 |
|
EHN Archives home page |
|
Executive Report: The ‘listening’ Chairman In an exclusive interview, financial analyst Catherine Stratton talks with new HSS Chairman Archie Norman to learn his views on the company and the wider hire industry. The announcement in June of Archie Norman’s entrée into the tool and equipment hire market left many industry experts perplexed. The price of £310m, more than twice what the 3i-backed MBI team had paid for HSS three and half years earlier, also caused many eyebrows to rise. Most significantly, the arrival of one of the UK’s most highly rated businessmen on the hire scene begged the question ‘why?’ What did Archie Norman think he could bring to a company whose name was synonymous with tool hire, but, in recent years, had lost its market leadership? Whilst the financial climate has changed since June, we have, nevertheless, seen a chain of big deals internationally in hire companies with the sales of the world’s largest hirer, United Rentals, and the Australian market leader Coates, and, most recently, the MBO at the UK’s largest crane hirer, Ainscough. When
I
met
Archie
Norman
at
the
HSS
head
office
in
Mitcham,
the
Northern
Rock
crisis
was
making
headlines.
He
exuded
confidence
about
his
investment,
emphasising
that
the
hire
market
remained
“strong”
with
HSS
continuing
to
trade
well,
but,
inevitably,
financial
markets
were
slowing
and
the
banks
were
not
keen
to
lend
money
anymore.
Such
conditions
meant
that
it
was
reasonable
to
be
Inevitably, before he committed to HSS, Archie Norman had looked at hire and identified it as “an attractive growing market but still reasonably fragmented”. He believes that the out-sourcing process is a long way off its limits. He also argues that the market “does not deliver a particularly high level of service” and that it tends to be volume driven. The HSS Chairman throws down the gauntlet to its competitors, declaring that HSS can do a lot better. Archie Norman contends that HSS is still the No. 1 brand as it is the best-known name in the market place. Its reputation remains good; its people are dedicated and “a solid operating ethos is part of the culture.” He describes HSS as “a great experience.” The mission is now to “take a good business and turn it into a really special one.” Three year plan A
three
year
plan
for
HSS
is
now
in
place.
In
the
first
year,
the
company
is
focusing
on
improving
its
customer
service
and
product
utilisation.
It
is
building
up
its
approach
to
the
market
and
customers,
above
all
building
a
team
with
the
knowledge
and
specialisations
to
fully
serve
the
customer.
With this initial groundwork in place, the second year will see more time spent looking at the different routes to market, at on-line business, product line extensions and exploring the additional areas which core customers would like HSS to be in. It will return to developing speciality businesses, which Archie Norman says the company has walked away from in recent years. By the third year, the company should have honed its capabilities to be able to service an increasing number of large customers, with a growing focus on the Facilities Management market. Despite his reputation, Archie Norman does not behave like one of the great captains of industry. He engenders an air of informality and can clearly move with ease from a formal boardroom to an HSS depot; he listens as intently to the comments of those employed in the latter as to those engaged in discussion around the boardroom table. In fact one of his guiding principles is the importance of listening to staff. He is clearly a great believer in ‘listening’, stating that “a good business listens to its own people.” In his first months at HSS he has talked with many of the company’s work force at all levels of the organisation. He then discusses his findings with Chief Executive Chris Davies. “Team coach” Archie Norman believes that he is a much more ‘hands on’ Chairman than most; so how does he draw the boundary between his role and that of the Chief Executive? He says very firmly that he does not believe in non-executive chairmen, but hastily adds that it is the Chief Executive’s job to run the business. He defines his own role as that of adviser to the CEO and as “team coach, standing on the touch line but not getting to play on the field.” He also defines himself as the “guardian of the company’s strategy and values”, with a duty to tell the executive directors if they are “going off piste.” Another aim is to help them to create a company that improves itself; the striving for continuous improvement is set within the context of making the employees feel a part of what HSS is achieving; this is central to their motivation. There is little doubt that morale at HSS had suffered in recent years, but Archie Norman affirms that it is now definitely better. A major overhaul of bonus and salary schemes at all levels, which he describes as having been far too complicated, is now underway. A new share incentive scheme, which will go further than the one under the previous ownership, is also to be implemented. He is committed to establishing a performance-based business where people are paid for what they contribute. Archie Norman believes that the complicated nature of the HSS schemes was symptomatic of the way in which the company had become top heavy with bureaucracy. Management had become highly centralised and much time had been spent form filling, while important and distinctive functions, such as training, had been axed in cost saving measures. He declares that under Chris Davies there has been “a huge bonfire of bureaucracy.” This, he says, has helped to get people working and HSS has moved, over the past year, from an under-performing company to one which is at least in line with its market and, perhaps, now moving ahead of it. As well as this release from bureaucracy, the company is beginning to benefit from its change of ownership with adequate financing replacing the ‘stop-go’ attitude under 3i. The policy is now to give buyers a mandate at the beginning of each year. 2007 has seen a 50% rise in capital expenditure compared with 2006, and 2008 will see an expansion of 25% on this year. The Chairman’s ‘listening’ is not simply confined to HSS itself. Archie Norman believes that HSS and the tool hire market as a whole needs to listen more to its customers. He finds that customers have a poor image of the market, regarding it as “pretty ropey” and “all as a bit of a rip off. Most of the more specific criticisms from customers are those that we all know have been commonplace throughout the industry.” Some of his competitors may feel he is a little out of date in his appraisal and that service has improved (which it undoubtedly has over the years), but many in the industry will concede that there is still significant room for improvement. Amongst the grievances that Archie Norman singled out were availability of equipment, equipment not being off-hired on request and customers being invoiced for equipment long after it had been off-hired. Such complaints will no doubt strike a chord with his competitors and, perhaps, warn against complacency. Archie Norman has identified the merits of the tool hire industry and is showing considerable commitment to HSS, both in terms of money and time. In recent years, he has shown an ability to turn round businesses as different as ASDA and Energis. When I met with him it was just four months since he took over the ownership and chairmanship of HSS, but he himself has said (in another context), that it is the first 100 days that really count. All the indications are that they have already had a considerable effect at HSS and we wait with great interest to see what impact Archie Norman’s thinking will have on the rest of our industry. • Executive Hire News › Archives › November 2007 › Executive Report › The ‘listening’ Chairman
|
