.

BH: Did anything ever go wrong?

PK: We hired someone who had served seven years in prison for murder and lost them and the company car fairly swiftly! These things can happen when you start from a position of trust.

Our self-selecting teams caused some trouble with one of our major software suppliers who came to visit our offices and their first impression was that we were operating some form of office Apartheid. It wasn’t something that had even crossed our minds internally as we knew the relationships and dynamics of the different teams but when pointed out, we could see how it might look to an outsider. At risk of the supplier refusing to let us sell their products, we had to change the way we organised ourselves to ensure we were being inclusive in every team. This was also part of growing up and becoming a company that more people were paying attention to.

BH: Where did you see your management practices succeed in the face of criticism?

PK: Our democratic voting system for managers understandably sometimes resulted in managers being demoted and replaced by someone else. This was never an easy scenario. However one particular incident I recall, a manager was demoted and found himself reporting in to someone who he had previously line managed. The new team manager had been elected by their peers as someone they felt was better suited to the role. Initially the old manager huffed and puffed and complained about their demotion but after three months he came to me and admitted that the team had made the right call. He was learning a lot about how to manage a team from the example now being set. A year later he got voted in to the position of team manager having learnt the appropriate people management skills to do a good job.

BH: How would you summarise the culture you tried to create at Softcat?

PK: I wanted Softcat to be a place where everyone worked with people they liked and respected. I wanted people to feel they were rewarded fairly and could have fun at work. As a management team we were generous with shares and financial reward but also with our time. I believe we had a culture where everyone was pulling in the same direction. Above all we treated people as human beings.

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