The Apprenticeship Levy – Are You Ready?

Apprenticeship schemes are in the spotlight. Not only are UK businesses grappling with the Government target to have three million people in traineeships by 2020, but they’re about to be hit with the Apprenticeship Levy. It may seem daunting, but there are huge advantages.

From April this year, UK companies with an annual pay bill over £3 million will have to give 0.5 per cent to fund national apprenticeship schemes. In turn, they will receive £15,000 to support their own.

It’s a lot to take in – particularly for those who feel the Levy is an unwanted tax, or that apprenticeships are just for youngsters going into manual roles.

“It’s crucial that companies nurture talent − not just from a social imperative but from a business one,” says Andrew Minton, Managing Director at Criticaleye. “Apprenticeships are a great way to do that. They can breathe life and creativity into the company, boost employee sentiment and build a pipeline of talent.”

Timed with National Apprenticeship Week, we asked Members of the Criticaleye Community how they are approaching apprenticeships. Here’s what they had to say.

Mark Castle, Deputy Chief Operating Officer, Mace

What I like about the construction industry is that whichever entry point you chose, be it University or apprenticeship, you could still end up being CEO.

At 16, I was very fortunate to be offered an apprenticeship from one of the big Plcs, which I did on day release from college. I still think it’s a great way to learn the practical aspects of a craft.

The ability for the younger generation to run a practical and academic career in parallel, and get paid for it, is wonderful. In fact, my son, who left school at 18 with A-Levels, decided to become an apprentice, which I’ve encouraged.

Apprenticeships are massively important for Mace too. The construction industry is responsible for seven to eight percent of GDP, yet we have an aging industry.

Those we take on can be raw, so they do take a lot of time, investment and mentoring. Many companies lose their apprentices because they don’t put in the effort to develop them.

We really encourage our trainees, who join us at age 18, to continue their education. For the last ten years, we’ve run an in-house business school, and the last four years, had a relationship with Imperial College to provide continuous learning. The latter means people who have finished apprenticeships can still develop.

Peter Horrocks, Vice Chancellor, The Open University

My advice on the Apprenticeship Levy is to use it as a tool to deliver precisely what you need for your workforce long term.

In planning apprenticeships programmes, leaders should look at future workforce requirements and use apprenticeships to combat skills gaps, promote diversity and provide meaningful opportunities to progress.

A number of Higher Education Institutions (HEIs) are entering the apprenticeship market. Some are truly committed to workplace learning, but there has been criticism that others are simply repackaging existing academic programmes. We’re planning to form partnerships with innovative HEIs that share our commitment to work-based learning.

While many institutions are engaging in apprenticeships, it’s important there is clear progression for students. For this, institutions will need to work together to support the transition from Further Education to Higher Education.

The focus tends to be on 18-year-old school leavers yet in 2015 and 2016, 44 per cent of new apprentices were 25 or over. The decline in mature learners has been attributed to high fees and low training budgets − but the great thing is higher and degree apprenticeships provide another vehicle.

Steven Cooper, CEO, Personal Banking, Barclays

The genesis for our youth apprenticeship scheme, which started in 2012, was when we tried to recruit people for an operations centre in Cardiff. We couldn’t find staff, despite Cardiff having one of the highest unemployment rates. We realised many people leave school without the right skills for the workplace.

To tackle that, we offered apprenticeships with real, paid jobs and an eight week induction, giving numeracy, literacy and basic life skills − like how to dress appropriately, communicate professionally and get to and from work. It’s been hugely successful and we’ve recruited almost 3,000 apprentices. Over 80 per cent have stayed on with many taking senior roles, including leadership ones.

We’re now focusing on what we call ‘bolder’ apprentices who range from being in their 20s to 50s, or above, and are looking at getting back into the workplace.

I met a cashier in our Kings Cross branch who is one of our older apprentices. She’d been out of work for a couple of years so was grateful to have a role, which means as an employer I have a loyal colleague. But mostly, I was struck by how many customers loved dealing with her – she’s friendly, engaging and experienced in life, which a lot of people relate to. I can’t buy that.

Dave Newborough, HR Director, E.ON UK

We’re increasing our intake of apprentices from 100 last year, to 400 in 2017. We see it as being good for business, growth and reskilling – but also for society. We have apprenticeships in everything from cyber through to blue collar activities.

We’re currently running three pilot schemes with the Government’s Department for Workplace and Pensions (DWP), with two already complete in Harlow and Colchester. We’ve been targeting people who are not in education, employment or training and have so far recruited 24, of which nine are over 50 years old.

There is a historic ageism around apprenticeship but it’s not just about young people. In the context of the Levy most investment goes into training for the young, yet finding the right behaviours can be much harder and investment support is required for mature candidates too.

In recruiting for our Smart Metering programme, we’re finding that many of the skills we need – such as for customer services – are common in the older generation. This sits well with the DWP’s Fuller Working Lives, a campaign that Minister Damian Hinds recently visited us to promote.

Importantly for us, we’re finding that apprenticeship attrition is very low because candidates of all ages can see career potential within the business, particularly as some have already been fast-tracked. That’s helped to build our line managers’ confidence in the model too. The bi-product is a really strong sense of pride from our troops having seen unemployed people from their own communities find work with us.

Candida Mottershead, HR Director, UK&I, Accenture

We started running our apprenticeship programme in Newcastle in 2013, and have now recruited around 200 across London and Newcastle. Our first group graduated in April 2016 and have since stayed in the organisation. It’s very well-sponsored throughout our executive team and we’re looking at how we can expand our programme.

School leaver apprentices typically have less experience in the workplace, so we need to make sure we give them the appropriate pastoral care and that we check in with them regularly. They all have assigned career counsellors to ensure they are working on the right project and are thinking about career progression.

In the past, apprenticeships were synonymous with certain kinds of careers and employers but now it’s much broader. There is a lot more opportunity for apprenticeships now.

For example, at the moment, our focus is on school leavers. However, we’re beginning to look at different ideas and demographics, such as programmes for people returning to work after an extended career break and ex-military personnel.

I see the Apprenticeship Levy as a different way of funding apprenticeships. I think it will provide more organisations with a focus on apprenticeships in general, which is a positive – not just for individuals but for businesses too.

By Mary-Anne Baldwin, Editor, Corporate and Dawn Murden, Editor, Advisory

Don’t miss our next Community Update which will cover the highlights from our HR Directors Retreat.

Workforce Planning in the Digital Age

Digital is plunging HRDs into numerous quandaries. How can they predict what new roles will arise and which will disappear? How can they train staff accordingly, and where will they find talent to plug the gaps? These questions are putting greater emphasis on data analytics and the role of strategic workforce planning.

“As well as the impact of a contingent workforce, we’re seeing a rise in remote working – which can potentially offer 24/7 online capacity. This approach to flexible working will change the nature of the workplace,” says Mark Spelman, Member of the Executive Committee at The World Economic Forum (WEF), who has spoken at a number of Criticaleye events on global changes to the workforce.

