Mike McKechnie, who took up his post as chief executive of Jigsaw six months ago, is seeking to make the chain more competitive and increase occupancy at its nurseries while also slashing head office costs.
Last week Jigsaw announced planned cuts to full-and part-time rates at six of its nurseries. The new pricing structure is a trial and if it is effective it may be rolled out to other branches. The charges vary across the six nurseries, but the cost of a full-time place at the Shenley nursery will drop from Pounds 220 to 195 per week, while the day rate falls from 50 to Pounds 46. At Basingstoke, the price of a full-time place has dropped from 195 to 175, while the daily rate falls from 46 to 38, and at Harlow the full-time rate moves from 190 to 175, while the daily rate becomes 39 rather than 45.
At present occupancy at Harlow, Shenley and Basingstoke is around 70 per cent, while in Oxford, also part of the trial, it is 60 per cent. Mr McKechnie aims to have occupancy up to 90 per cent in all but the newest nurseries within the next 12 months.
A number of chains have put up their fees significantly over the past year as they have increased staff wages. Mr McKechnie, however, said he felt this approach was not sustainable. 'In a competitive marketplace, your ability to pay staff doesn't come with fees, it comes with getting right the numbers coming through the door and charging a fair amount. I think the whole industry has to tackle the issue of fees being driven by labour costs,' he said.
He added that one approach to staff recruitment and retention could be to introduce a form of performance-related pay. 'We are looking at how we can put together an employment package which isn't just about pounds, shilling and pence in the bank account. It's about the way people are managed and led. We are looking at a series of possibilities including a performance management system which could be linked to pay.'
He said a system for linking appraisal of staff to rewards might monitor progress against a defined curriculum, draw from the observation of the management team or involve feedback from parents.
Meanwhile, Jigsaw has cut back on management with 15 redundancies at its head office, which will be relocated from London to Milton Keynes. A number of interim managers on short-term contracts will not have their contracts renewed, trimming the head office staff from 45 to 25.
Mr McKechnie said, 'We have had to reduce the overhead at the centre, but we are not going to make cuts at nurseries, or increase costs to parents.
'We made a huge loss last year and this year we are going to suffer about one-third of that loss. In April or May next year, we'll start to generate profits. We are in a fairly aggressive turnaround at the moment.'
The group is assured of venture capitalist 3i's ongoing support for the next two to three years and will not look to buy or sell in the near future. For the next 12 months it will not expand beyond its current 36 branches and will concentrate on consolidation.
* See Special Report, p10-11
