Interview: Sodexo CFO Siân Herbert-Jones

BY any measure, Sodexo is a large business. The French multinational, which provides catering services to care homes, schools, universities, military personnel and thousands of businesses around the world – among many other establishments besides – is the planet’s 18th-largest employer, boasting 420,000 employees and revenues of €18bn (£13.3bn).

In all, it serves 75 million consumers a day across 80 countries, generating €966m operating profit. As scale goes, it is truly imperial, and long-serving chief financial officer Siân Herbert-Jones has presided over growth that has seen the business more than double in size during her tenure. About 80% of that growth has been organic, which has also led the company into the vast majority of its geographical coverage.

Herbert-Jones’ spell as CFO has been characterised by managing the company’s expansion, and from the beginning she faced grim circumstances: the company was set to list on the New York Stock Exchange as the World Trade Center was attacked on 9/11. Several Sodexo restaurants were in the buildings and many employees were among the victims.

Despite that tragedy, the business pressed on undeterred and today supplies restaurants in Marriott hotels across the country as well as US military personnel.
Today, her focus lies more in growing Sodexo in developing economies, and in particular considering the merits of entering new markets. By way of illustration, under Herbert-Jones’ watch, Sodexo has become the premier food services and facilities management business in Brazil, China, India and the US.

There are key considerations before moving into new markets, Herbert-Jones explains. These are attractiveness, business culture, financial analysis and potential for growth.

“We have entered most geographies by organic growth and started from scratch,” she says. “We have, on a few occasions, acquired a company to enter a market. An example would be two years ago when we made a small acquisition in Israel in benefits and rewards. Given we’re in services, we know our market potential is probably about 50 times – or even more – our current size,” she claims. “The readiness and market potential and outsourcing potential are key.”

In what is a common refrain throughout the interview, she adds: “We are a people company. Our asset is our people, so if we’re starting up organically, we need to know we have the right people because people are a limiting factor. When we’re making an acquisition, before I let my team run wild on the financials, we do a thorough analysis of cultural fit.”

Unusual route

Her route to the CFO post was an unusual one, she says, initially “meeting” – as she puts it – Sodexo as a consultant more than 20 years ago.

“I do have a slightly atypical career,” she admits. “I’m British, I started my career here in the UK – and had a small stint in Belgium – for 13 years, before I was asked to go to France for a year to try to develop M&A. And I’m still in France 22 years later.

“The CFO at the time approached me one day and said, ‘Stop being a consultant and join us’. I stopped and thought because I’m British and Sodexo at the time – particularly in the head office – was pretty French. I was almost the first non-French person at head office. I thought twice, and I thought, ‘What have I got to lose?’, so I said yes.”

Five years later, a similar conversation took place regarding the CFO position, and after an equally similar deliberation, Herbert-Jones accepted the role.
Given Sodexo’s extensive territory and the variable political dynamics at play, Herbert-Jones places great importance on what she describes as a “global, yet local” approach.

“We’ve built our presence worldwide over the past 30 years. We have to be segmented. Take healthcare – we look at public and private healthcare. In some geographies, the willingness of the public sector to outsource might be greater than others. Clearly, the UK is more at the forefront of outsourcing public services. If you cross the Channel to France, the willingness to outsource is about 5%,” she tells Financial Director.

“The business day-to-day is managed very locally and the challenge is touching 32,000 site managers somewhere in those 80 countries. The complexity for us is the communication so we can provide those people with the know-how they need to, for example, maintain a scanner in a hospital.”

The work itself, says Herbert-Jones, is not capital-intensive, currently standing below 2% of the company’s revenues. Not only that – the services can be very cash-generative, she adds, with 140% cash conversion in its 2014 figures.

The long goodbye

There is, however, an elephant in the room. Despite having announced she is to leave in March 2016, Herbert-Jones is clear it has no impact on her work and that of the finance team and declines to be drawn on what she plans to do next.
She will be succeeded by Marc Rolland – currently employee benefits finance chief – with effect from 1 March 2016. Until that date, Herbert-Jones will retain all existing authorities and responsibilities as group CFO.

“I am the CFO,” she says tersely. “I made a personal decision eight years ago that I will do something else when I’m 55. I’m totally committed to delivering for Sodexo over the next 12 months.”

And those 12 months are likely to prove busy at a time when 85% of Sodexo’s revenues occur outside France. Indeed, global trends – such as demographic change that includes an increasing and ageing population, increasing urbanisation and shifting economic muscle – will continue to exert a powerful influence. But Herbert-Jones is confident about Sodexo’s ability to adapt to those forces and stay ahead of the curve.

“Next month, I will be going to China and we’ll be celebrating 20 years there,” she says. “Over the past 15 years there has been a lot change in the group. We have tripled our presence in emerging economies and expanded our range of services significantly. The world is moving very fast and every year brings a new challenge.” ?

IN BLACK & WHITE

2001-present CFO, Sodexo
1995-2001 Various roles including finance manager, treasurer and deputy CFO, Sodexo
1982-1995 Director of mergers and acquisitions, Price Waterhouse