“We’re also about to move into an era in which everything is connected, online and real time. We’ll be in a hugely different place. I’m not sure our workforce strategies are focused enough on the exponential disruption of technology,” Mark adds.

In a world where digital innovation regularly makes the unpredictable a reality, how can businesses successfully plan their workforce requirements?

Find the right person for the right role

As Executive Director for People Advisory Services and Data Analytics at EY, it’s Nathan Sasto’s job to find practical solutions for tomorrow’s talent dilemmas. One of which is how best to access the gig economy – a pool of specialist employees who can drop into a business to deliver a specific, short-term project.

“The trend towards the gig economy is certainly one of the major impetuses we’re seeing from a client perspective. We’re doing a lot of work in financial services on this, helping them to understand which roles are feasible for them to outsource,” Nathan says.

Crisis, a charity that offers temporary accommodation and support to the homeless, is one of the many organisations to regularly tap into the community of temporary workers.

Jane Furniss, Criticaleye Board Mentor and former Deputy Chair at the organisation explains: “Crisis employs around 10,000 volunteers each autumn to run their Christmas events. Choice and having control over when and where they work is a huge factor in whether they come back to volunteer again. Because they aren’t paid, they need to feel engaged and be happy with the team they work with.”

Engaging an unpaid workforce means offering roles uniquely enticing to each volunteer – and that requires a lot of data crunching. Nathan knows all too well how complicated, yet rewarding, that task can be.

When he joined EY in 2012, Nathan’s first project was to plan the volunteer workforce requirements for the London Olympics. “They needed 70,000 volunteers to run the Olympic and Paralympic games, covering 3,500 jobs ranging from medics to drivers,” he explains.

“The HR Director at the time compared it to building a Fortune 500 company in three months and then tearing it down – that was the scale of the problem.”

To address this, Nathan and his team built an artificial intelligence-based matching system, comparing over 500 million data points on languages, skills, experience and preference to reach an optimal workforce distribution. He explains: “Once we were up and running, a HR allocation task that previously took 13 people one month to carry out, took a single person just four hours.”

Analytics such as this allow organisations to map their staff requirements against a pool of talent – be that internal or external – and do it in a way that caters to different personalities, desires and skills.

Train your staff to be digitally fluent

Another critical dilemma for HRDs is the need to re-educate the workforce for tomorrow’s employment landscape.

“One of the issues we face is in retraining for digital fluency. We must work out how to move people who were trained to work in one way into a digital world,” says Mark. “Half of the people coming into the workforce today will live until they’re 100. Life-long learning will be critical going forward. I’d argue that the ability to keep your top 30 per cent of staff will depend on your long-term corporate training.”

David Grounds, who supports corporate business leaders in his role as Relationship Manager at Criticaleye, says: “Continuous learning is becoming an economic imperative, it’s no longer enough to come into an industry with a qualification and think you’re the finished article. I see that need at a senior leadership level and right through the business.”

“While constant self-improvement has always been a worthy pursuit, the rate at which technology is changing the business environment means it’s now a priority.”

According to Nathan, a common problem is predicting where best to invest your efforts. “We talk about digital skills a lot but it’s quite a challenge to take that esoteric concept into practical measures, roles and functions,” he explains.

Again, data can help. Analytics capabilities similar to those used by Crisis and the London Olympics to map talent, can be employed to determine what skills will be required for newly developing jobs.

“Imagine all the available roles were on a platter and you could see what skills and attributes were needed for each – you could tell very easily which you’re suited to and what you’d need to do to move between those roles. That’s changing the vertical succession plan and really empowering people to plan their careers effectively,” says Nathan.

Address the fear of uncertainty

This kind of insight can help protect individuals from what the WEFs predicts will be five million job losses due to automation by 2020. HRDs must play their part in supporting staff through that uncomfortable process, quelling concerns and retraining where possible.

As Mark says: “When looking at strategic workforce planning we need to recognise that it’s not just about opportunity and the upside, it’s also about managing the fears associated with the downside.”

Jane warns that if businesses fail to address these insecurities they may see their talent drain away. “Fear of uncertainty about job security can lead some of your best people to go. You can end up with people who either don’t understand the change that is happening or aren’t able to get jobs elsewhere,” she says.

“Your worst case scenario is that you lose the really good people who can obtain jobs elsewhere, while retaining the not-so-good who can’t.”

These thoughts were shared during a recent Criticaleye Global Conference Call on Making Sense of Strategic Workforce Planning.

By Mary-Anne Baldwin, Editor, Corporate

Don’t miss our next Community Update on the importance of apprenticeships.

Taking the Top Spot

The learning curve for a rookie chief executive is notoriously steep. They will have to adjust to an unprecedented level of accountability as they assess the talent within the organisation, build strong relationships with the board and articulate a strategy that captures stakeholders’ imaginations.

Conventional wisdom focuses on making your mark in the first three months, but many CEOs will tell you it’s not so simple in practice. In most cases, the job is never quite as advertised, even if you are promoted from within.

Matthew Blagg, CEO at Criticaleye, says: “There is a lot to accomplish as a new CEO. While you should go in with a strong understanding of the business and what you hope to achieve, you will also have to spend a lot of time uncovering hidden truths and evaluating your team.

“You will need a strong network around you, including a leadership team that you can trust and collaborate with, and external confidants whose experience and knowledge you respect. Never hope to go it alone.”

Here, we share advice from a range of business leaders on the skills and actions new CEOs need to address.

Listen Before You Act                                                                                                                              

Debbie Hewitt, Chair at Moss Bros Group, advises new CEOs to spend time reflecting and listening to the board before taking decisive action.

Usually first-time CEOs have worked in the business before, which can bring its own challenges. They have a track record, style and approach that was conducive to a different role. As a chair, I always advise people to spend time thinking about how they will adjust.

Most new CEOs were previously commentators on what their predecessor didn’t do well. The natural inclination is to go in and fill the gaps as they see it, so I encourage new CEOs to think about the business, not what their diagnosis was under the previous leader.

It’s also common to want to jump in and make new hires or lose people they don’t think are right for the business, but I urge them to think first about the strategy and then build the team around it.

NEDs are an invaluable source of input – I recommend asking a lot of questions as it’s essential to get feedback on the leadership team from the board. Far too often new CEOs want to illustrate that they know the business and its problems, but actually once you’ve got the job it’s really important just to listen because the board has an impartial view of the business, your team and your predecessor.

When a new CEO is not used to working with NEDs they need to balance how much information to give versus drowning them in detail. Some CEOs worry that information will be used as a stick to beat them, but the board doesn’t need to hear about what’s going perfectly.

Get Your Team ‘On The Bus’                                                                                                                

Matthew Dearden, former President for Europe at Clear Channel, reveals how he got his team on side.

