Persimmon takes strides in cultural revolution

Persimmon’s pre-tax profits topped £1bn for the second year running in 2019 but the real story is the cultural revolution said to be taking place within the organisation to avoid the shoddy workmanship and site management that the company has owned up to.

In April 2019, after Jeff Fairburn was replaced as chief executive by Dave Jenkinson, the Persimmon board commissioned an independent review of its operations. The findings, highly critical of the company’s operations, quality control and site supervision, were published on Persimmon's website in December.

At time of publication, the board said that it had already taken action to address some of its shortcomings. Other measures are continuing.

Persimmon has so far spent an extra £213m on work in progress to improve build quality and customer care, its said.

A consistent group-wide approach to construction is being developed, called the Persimmon Way. It started with the establishment of a Construction Working Group in October 2019, comprising experienced senior construction professionals from across the business. A ‘group construction champion’ has been appointed to manage and monitor the implementation of the Persimmon Way, based on central control of construction quality standards. A new staff training programme is being rolled out. Quality inspectors will support site management teams to apply the new construction standards consistently across the business.

Chief executive Dave Jenkinson said: “Once the Persimmon Way is rolled out across the group through 2020, a third party will be appointed to independently verify the execution of the required construction processes on an annual basis, providing further assurance over the quality of our build.”

The update on the quality initiative came with the announcement of Persimmon’s 2019 financial results. Total Group revenue was down 2.4% at £3,649m (2018: £3,738m); pre-tax profit was a bumper £1,041m, whichg is 4.6% down on 2018’s figure of £1,091m.

Persimmon sold 15,855 new homes in 2019, 4% down (2018: 16,449) - 4% down.

The group has 365 developments in construction, a similar number to last year. During the first half of 2020 it expects to start construction on approximately 80 new developments,

Chairman Roger Devlin credited the reforms to Dave Jenkinson, although he is hardly a new broom, having been with the company for 23 years and at or above regional managing director level for the past 15. He has also been a main board director for six years and in recent times has been only marginally less handsomely remunerated than his predecessor. He is thus fully implicated in the shoddy management he is now seeking to fix.

Now aged 51 and having served just a year as CEO, Dave Jenkinson has told the board he wants to stand down already, although he will hang around long enough for a successor to be found.

“Dave has played a critical role in the development of a new Persimmon,” Roger Devlin said. “As chief executive he quickly set about designing and implementing a programme of change and started the process of resetting the culture of the business. Under his leadership Persimmon has invested in a range of customer care and quality initiatives, prioritised customers over volume, became the first UK housebuilder to implement a retention policy and will achieve an HBF 4-star rating.  Throughout this period of significant change, the operational performance of the business has remained strong.”

David Jenkinson said: "I'm very pleased with the progress that we've made over the last year in reshaping Persimmon's approach and culture while at the same time maintaining our operational momentum. Persimmon is an outstanding business with a strong balance sheet and a great team of talented and dedicated people who mean a great deal to me. I will remain fully committed to both the CEO role and to our programme of change until my last day in the job."

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