Mark: Having been promoted whilst with Tarmac Building Products from CFO, how do you feel the senior finance role has recently changed within the industry?
Ian: The senior finance role has changed beyond recognition in the last 10 years, it is now more challenging and diverse but in my opinion a much more fulfilling role.
More recently the senior finance role, if done well, is about working with the leadership team to develop and refine the business strategy. In doing so, it is then far easier to identify the critical success factors and target management information and resources to deliver the most important tasks. It is all about being a team player and working with, and influencing, the senior managers. To do this you need to provide reliable timely and insightful information backed up by good data analysis. However, you also need to be confident and skilled enough to bring challenge and an alternative viewpoint to the table. It is also important to make sure the financial implications of any proposal and the associated risks are fully understood before you act.
In these competitive and often challenging times, a CFO is in a unique position to have an overview of all the business processes and ensure they operate efficiently and deliver value for money for the business, and ultimately the customer.
Mark: Which areas excited you most in the broader CEO role and what would you say was your biggest impact?
Ian: Initially, I was excited by the opportunity to work with colleagues and customers to develop a new strategy which at its core was about ‘delivering exceptional customer service and product quality in a safe and rewarding work environment. It was important to look at the things from a new perspective in order to streamline and simplify the business wherever possible making it more efficient and easier to deal with
The biggest impact came from focusing on two key elements, ‘our people’ and ‘our customers’.
Our people needed to be trained, have the right tools and be empowered to do their jobs to the best of their ability. In addition, a poor health and safety record needed to be tackled, colleagues can’t deliver great service if they are injured or suffering a work related illness. This required a significant change in the business culture, tackling behaviours at all levels in the business and putting the right incentives in place.
Once all colleagues in the business were safe, appropriately trained and empowered they could spend their time ensuring our customers were offered great service and products. As a consequence, the work place conditions improved as did morale and job satisfaction.
Mark: Talking with you I was very impressed with the company’s reduction in lost time incidents from 26 to 2 in the space of five years. With over 50 sites held under your stewardship, how did you install a change in culture across the country?
Ian: Indeed, we were very proud to achieve such a reduction in incidents mainly because it showed we really cared about the team’s welfare first and foremost. Having worked in the mining and building products sectors I have seen first-hand how important it is to put safety at the heart of everything you do. No one should have to go to a place of work where they could be seriously injured or killed.
To change the safety culture of the business required a consistent and uncompromising message 'no job is that important that it can’t be done safely’.
I focused on behaviours. If something was important from a safety perspective and it had been agreed action was required, it had to be done.
The culture was also open and just so reporting of all incidents and near hits was encouraged to get a real understanding of the problems. Individuals were not disciplined for having an accident. All accidents were analysed and the learnings acted upon. Repeated poor behaviour and blatant disregard for personal safety and the safety of others was not tolerated. I launched a highly visible campaign called ‘Safety Starts with ME’ which was about taking responsibility for your own safety and the safety of everyone around you.
Campaigns and good communication are critical but they must be backed up with substance and visible leadership. Every quarter the whole business would have a safety stand down during which operations were stopped and safety could be discussed and the working environment could be assessed for potential risks and ideas for improvements tabled. If you don’t put time aside to consider safety, then no one will believe it is a priority.
At the end of the day safety makes good business sense. I have visited many sites over the years and the sites with a genuinely good safety record are well run and a well-run site has a much greater chance of being profitable!
Mark: Having managed Tarmac Building Products through the recession and into growth, how did you prioritise which key markets to focus on to maximise the growth experienced?
Ian: The attraction of taking on the CEO role when business was tough meant really looking at the business from top to bottom and questioning everything. It was a turnaround situation and you have to get right back to basics to rebuild a business. That’s were fundamentals like solid management information become so vital in understanding the cost to serve our customers as well as customer and product profitability. Initially there was a lot of myth busting as we realised some active customers and popular products delivered very little profitability and in some cases losses! It also meant we had to redesign our distribution and production plans as the cost to serve highlighted we were often hauling products too far to meet an order deadline. Better forward planning reduced haulier miles significantly.
The focus was actually not on maximising growth but maximising product profitability. It is easy to sell a lot of building products cheaply but the goal was to improve service and efficiency and develop key account relationships. It takes time to achieve, but if you can establish a reputation for quality, service and consistency you can retain customers, improve margins and sales grow.
We moved the business into the DIY retail market which is harder to service but at that time offered better margins and the chance to introduce product innovation. I was always keen for the business to be more flexible and fast moving which meant we could capitalise on some significant sales opportunities which would have been impossible with the old systems and processes.
Mark: Within the larger CEO role your work included managing site efficiencies. Culturally and process wise, what key areas did you concentrate on to yield 30% increase in critical plant output? How was your message fed through to plant level?
Ian: Absolutely, my work covered every aspect of the business as we critically reviewed every aspect of our operations to deliver the turnaround required.
With 50+ sites it was cost prohibitive to roll-out a lean manufacturing programme at all sites so I started in 2012 with a pilot scheme at the 8 sites which I forecast would deliver the best return on capital.
The areas we concentrated on were mapping the operation processes and then identifying areas in the process where there were regular unplanned production stoppages. The plant was cleaned and worn and tired parts replaced but that was then followed up with a planned preventative maintenance programme and operated led maintenance routines to ensure equipment was kept in appropriate condition, improving both safety and reliability.
Processes were reviewed to understand the constraint points i.e. which parts of the process were slowing down the overall output and improvements and upgrades were installed.
Shift patterns and working practices were redesigned to match output requirements. Input material quality was also reviewed as problems were sometimes as a result of sub-standard raw materials.
Communication through regular project meetings and site visits by the senior leaders were very important to keep momentum, as was celebrating the successes to the wider organisation via the in house magazine and my monthly briefings to all colleagues via a conference call.
Mark: The building products industry is experiencing some very mixed messages still. Government is committed to infrastructure projects and increasing affordable housing. Where do you see key gains coming from over the next couple of years and how can the government further help oil the wheels of our industry?
Ian: I agree, the messages are mixed but there is still huge potential, despite concerns about the impact of China on the world economy.
The government needs to find a way to remove some of the delays that are being reported in state funded infrastructure, it all seems far too difficult to get projects started.
The big gains in the next few years should come from housebuilding but I am concerned that the Government’s commitment to affordable housing is flawed. It all comes down to what is really affordable? As property prices continue to rise, large areas of London and the South East are already unaffordable for first time buyers even with a 20% discount. I also think the government’s ability to fund these discounts through council property sales is over optimistic. A rethink of social housing is required to help unlock large scale social developments. I also think that local planning authorities need better development plans that clearly set out their intentions as this will make planning application a clearer, more straight-forward process.
My greatest concern is that even if the blockages are removed and a way to convert pent up demand into building homes is found the industry’s lack of skilled labour will ultimately be the critical constraint on building. A lot of skilled people left the industry in 2008 after the financial crisis and they haven’t returned. When you combine this with the ageing demographic of the existing workforce you have a perfect storm. The industry and government need to work together to develop the relevant skills for the next generation. A more considered long-term investment in the work force is required.