You need to be very clear on your expectations for performance, as well as the behaviour and values that will get you there. As a leader you will have some non-negotiable requirements – make sure people understand them and then bring in the team to agree the rest.

A polished appearance doesn’t necessarily equate to underlying talent. You have to figure out exactly who you need and show patience to those who possess real ability but are rough around the edges.

I found it useful to bring in a small number of external hires – partly because of what they brought to the team and partly because of the signal their appointments sent to the rest of the organisation.

Over the first year, about half of my senior leadership team changed. It was important to do that with respect and humanity. You need to have clear, honest conversations about the direction you’re going in. That will usually excite those who fit your needs, and those who don’t appreciate it will decide they should move on. That’s better for everyone.

I talked a lot about emotional commitment and used the question: ‘Are you on the bus?’ It became a motto, so when I took the top team away for an off-site trip, I hired a double-decker bus to take them to dinner. I acted as conductor handing out tickets for those committing to coming aboard. Some thought it a bit cheesy, but five years later they still talk about that magic moment of accepting the ticket and getting on the bus. It built a sense of drama and that’s critically important if you’re going to get people to come with you on a tough journey.

Create a Culture of Ownership                                                                                                      

Peter Sephton, CEO of The Parts Alliance, discusses the dynamics of being a new CEO under private equity backing, and how he created a culture of ownership.

One of the first things we did was to create a founder mentality by involving a wide group of people in defining and building our strategy. We branded it the ‘10 steps’ as it was designed to keep us 10 steps ahead of the competition.

We broke our business into divisions and introduced new performance management metrics with real-time updates throughout the day. Regional directors were assessed against those metrics so performance was highly visible. This was an important aspect of building a founder mentality.

I also took the opportunity to distribute sweet equity widely. One of the key advantages of being a PE-backed CEO is the ability to do this. Through this, behaviour changed as people realised they were in effect running their own business.

We kept a sense of ownership at a local level by deciding not to change the operating brands of the businesses we acquired. Local branding is critically important to your buy and build strategy – too many opportunities go wrong because of corporate arrogance and the ‘conqueror syndrome’.

Prepare Early For The Role                                                                                                                

John Goddard, Partner and Member of the Global Leadership Team at LEK, explains that CEOs typically have only six months to really make an impact, so early preparation is vital.

The CEO’s chair can be an uncomfortable place to sit. As well as more scrutiny and higher expectations, you will have limited time to make your mark in shaping the business.

It’s popular to say that the first 100 days are make or break for new CEOs, but we have a different metric: you have six months to fail and two years to succeed. In other words, you need to make significant progress in your first 180 days. If you do this convincingly, you’ll be given more time.

There are four very practical steps you can take before your first day: identify and address any gaps in your industry knowledge and how the business competes; start developing some strong relationships with the board — you will need them; find a confidant outside the business who can provide a broader perspective, such as a fellow CEO or a trusted advisor. Finally, begin to formulate a high-level narrative, which you will need to inspire confidence both internally and externally.

Some of the individual team members may resent you as the newcomer, a few may even have applied for the top job. They may be waiting for you to make your first mistake. A quick way to assess the team is to commission an external executive audit, but there is no substitute for spending time with them yourself.

By Mary-Anne Baldwin, Editor, Corporate

What are your experiences, thoughts or concerns about being a first-time CEO? If you have an opinion you’d like to share, please email me on maryanne@criticaleye.com

Don’t miss next week’s Community Update on the importance of 360 feedback as a leader.

Follow Criticaleye on LinkedIn

The Evolution of the Workforce

Evolution is typically energised by a single but significant change, the effects of which are radical but slow coming. Language, the ability to walk upright and the introduction of money each happened in pockets spread over land and generations. Yet now we’re being hit by numerous and instant technological changes that affect us worldwide, and employers are struggling to keep up.

“Due to exponential technological disruption, digital can completely transform a business within a year,” warned Nils Michaelis, Managing Director for Digital within the APAC Products Operating Group at Accenture.

Speaking at Criticaleye’s Asia Leadership Retreat, held in association with Accenture and CEIBS (China Europe International Business School), Nils went onto explain how another important factor — the consumer — has been a catalyst for the creation and evolution of many jobs, even among the top roles.

“A couple of years ago, the then CEO of Macy’s gave himself the title of Chief Customer Officer and was one of the first CEOs to do so. This got the whole company to rotate towards being customer-centric,” Nils explained.

From a leadership perspective, the difficulty lies in creating a talent pipeline that is able to deal with these changes. “As leaders, we need to turn our attention to how we bring the workforce together, and how we reskill them,” said Chris Harvey, Managing Director for Financial Services across APAC at Accenture, who led the keynote address.

However, in a Criticaleye survey of attendees at the Asia Leadership Retreat, only around half said their executive team are collaborative and 85 per cent said the behaviour of their executives can create silos.

While it’s a global business issue, it’s particularly important in Asia where talent is in dangerous demand, competition has led to high staff turnover, and many of the family and founder led businesses aren’t doing enough to train and promote talent. So, how can we progress?

From aptitude to attitude

For many business leaders, including Alan Armitage, CEO for Standard Life (Asia), the spotlight has turned from highlighting an employee’s functional aptitude to their attitude.

“I used to focus on the project plan, but realised more effort had to be put into behaviours and people,” said Alan. “We’ve put a strong emphasis on behaviours, both individually and collectively, especially on whether we have the right blend of individuals within the team and if they will work together in a productive manner.”

In her work with businesses both in the UK and Asia, Jamie Wilson, Managing Director at Criticaleye, has found that “high performing teams show collaboration, innovation, trust and the ability to handle the ambiguity of change”. She added: “It’s these traits that will see them through today’s fast-changing business environment.”

Alan recognises that in order to attract the best talent, Standard Life needs to offer its staff the opportunity to develop in a way that suits them. By doing this, the organisation will also reap the benefits of having a diverse range of skills across its workforce.

“The next generation have less affiliation to the company itself but more to those that develop their skills and brand at a personal level,” Alan noted.

“Every single member of our team has an individual development plan. Those plans need to be absolutely distinct from the individual’s day job and their performance-related plan. They are focused on where the individual would like to be in three years’ time. They need to be challenging and also outline the steps an individual needs to take.”

The fluid workforce

Leaders must acknowledge their workforce will be more fluid than ever before; that may mean hiring more people on a part-time or consultative basis, and also acknowledging that an employee’s development might result in them leaving the company.

This is something Criticaleye Board Mentor, David Comeau, realised back when he was President for Asia Pacific at Mondelez International. Rather than being afraid of the fluid workforce, he saw it as a way to improve the company’s reputation as an employer.

“People need to own their own career and development,” said David. “We realised people would leave the company, so we told them we would celebrate when they leave − but also when they return.”

