Hays FD Paul Venables on the key ingredients for growth

There can’t be too many finance heads of large listed companies that have been in position for 12 years. Paul Venables is one of the exceptions. He has spent the past dozen years as finance director of recruiter Hays, finessing the role he describes as ‘commercial enabler’, building the group alongside CEO Alistair Cox into the world’s largest player in white collar recruitment.

Hays has continued to grow since it was launched above a City restaurant by Denis Waxman 50 years ago (although original roots extend back to the 17^th century) to employing over 10,000 staff in 33 countries. Its last full year results saw operating profit of £211.5m, up from £181m in 2016, on the back of strong performances in continental Europe and Asia-Pacific.

In contrast, fee growth was just 1% in the UK and Ireland, representing 27% of its global market. This weaker domestic effort resulted from cost control in the face of Brexit uncertainty.

Venables says that the group has been able to position itself effectively for fast growth in countries such as Germany, where it has grown the number of consultants to 2,000 since it acquired the business in 2003.

He says his previous experience, firstly at Deloitte in audit, receivership and business development, and then in various senior finance roles at logistics giant Exel, honed his business instincts- based on the priorities of culture, people and technology.

Setting the tone

By culture, Venables means setting the tone for the team. “That means being on top of your numbers, having a no-surprises culture, backed by intellectual rigour,” says Venables, who worked at Exel under CEO John Allan, now chairman of retail giant Tesco, creating a common culture across 140 countries.

“Good FDs surround themselves with excellent people, they understand that the bigger the job you do, that you need really good people who in turn hire good people,” he says.

On technology, Hays is spending about £10m a year on innovation, developing its own IT systems, and building partnerships with tech giants like Google.

His forthright approach he puts down to a background that he admits is “not normal” for an FD, with roles such as business development at Exel, giving him a grounding in sales and marketing.

It’s a hands on style that allows him to interact confidently with the regional CEOs and MDs, as well as FDs, across the 33 countries Hays operates in, up from 16 when he joined. “You have to build very close relationships with all the operators around the world if you want to develop a single culture,” says Venables, who spends 13 weeks a year on the road- often spending considerable time meeting prospective candidates for key roles.

It goes back to his days at Exel, where he was the first person from the management board to visit all the company’s African businesses in 10 years. “Why did I do that? Because I felt somebody from the group should be sitting down with the MDs of Nigeria, Ghana and Angola to understand the challenges in that market,” he says.

Discipline re the numbers is a key consideration when hiring, says Venables. “One of the things I always cover with anyone I’m interviewing is that number one in finance is having accurate actuals. If your actual results are accurate, then you can talk about what the potential is over the next quarter,” he asserts.

“We’ve never had to restate anything, had any major sensitivities or unexpected results,” says Venables. “We have very simple revenue recognition policies- in permanent recruitment we recognise the fees when somebody’s started work, we can verify that simply by asking have they started work? It’s a yes or no,” he says. “Other companies in our industry might have it on acceptances, where somebody has accepted they’re going to join. Then you have to ask:  Is it verbal acceptance? How many are going to fall through?”

Openness and honesty are encouraged across the group. “There is nothing wrong in saying I have made a mistake, in fact you want people to say I’ve made a mistake,” he says, “It’s being positive about the things you do well-and understanding when you’ve got problems that is important. What you don’t do is bury something until it becomes a major issue,” he adds.

Because of limited forward visibility in the recruitment market, Venables says he is very hot on ensuring that as many key trends are gathered across the sectors Hays operates in- finance, IT, construction, property, automobiles, mining- in order to determine how and when to increase or decrease consultant headcount.

On the technology side, Venables says he has automated back offices and developed data warehouses for ‘one version of the truth’ data, “because if you’ve got those you tend to have more accurate results”. He says this is key for forecasts in an industry with few forward revenue streams, and where any political sensitivity or economic uncertainty can impact the numbers quickly.

Keeping it simple

Because of the likelihood of rapid change across its territories, there’s a strong onus at Hays on communicating in as simple a way as possible- a trait Venables picked up at Exel. “You should assume if the meeting only lasts 30 seconds, what are the 5 things I’m going to say? When I cover our results at Hays I’ll always start by saying these are the 3 things that came out of the results this month that were a surprise, and these are the 3 things that I’m concerned about for the next 2-3 months,” he says.

Venables likes to get straight to the point when trying to get a steer on how a pipeline of new business is likely to play out. He’ll ask questions such as:  “If the pipeline is £1m, 6 months a year later, how much of that pipeline did you really win? If you’ve only won 1 in 3 tenders but the forecast has you winning 75% of them, why?”

Although he appears a tough operator, Venables is sensitive to the mood music coming from the vast army of consultants who are always talking to candidates and clients- 20,000 customers alone in the UK- providing a vast set of insights into what’s happening to a granular level-vital for understanding when to raise or lower consultant headcount. “I have very strong relationships with all of our operators, and they feed information to me,” he says.

“As the largest recruitment company globally in the professional white collar space, the biggest in the UK, Australia, Germany and a top 5 player in 25 countries, we get a lot of rich data which we graph every week,” says Venables. “We look at how many jobs have been registered, how many interviews have been taking place.”

He says Hays is run like a retailer. Every Tuesday morning, operational data for the last week is graphed sequentially so that it is possible to identify trends developing in areas such as workers starting on temp assignments, levels of terminations and average level of assignment.

Through this approach it was possible to identify to what degree UK companies are being cost conscious- by not spending the 10% of revenues on new investment as against the 90% that is attributed to replacements- as a result of Brexit.

“What we saw in construction and manufacturing is companies waiting for the Brexit deal, rather than investing £100m to find that it’s not now competitive in the European marketplace”, says Venables.  “Our UK business had been growing 6 months prior to Brexit poll, in the 4 months to the Referendum, companies started to be more sensitive about spending.  In the immediate aftermath we saw a reduction in activity of about 10% within a month,” he informs.

Another important insight is the move by mainland European companies to focus on contracting- using skilled interims hired on a 6, 12 or 18 month contract, as corporates seek to reduce their exposure to permanent employment. “We’ve rolled that model out across Canada, South America and Asia, where we’re also seeing the trend,” says Venables.

Ever richer insights that will drive the consultants’ performance will come from the relationships being forged with tech giants employing Artificial Intelligence (AI) and other technologies. “A 1% improvement in the productivity of every one of our consultants globally is worth £7m of operating profit, so we test lots of things to find better products for our consultants to use.

“The approach is more scientific, whereas 10 years ago, you had none of that. Using smart data to show candidates are more likely to move to another company has become an increasing part of our approach,” says Venables.

He says the nimble-footedness made possible by powerful data insights, is being rewarded. “We’ve driven profit growth faster than our competitors and if you look at any stock market chart we’ve outperformed them, which means happy shareholders, which is probably why I’ve been here for 12 years rather than 12 minutes,” he adds.

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