David explained that three-years ago the company launched a programme through social media that openly recognised employees who chose to develop their careers by moving on. “This allowed both us and them to promote their skills and success to those outside of the business. It’s helped their development while also getting the word out on the great things going on at our company,” he said.

Planning ahead

This kind of attitude teaches leaders to embrace, rather than fear, mobility and succession planning. Indeed, it’s an increasingly crucial way to manage tomorrow’s liquid workforce. “Succession can be a great exercise as it forces honest discussions about building the team,” said David.

Neil Galloway, Executive and Group Finance Director at Dairy Farm Group, said that “we’re increasingly trying to learn from exit interviews with people who we didn’t expect would leave the company”.

One of the things he discovered was that employees wanted to see there are opportunities for them to grow within the organisation. “In some cases, we had to create mobility through forced changes in order to make room for talent to move up the business. This has meant putting all roles − including mine − into a succession plan. It was a surprise to some that I was already talking about finding an internal successor within a few months of joining the group, but it sent a strong message,” Neil explained.

Although the requirements on your workforce – be they skills or entire roles – are both changeable and unpredictable, your employees will want reassurance.

“You need honest, transparent discussions with external candidates, so they understand the situation they are signing up for,” said Neil. “And you need to give colleagues candid feedback on their capabilities and potential, both the opportunities and limitations.”

These views were shared during Criticaleye’s Asia Leadership Retreat 2016, held in association with Accenture and CEIBS.

By Mary-Anne Baldwin, Editor, Corporate

Do you have any experiences of the changing workforce you would like to share? If so, please email maryanne@criticaleye.com

Read more from our interviewees as Nils Michaelis discusses the customer experience and Alan Armitage reveals how to motivate the executive team.

And, don’t miss next week’s Community Update on how to tackle international expansion.

Follow Criticaleye on LinkedIn 

Big Ideas in the Boardroom

“Boards can sometimes fall back into thinking that all they’ve got to do is governance and then they’ve done their job, but that’s a trap,” says Andy Brent, Senior Independent Non-executive Director at Connect Group. “It’s important they are engaged in the long-term strategic direction of the business.”

Balancing short-term imperatives with long-term goals is one of the most challenging issues a board will contend with, as highlighted in Criticaleye’s recent survey.

In fact, 95 per cent of respondents said that boards should pay greater attention to creating long-term value, while devoting more time to strategy was cited as the best way to drive better business performance.

On top of this, the time spent on corporate governance and reporting issues was seen as a potential barrier to adding value, with over half saying that it diminished the value a NED could add to the business.

“Non-execs and the board have to spend time on governance because it’s a key part of their role,” says Celia Baxter, Non-executive Director at Senior. “But I think that if it’s all the board does then it’s not going to be very helpful. The board has to grow the business and purely focusing on governance is unlikely to do that.”

This point is echoed by Charlie Wagstaff, Managing Director at Criticaleye, who said that NEDs have to apportion their time carefully in order to add maximum value: “Non-executive directors must be the champions of their executives, but they must do so in an increasingly complex and competitive environment – whether that’s getting the right balance between supervision and strategic input, or ensuring teams have a diverse set of views and experiences.”

Closing the gap

The interplay between the executives and NEDs must be open and transparent. You cannot get sucked into an ‘us and them’ mindset.

Pauline Egan, Non-executive Director at AIB Group (UK), says: “[The relationship] varies from company to company. It is indicative of the culture and whether or not the executives see the NEDs as a sounding board, a source of alternative perspective and independent challenge, or just a regulatory nuisance that must be complied with.”

Chairman and NEDs have to make the effort to be visible. Andy comments: “Make sure you put the time in to go and visit your business regularly outside the cycle of board meetings, both to ensure that you know the people and so they know you understand what they’re doing.”

Andy goes on to say that there has been a conscious effort at Connect to make sure this is happening. “We rotate our board meetings around the different company locations; wherever we go we’ll have a pre-board breakfast session with the local management team,” he continues. “It helps us meet more people and gives us a chance to see the nuts and bolts of the business.”

Ultimately, this interaction helps the NEDs and executives understand their respective challenges and how to work together. “It’s very important NEDs get that alignment,” he adds.

Don’t get overloaded

The information that boards are expected to understand and provide oversight on continues to expand, particularly in regards to risk. For some NEDs, it can be difficult to see the wood for the trees.

Phil Smith, Chairman for UK&I at Cisco, comments: “You need a good company secretary and chairman to make sure you’re giving issues the right focus, and to ensure you’re not getting bogged down in unnecessary details and losing the purpose of the board.

“For example, if the board receives reports with hundreds of KPIs to look at, you can focus on one or two but ultimately the important issues are drowned by the less important. The company secretary has to be vigilant on the information coming to the board.”

Quite simply, “the board does not have the time or even the proper context in many cases to review a dozen 80-page papers”, Phil comments.

This has put additional pressure on audit committees in particular, and an increasing number of sub-committees are being created to deal with specific challenges.

Tim Eggar, Criticaleye Board Mentor and Chairman at Cape, says: “Much of the governance can be done outside the main board, especially a lot of the process work. It’s then up to the chair of each committee and the chairman to ensure it’s not swamping the agenda for the main board meetings.

“The committee chairs should also ensure that routine governance process isn’t dominating.”

A good chairman will understand how to set the right rhythm for discussion in the boardroom, so that governance and compliance are executed to a high-standard, while proper consideration is given to the business and its resilience over the medium to long term.

Andy recommends regular strategy reviews, whereby the board comes together and looks ahead to think seriously about where the business is going, and whether it possesses the leadership capability to get there.

“Don’t run it as a session where the executives come with the plans and the non-executives sign it off, but rather a working session where the teams come together, challenge each other and maybe even go through one or two iterations of what the strategy should be,” Andy adds.

By Dawn Murden, Editor, Advisory

Our survey also found that two thirds of NEDs and chairs do not frequently meet the HRD to discuss executive leadership development. Why might this be? If you’d like to get in touch about this, or any of the findings, please email dawn@criticaleye.com

Don’t miss next week’s Community Update, which will bring you highlights from Criticaleye’s Asia Leadership Retreat, in association with Accenture and CEIBS.

Unlocking the Value of Data

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Mastering data analytics can reveal a multitude of business learnings and the means to improve your products and services, yet the sheer volume of data available often leaves companies immobilised. Here, we detail five simple steps to unlock the value in your data.

1) Be Clear on What You Want to Achieve 

The difference between sitting on a gold mine of information or drowning in it depends on how you approach big data analysis.

Criticaleye’s Managing Director, Charlie Wagstaff, explains: “As is the case in so many aspects of business, it pays to have a clear strategy; it’s no different with data analytics. By knowing what you want to achieve you can hone in on the data you need to accomplish it. Go in as though it’s a treasure hunt and you’ll soon find yourself lost in a sea of information.”

Catriona Marshall, CEO of Hobbycraft, has learned that the best way to benefit from data analytics is to set clear objectives: “We cottoned on to having a customer club a couple of years ago and through it we rapidly built a database of over two million people − and we use really smart analytics with that.

“We haven’t gone for big data and got swamped with finding our way through, or had to put a lot of resources into understanding it, we’ve been really clear on what we were looking to deliver. While we have a mass of data that we can drill into to answer numerous questions, we tend to focus just on what we really need to know to drive specific behaviour.”

2) Present the Information in a Meaningful Way 

The second trick to analytics is to present the information in a meaningful way, explains Peter Lumley, Head of Business Intelligence & Analytics at PA Consulting Group.

“People want something visually rich. They don’t want a flat table of numbers but something they can interact with,” he says.

“You need to pick the right tools for the job. With products like Qlik, Microsoft, Tableau and Niagara Files, there are a whole set of offerings that give you opportunities to do new things.”

As an example, Peter describes how his team at PA Consulting Group worked with the UK’s local Government: “In under an hour we were able to extract their public data, put it into a dashboard and start to build insights. The intriguing part is that if you really understand how a local government works you can bring that data to life. There’s a theme developing on the use of analytics alongside business understanding.”

3) Understand the Etiquette of Big Data 

“Access to swathes of online information has raised public questions about the big brother nature of data analytics and whether it will be used it to ‘spy’ on people,” says Criticaleye’s Charlie. Be aware that you will have to find a balance between interaction and intrusion.

This is something Ruchir Rodrigues, Managing Director of Digital Banking at Barclays, knows first-hand having had to reassure the public of its intentions following the recent release of its data analytics tool, SmartBusiness.

Using transaction information, SmartBusiness allows UK SMEs to track their financial performance, compare themselves with other local businesses and then use Barclay’s online tools to reduce costs and grow the business.

“We’ve got permission from the customer so we’re legally compliant but that is not enough. You have to be very cautious that everyone understands that it’s anonymised information and the customer’s privacy is secure. You have to spend time and energy reassuring the customer, even if you have permission,” says Ruchir.

4) Partner for Quick Progress

Norman Bell, Group strategy and IT Director at Travis Perkins, highlights the widespread challenge of finding the talent needed to support the data function. “Not having enough of that technical capability is a major limitation. There just aren’t enough data analysts coming out of university to meet the growth in demand – which is almost as big as the growth in data.”

At Hobbycraft, Catriona has tackled staffing constraints by partnering with external companies. She explains: “One of the ways that we’ve overcome resource is to contract out to really good partners – these being younger, smaller, really hungry partners who would give us a good deal financially but were really keen to prove themselves.”

Harnessing innovation through partners is at the heart of Barclays’ strategy. Ruchir explains: “We let partners develop on an open platform, which makes it easier for them to show the relevance of their intellectual property and also makes it a more efficient model.”

Through its programme, Accelerator, Barclays supports fintech companies by offering investment, mentoring and business connections and in return gains the latest insights into machine learning, digital banking solutions, cyber security, payments, cryptocurrency, and wealth management.

5) Build an Army of Analysts

Partnering with external companies can build momentum and create a drive for further change internally, yet it’s not enough to support long-term growth and innovation. “As businesses become more inherently digital, so too must their workforce and that means building up the talent from within,” says Charlie.

Peter at PA Consulting Group advocates that talent be built internally. “In our business recruitment is challenging, the people who have the right skills are in high demand, which also affects the market,” he says.

“I think companies are missing a trick in not building the resource internally. Reskill the people you have by building communities around a few very skilled people, it could make a big difference in the long run.”

Ruchir – who sees data and digital as becoming integral to every aspect of business at Barclays − stresses the same point. He says: “It’s difficult to find people who really understand data sciences so we’re encouraging everyone in the business to be analysts. We need to change the culture from going to ask the nerdy people in the corner what the data means, to everyone in the business becoming a data expert.

“If we can change the organisation’s mind set and culture to become more data led then we can get scale behind using information.”

Do you have an interesting story to tell about data analytics? Share your experiences and opinions with maryanne@criticaleye.com

Read more about fintech partnerships and dial into our upcoming Global Conference Call to hear Catriona Marshall discuss the challenges of being a first-time CEO.

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The Great Leadership Taboo

Plenty of CEOs and senior executives scoff at the idea of having anything to gain from leadership development. After all, if you’re running a business or a division of a corporate, you’re evidently accomplished in your role, so why would you need a guiding hand?

It’s an old-fashioned way of thinking and one of the reasons that over half of the Fortune 500 have either burned out or faded away in the past 15 years. As volatility and uncertainty across the business landscape have become the accepted norm, there’s no room for complacency and blind-spots in the top team.

The Human Resources Director is uniquely placed to understand where an individual executive, or the whole ExCo for that matter, may require additional support to help them achieve their goals faster.

With this in mind, Criticaleye polled a selection of HRDs on whether enough is being done to sharpen leadership skills among executives. The results show there is a gulf between how organisations are set up and what HRDs believe is required.

According to the results, 86 per cent identified a lack of leadership capability as a barrier to growth. Thirty-nine per cent said that their existing framework for reinforcing leadership skills is inadequate, while just over half (52 per cent) want to improve what is currently in place.

Matthew Blagg, CEO of Criticaleye, says “the figures clearly suggest that CEOs and leadership teams are not doing enough to ensure they have the right expertise in place for the future”.

Saying the “L” word
So, is there some kind of taboo around the question of leadership development for senior executives, including the CEO?

Orlagh Hunt, Group HR Director for Allied Irish Banks, Corporate Banking, Ireland, comments: “It is difficult to tell people they are not as good as they think they are, and also to get senior executives to focus on development.

“They should see life as a learning journey; no matter what your experience is you should always seek to learn and develop.”

A degree of openness or, to use a popular term at the moment, ‘curiosity’ is not always easy to find. Simon Laffin, Chairman of FlyBe Group, gives the example of trying to persuade a CEO to take on a mentor. “CEOs tend to have large egos…You are totally reliant on the CEO being open to having a mentor or not. I personally would encourage it but some don’t want it,” he says.

Yet our survey identified external mentoring and experiential learning as the most effective tools to support senior executives in performing at the highest level. These were followed by executive coaching, partnering with business schools and external courses.

Elements of a high-performing executive team
Organisations fixed on a hierarchical model are going to struggle in the current environment. An overly directive approach results in poor communication, inflexibility and an organisational culture where information and knowledge are withheld, rather than shared.

Such an environment won’t appeal to the best talent and everything seems to point to successful businesses adopting an agile model. According to the survey, the most important elements of a high-performing executive team include trust, constructive challenge and collaboration – all components of a flat hierarchy.

Another key element identified was a common purpose. Nicky Pattimore, HR Director at Equiniti, comments: “The leadership team has to be aligned with the purpose… we ran workshops with all the senior management team to ensure this. Consistency of messaging is critical and you have to have regular touchpoints with employees across the organisation.”

Difficulties arise when executives pursue their own agendas too aggressively. Indeed, the survey found that a lack of alignment over strategy is the primary reason for senior executives quitting.

Ian Cheshire, Chairman of Debenhams, suggests that the top team must genuinely agree where the future of the business lies. “Alignment comes when people have had the chance to work together and own the strategy. You can’t just hand them a to-do list,” he comments.

The HRD and CEO can create the right degree of openness and collaboration within the executive team, provided they’re willing to make the effort. “There will be moments as a HRD when you are standing alone,” says Orlagh. “All the pressure will be on you to tell the CEO about the issues within the business, largely because the other executives won’t raise it themselves.”

Ultimately, there can’t be any sacred cows or taboos in the executive team, especially when it relates to talent. “Some CEOs don’t find managing individuals within the team and the team dynamics that easy, [whereas other] leaders accept challenge as a natural part of a healthy team dynamic,” adds Orlagh.

“Even if you find it tough, as the HRD, it is important that you are willing and able to challenge. It is important that your relationship with the CEO is such that they know that you are doing it from a desire to enable their success, not from a point of ego.”

What are your thoughts on leadership development? If you have experiences and opinions that you’d like to share, please email marc@criticaleye.com

This article was inspired by Criticaleye’s recent HR Director and CEO Retreats
Find out more about our upcoming Asia Leadership Retreat or read more on Strengthening the Executive Team

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Creating a Mindset for Fast Growth

The challenge for the leaders of fast-growth companies is to master the art of reinvention. It’s a matter of creating teams that possess both the capability and desire to keep rebuilding and improving the business model in order to gain competitive advantage.

Not every company will make the journey. Criticaleye looks at some of the common barriers that need to be overcome when scaling-up a business at pace:

Attitude is everything

The priority for any leader of a fast-growth business is to bring in people who can cope with the demands of ongoing change. Jim Macdonald, CEO at Calvin Capital, says: “We altered our recruitment policy. We had always recruited on a skills and capability basis but changed our first priority to recruiting on the character of the individual and whether we believed they could lead us to growth.”

For Joanne Thompson, CEO of Penrillian, a shift in mindset has been crucial as the software company moves from providing clients with one-off technology solutions, to rolling out its own white-label products.

“The most critical barriers for us to overcome are the ones we set for ourselves through our own lack of imagination, or by too readily accepting the constraints imposed by our current environment,” she says. “By accepting a limit on what’s possible, you make it more difficult to innovate and impossible to completely re-envision an environment in which you’re able to grow rapidly.”

Matthew Blagg, CEO of Criticaleye, agrees that leaders must promote a shift towards a forward-thinking approach. “A business going into growth needs to unlock inhibitors and ensure it is not wedded to the things of the past. It must create an adaptive culture, recognise the potential it has and speed up all elements of the business,” he says.

Stay on top of the numbers 

Many promising businesses have strayed off course due to poor financial management. As Jim notes: “One of the common barriers is not having the funds; there’s no point having a strategy for growth if you don’t have the finance behind it.”

This is something Jay Patel, whose experience covers numerous rapid-growth businesses from publishing to online retail, has learnt first-hand.

Jay, who is now CEO of IMImobile Europe, a software and solutions provider for mobile communications, explains: “A lot of entrepreneurial companies misunderstand revenue growth for success. They typically over service clients and don’t make any money. They then tend to struggle when it comes to funding future growth.

“Anyone looking at growth initiatives should make sure they measure it properly − revenue can be a crude measure.”

Walking the M&A tightrope

An acquisition can rapidly change the fortunes of a business, for better or worse. This is why plenty of thought and planning must go into deciding whether the target company is the right fit.

It’s something that Steve Richards, CEO of Casual Dining Group, knows all about. The multi-branded restaurant company, with subsidiaries including Café Rouge and Bella Italia, acquired the chains La Tasca and Las Iguanas last year.

In the case of Las Iguanas, Casual Dining Group set up a devolved structure. Steve explains: “Anything to do with the consumer, people or brand, we left within the business. The Managing Director of Las Iguanas is continuing to run it with his team. We’ve integrated his IT and finance but haven’t gotten in the way of his business. Getting that balance right is at the heart of the matter.

“Whenever you buy a business you have to remember that you’re doing so because you admire it. We loved lots about Las Iguanas and the fact it’s so scalable. The worst thing you can do when you buy a business is to homogenise it and turn it into your own. So many companies do that through M&A, but that certainly doesn’t work for a consumer-facing business.”

The tactics for combining two businesses will vary by sector, but in no case should the newly acquired entity become a distraction. Stuart Lisle, Tax Partner at professional services firm BDO, comments: “One of the big problems is not planning for integration ahead of doing the deal – a lot of companies focus on the deal first and then think about integration. Issues can build quickly when the two businesses are working on different systems or have different cultures.”

Build capability in your team

Questions on talent, capability and resources will dominate the thoughts of a CEO leading a business through rapid growth. Among the many questions, they will want to think about how much to spend on training and development, how you raise professional standards and improve processes, and whether the senior leadership team is capable of stepping up to the next level.

Joanne explains that she will need to build the company’s workforce in order to match its growth trajectory: “What I am doing at Penrillian, as well as ramping up our permanent resources quickly, is looking to work with partners and contractors while in the process of achieving critical scale. That enables you to recruit in slower time the right people who are able to stay with you on your journey.”

For Jay of IMImobile, an individual and collective sense of responsibility is important. “The one thing I always ask when a business is entering a period of growth is which one of my team is going to handle it? If you don’t have that individual who has put their hand up it’s very difficult to sustain growth, or even believe that you’ll succeed,” he says.

“We have people in 15 territories and operations in about 70, and the one characteristic in people across all those areas is that they are entrepreneurial self-starters that we’ve built trust in.”

Matthew notes that the qualities and skills of the team you require are likely to change over time. “Rapid growth doesn’t go on forever. You can have a team in which the executives are great for growth but not consolidation and the converse is true. A team can evolve if the appetite is there but you’ve got to invest in them as you’re going along,” he concludes.

By Mary-Anne Baldwin, Editor, Corporate

Do you have a view on this subject? If you have an opinion that you’d like to share, please email Mary-Anne at: maryanne@criticaleye.com

Interested in reading more? Find out how to stay calm in an overheated M&A market,
Or, discover the six steps to unlocking performance.

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Cleaning Up the Supply Chain

Many large businesses are battling to regain control of their supply chains. The lack of transparency due to off-shoring, myriad partnerships and poor data management means that a chief executive and their board can appear clueless when a scandal breaks.

And break they do, as shown by the horsemeat scandal that swept across Europe, the collapse of the Rana Plaza factory in Bangladesh and Nestlé’s discovery of forced labour in its supply chain.

Andrew Minton, Managing Director at Criticaleye, says: “If the CEO and the board are unaware of the risks, how are they expected to mitigate them? Often organisations don’t realise the inherent reputational danger that lies within their immediate and extended supply chain around the world. If executives don’t develop a strategy to deal with that, it can quickly become too late.”

The focus during the recent Criticaleye Global Conference Call: Reputation Management and Your Supply Chain was on how senior executives can show greater diligence in mitigating against such failures.

Here are four key points to emerge from the discussion:
1) Centralise Data

The single largest barrier to creating a visible, transparent supply chain comes down to having good information that is updated regularly.

Richard Shoylekov, Group General Counsel at the FTSE 100 distributor of plumbing and heating products Wolseley, comments: “Business partner due diligence − knowing who your partners are − is important. It sounds easy but it’s about having the right system in place to ensure you’re not doubling up or missing something, and categorising them properly.

“IT systems and data on existing operations should talk to one another and allow you to extract data in a reliable way – we’ve had a challenge with that.”

The crux of the problem lies with fragmentation. Bruce Morrison, Vice President for Production Procurement at GlaxoSmithKline, says: “We have a presence in 150 countries, the best part of 50,000 tier one suppliers and 72 manufacturing sites operating on multiple ERP systems. The biggest hurdle to overcome is getting control of this complexity and understanding what you’re doing today.

“I’ve been asking how many suppliers we have. Only now are we getting to the right answer; it’s taken us a year to get there.”
2) Prioritise the Risks

The sheer volume of suppliers, particularly those in tier 2 and 3, makes due diligence extremely complex for an international business.

Bruce notes that GSK has introduced Category Councils to ensure the organisation is choosing appropriate suppliers: “These are business-led as opposed to procurement-led and are an opportunity to debate why we are selecting a particular supplier or how we manage risk within a category,” he explains.

A programme called Third Party Oversight (TPO) was also launched a couple of years ago. It’s company-wide and focuses on 13 different risks – including anti-bribery and anti-corruption, labour rights, health and safety, information risk and conflict minerals – across all external engagements with suppliers, distributors and companies in which GSK holds an equity stake.

“In my area – the manufacturing organisation – we have 72 sites and about 20,000 tier one suppliers. Our goal through TPO is to assess all of those suppliers across the 13 risks by the end of 2017; to date we’ve assessed about 1,000 suppliers.”

Luke Wilde, CEO at consultancy twentyfifty, says that companies need to prioritise which supply chains require an in-depth assessment, although he acknowledges that it’s no easy task. “It’s important to explain how you’re doing that prioritisation in your reporting,” he explains. “Most sensible external critics will recognise when a company needs to make decisions about where it invests limited resources; it’s about having a good rationale to do that.”
3) Focus on Collaboration, Education and Enforcement 

Proper interaction with suppliers needs to take place. Amelia Knott, Director of Consulting at twentyfifty, says: “The focus on this area has increased. For many years there was a safety net, [companies] would simply put something in the contracts and that would be adequate. Now there is a recognition they need to go further.”

Last year, GSK introduced additional training to develop employees so they can, if necessary, ask suppliers the right questions. “It’s no longer just left to a CSR representative or an auditor,” explains Bruce.

While not underestimating the scale of policing companies across a global supply chain, it’s evident there must be greater responsibility for enforcing standards. Bruce continues: “Previously, there was a tendency to think that inserting the right clause in a contract would be sufficient; that has definitely changed. Legislation, such as the Modern Slavery Act, is encouraging us to further understand what we are doing and our approach in this area.

“The first point is making sure you’re sufficiently empowered to drive change. We’re fortunate that we have a Global Ethics and Compliance Team that sits within our executive committee, reporting into our CEO.”

Given that the reputation of a business is inextricably linked to suppliers, there needs to be a clear and unambiguous set of expectations, argues Will Smith, Vice President for Property & Market Development at retailer Asda.

“The way we do business has to be consistent,” he explains. “There’s one set of rules, one code of ethics and they apply internally and externally. There are no exceptions and there is no grey area. We communicate clearly through regular supplier briefings and training days… All suppliers sign up to our standard terms of engagement with the appropriate ongoing checks and balances – or there is no business.”
4) Communicate With Stakeholders

Regulators, NGOs and other stakeholders want to see companies strike the right balance between margins and an ethical, sustainable approach to managing risk.

Amelia notes that companies should be prepared to answer questions about their supply chains and work with external parties for the greater good: “The board might want to ask who your teams are talking to and what relationships they have with NGOs and institutions like the International Labour Organization (ILO), which has insight into the conditions within various supply chains.

“NGOs are willing to support companies that are genuinely trying to make a difference. They’re not expecting companies to solve the problem of modern slavery, for example, which is huge and would require multi-stakeholder action. It’s more about showing proper commitment to understanding where risks are in supply chains and making an informed decision about where to focus effort.”

As ever, a company’s appetite for investment in systems and processes, combined with its ability to communicate with external parties, depends very much on the leadership within an organisation. David Horlock, Managing Director for Asia Pacific at standards body BSI Group, comments: “The CEO has to specify the direction of the company in terms of values and how to drive that with procurement, [suppliers], training and governance.

“The CEO needs to state that, while price is important, there is a minimum criteria and [be clear on] what that entails.’”
By Dawn Murden, Editor, Advisory
What are your thoughts on supply chain risk? If you have an opinion that you’d like to share, please email Dawn at: dawn@criticaleye.com

 

Find out more about Criticaleye’s next Global Conference Call: Cyber Security – What Boards Need to Know with Justin Lowe, Cyber Security Expert at PA Consulting and Sigga Sigurdardottir, Head of Customer & Innovation at Banco Santander. 

 

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The Global Outlook for 2016

With unease over interest rates, plummeting oil prices and China’s stock market plunge, business leaders had to navigate many economic factors last year. Now, Criticaleye takes a look at the current global economy and asks leaders about their focus for the year ahead.

“Concerns about potential economic fragility in emerging markets commanded considerable attention in the second half of 2015. In particular, the possibility of slower growth in China as it moves to a consumer-led economy,” says Barry Naisbitt, Chief Economist at Santander UK.

The other headline-grabber was the US Federal Reserve’s decision to raise interest rates – the first increase since 2006. “Contrasted to this, the European Central Bank (ECB) is still undertaking quantitative easing and has cut deposit interest rates,” Barry comments.

“As 2015’s drop in inflation was due to the sharp fall in oil and other commodity prices – which started back in 2014 – unless those falls are repeated, it looks most likely that inflation will pick up again in 2016.”

Economic growth in both the US and UK is expected to continue, although not at a storming pace. “The IMF expects growth of 2.8 per cent in the US and 1.6 per cent in the Eurozone,” Barry notes.

When it comes to the UK, household earnings have increased due to the sharp fall in inflation, according to Barry. “If productivity growth picks up, then employment is likely to rise and result in a stronger overall economic position.”

Matthew Blagg, CEO at Criticaleye says all eyes are on China as it “addresses its structural issues” and he expects ripples to appear globally in commodity and oil prices.

Global wage inflation, and specifically the UK’s national living wage, is set to have a big impact on many industries, notes Matthew.

“Productivity will be hugely important. I think the tactical capability of leadership teams will be challenged. Organisations that haven’t aligned the strategy with capability will struggle,” he says. “Well-run businesses that get the balance right between income, reward, productivity and profit will do incredibly well.”

We spoke to a range of business leaders to find out what challenges and opportunities they expect to face this year:

Sandy Stash
Group Vice President, Safety, Sustainability & External Affairs
Tullow Oil 

In 2015, the largest challenge was the steep and rapid decline in the price of oil. The challenges that’s brought have included a need for fairly quick action on everything from capital budgets to operating expenses. All indicators say that challenge will continue this year.

But this also brings an opportunity to catch our breaths and work on making the business more efficient. We’re figuring out how to do more with less; how to simplify processes. One thing we did last year was to integrate all of our management systems into a single common one. That allowed us to streamline and clarify what we do.

As a leader, it’s a great time to knock down organisational barriers and encourage the team to explore better ways of doing things. It’s easy to get duplication and overlap when a company grows quickly.

When I look back on my career, some of the biggest opportunities came during downturns as people get the opportunity to enhance or expand their skills.

Phil Smith
CEO, UK&I
Cisco Systems 

The biggest opportunities for Cisco in the year ahead lie with cybersecurity and risk, the software-defined data centre and the Internet of Things (IoT).

The IoT is a big drive for Cisco because connecting things is the essence of what we do. Over the next five years, the number of connected devices a typical country might have is set to rise from tens of millions to tens of billions; this is happening faster in the UK than elsewhere. I also think we’re going to see big growth in the use of robots and autonomous systems.

In 2015, we acquired 11 companies and formed many great partnerships including one with Apple, optimising our networks for iPads and iPhones to function better in the work environment. There’s a recognition that while as consumers we’ve all got devices in our hands, when it comes to business we only use a fraction of their capability.

We’ll continue to look for opportunities in the year ahead and with $50 billion on the balance sheet in cash, we’ve got strong buying power in an interesting and evolving market.

Chris Riquier
CEO
TNS Asia Pacific 

The ongoing challenge for the market research industry is how to capitalise on new data sources created by the digitalisation of business and media. Today, we are presented with exponentially increasing volumes of data from new sources and new skills are required to monetise the opportunity.

We’re witnessing a huge number of start-ups in the industry, primarily focussed on analytics and new media. Many of the skills we require have been built within start-ups, so we’re constantly looking at increasing the number of partnerships with capabilities that complement our strengths.

China will also continue to be a key driver of growth. Five years ago, our client base was heavily dominated by Western multinationals whereas today the majority of growth is coming from local Chinese firms.

We’ve seen a greater degree of stability in our Chinese business this past year. Previously, there were significant fluctuations within individual sectors that were booming and then plateauing, making it difficult to manage supply and demand.

Now we know demand is mainly driven by domestic consumption, so it’s easier to predict the direction of our business and the degree of investment needed.

John Duffy
CEO 
Finsbury Food Group 

In 2014, our UK speciality bakery Group made £256 million in sales, which was ahead of expectations. The food service market typically grows at about five per cent per annum compound, but our organic growth in 2014 was about six per cent and our food service growth was close to ten.

We made two strong acquisitions in 2015, which broadened our channel offering. We welcomed Marks & Spencer as a large customer, plus moved into the food service channel through our acquisition of Fletchers and into the coffee shop sector with the acquisition of Johnstone’s Cake Business.

As an employer of over 3,000 staff at eight UK sites, we’re having to get our heads around increases to the national living wage, pension contributions and the new apprenticeship tax, which could be half a per cent on your payroll.

As well as prioritising further strong growth, planning for that through automation, skill development and productivity improvements is going to be quite a key thrust for our sector and Group. To address this, we increased our capital spend from just over £7 million in 2015 to about £11 million for 2016.

Anthony Fletcher
CEO
Graze 

I’m watching Europe like a hawk. Graze has been able to successfully internationalise into one country; of course it’s something we want to look at repeating. However, legislation seems to be getting more complicated. My worry is that there are more barriers to companies that want to transact over multiple territories.

Last year we launched in supermarkets including Sainsbury’s, Tesco, Asda and Waitrose. The roll out has been rapid. We’re also trialling in Odeon cinemas; that’s doing very well.

Being in more than one channel is an advantage. It’s more convenient for customers and sales have been strong. We’re absolutely looking to roll out to more retailers this year.

We’ve also made new senior hires. This links to our future vision for multi-channel expansion; we’re bringing in executives with skills to drive that. For instance, we’ve brought in someone from Expedia with a lot of experience in an international technology business.

Lucy Dimes
Former COO, Equiniti
Non-executive Director, Berendsen

Last year, in my roles as Chief Operating Officer at Equiniti and Non-Exec for Berendsen, technological advancements and digital channels featured continually as methods of competitive advantage, as well as potential threats and sources of industry disruption.

Financial services are at the very beginning of disrupting business models by using technology and digital channels to give customers what they really want. I expect to see a lot more of this in 2016.

More broadly, as the Internet of Things becomes a reality, I envisage lots more ‘machine-to-machine’ innovations and apps coming to market.

For investors 2015 was a mixture of confidence and cautiousness − capital was there but investors were looking for less risk and more certainty. So, while IPOs like Equiniti’s were successful and plentiful, multiples were more realistic than previous years and I expect that to continue in the year ahead.

Justin Ash
CEO 
Oasis Healthcare 

We’re going through an exciting growth phase. Back in 2014, we bought 110 new practices on top of the 200 we had before, which we’ve been busy integrating. It’s gone very well and in 2015, we bought an additional 40 sites.  We’re going to exceed £300 million turnover for 2015… which is a dramatic growth on prior years.

Branded dentistry is a growing global trend, so I’m certain we’ll internationalise at some point… but we’ll do that when we’ve consolidated more of the UK opportunities.

The world of healthcare is going digital and we see a lot of potential there for winning patients, building relationships and keeping them informed.

We offer very clear, national, single price points; the ability to book online and out of hours opening. I think the reason why we’re growing faster than the market is because we’ve led on this. The consumer feedback is very positive. It will challenge the market to consider these things.

 

By Mary-Anne Baldwin, Editor, Corporate and Dawn Murden, Editor, Advisory

 

Do you have a view on this subject? If you have an opinion that you’d like to share, please email us
Join Mark Gregory, UK&I Chief Economist for EY, at our Executive Breakfast where he will open a discussion on this year’s key business challenges and opportunities.

 

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