How Interserve's HRD is tackling skills gaps
Interserve's HRD explains how the business intends to use the apprenticeship levy for local communities' benefit
At what point does a business need a group HR function? Some might argue before it reaches 50,000 people globally and a £2.2 billion turnover, yet that’s exactly the size of business Catherine Ward walked into in 2013, when she joined support services company Interserve as its first ever group HR director.
It’s lucky Ward feels every role she’d had previously was leading up to this one. “This role has been the culmination of all my experiences,” she reflects, when HR magazine meets her at one of Interserve’s satellite offices in London Waterloo.
Those experiences include early career “core HR” with BT and ICI, consultancy with KPMG and SHL (running its HR practice), a large-scale change project at the BBC (Ward was at the production studios during the director general changeover from John Birt to Greg Dyke), and creating an HR function at an organisation preparing for IPO, BMI Healthcare. She also spent a number of years running her own HR consultancy, specialising in M&A and change. “When you’re back in a business again [running your own business] gives you that commercial edge,” she says. “You know what it feels like to deliver a set of numbers and have to find your own income.”
When Ward joined Interserve, which is active in lines as diverse as construction, facilities management, healthcare and probation services, although each constituent business had its own operational HR “there was no overriding HR strategy”. But with an ambitious acquisition plan in the works – in the 18 months after Ward joined the business grew to a £3.4 billion turnover and 84,000 people – it was clear the time had come to put HR strategy front and centre.
That has meant a focus on leadership, with a suite of programmes now running across the whole business. “The purpose of those programmes is to develop leadership skills, not management skills,” Ward explains. “It’s to get people working across functions, across the business and across geographies.” A balanced scorecard now reflects non-financial elements such as leadership behaviours. “All those pieces are coming to play, but now it’s about deepening it and getting more sophistication,” she adds.
Then there’s the fact that Interserve has ambitious sustainability plans, and that many of its goals in this area have an HR implication. They include introducing local employment targets to benefit the communities in which it operates, providing more than 1,000 school placements every year, having more diverse boards across the group, and doubling the number of apprenticeship, traineeship and graduate training opportunities by 2018.
This particular focus on giving local communities access to work and skills means the apprenticeship levy is top of mind for Ward. But unlike many HR directors, she feels positively about it. “We are a low margin business, and the levy is several million pounds, but from the outset I saw this as an opportunity,” she says. “The structure of the workforce here means we have relatively high numbers of people at relatively low levels of pay, often in low-skilled roles, but those do provide access to work, and access to work is something we take very seriously. What the apprenticeship levy has provided is a lever for saying ‘these things we’ve been thinking about around skills progression, we now need to get on with it.’”
Apprenticeships are nothing new for Interserve. It already has about 300 people a year coming in on apprenticeships – from level two to level six, in every function and business line – and Ward expects this number to triple with the implementation of the levy. And skills are an area where Ward takes a keen personal interest, having been involved in pieces of work on social mobility with the Social Market Foundation and the CBI’s Building a Better off Britain report, which “[looked] at the skills shortages at those middle levels where there’s the hollowing out, and creating progression”.
Interserve has also carried out research into public attitudes to apprenticeships. “One of the key findings was that people still weren’t appreciating that apprenticeships could offer a higher career path, and a general low level of understanding,” Ward says. (Headline stats include that 47% of young people thought having a university degree was the most useful way to start a career, against 17% for apprenticeships, and that 75% of parents and 68% of SMEs had not heard of degree-level apprenticeships.) “When you spend such a lot of time thinking about [apprenticeships] within a business it was interesting,” Ward muses. “You tend to think everyone knows about them, as you spend so much time talking about them.”
So in a way the levy provides the perfect platform for Interserve to promote alternative routes into work even more prominently, and at scale. “For the business there’s no additional cost above the charge the levy would have been anyway,” Ward points out. “[The levy] enables a lot of the thinking we’d had on scale and broadens access into skills development significantly. It’s about creating career pathways into middle levels that give people sustainable long-term careers, and we can directly target some disadvantaged groups while keeping conventional routes through things like the graduate scheme.”
She acknowledges that HR professionals in different business contexts, with more highly skilled workforces perhaps, could view the levy less positively. “The structure of our workforce lends itself to this,” she reiterates. “There is a clear access point into those jobs for people who might otherwise not have access to them. From a business point of view we have demand for those skills, and this enables us to build them through the levy. But not all businesses will be structured that way.”
Ward, like many others, feels the government “could do more” to work with businesses on skills. While she welcomes bringing skills and education together under education secretary Justine Greening (skills were moved out of the Department for Business back into Education during the latest Cabinet reshuffle), she is “still a bit surprised at the lack of connectivity”.
“If you’re a large employer it’s self-evident you need to be in the education system, talking at an early stage about what opportunities there will be in the longer term, and making sure students have access to those routes,” she adds. “But we need greater integration and connectivity needs to be built so both parties understand each other really well, and the education system understands what employers are looking for so that people leave school equipped for jobs. I welcome the bringing together [of skills and education], but there’s opportunity to do a lot more talking.”
Interserve is such a diverse business that its HR strategy needs to be a careful balance of global consistency and local context. “The career structures and employment frameworks can be so different,” Ward explains. “The nuts and bolts sit within the divisions, but the big conceptual pieces go right across the group to say: ‘these are the elements that make up our brand as an employer’.” Those elements include values, leadership, early careers, reward and recognition, and diversity and inclusion. “All those things together equals our culture, which equals our brand,” Ward says, adding that recent FRC requirements on cultural reporting makes this all the more critical.
While most of the company’s staff (55,000 or so people) are based in the UK, Interserve also has about 25,000 people in the Middle East, mainly working in construction and oil and gas, which comes with its own distinct challenges. While much of Interserve’s building work in the UK is outsourced and supervised by its employees, in the Middle East the firm directly employs everyone working on its projects, and even houses and feeds them. “That brings its own challenges,” Ward says. “We are totally responsible for their wellbeing, and we take that very seriously.” In a region “full of horror stories” (the human rights abuses and worker deaths during the construction of Qatar’s World Cup stadium just one stark example) “the biggest challenge is maintaining high standards”.
“Modern slavery is something within both construction in the UK and our supply chains in the Middle East that we have to watch very carefully,” she adds. “There are real areas of sensitivity and risk that we have to monitor closely. Procurement plays a big part, but operational managers and HR have to be involved too.”
Closer to home, as part of its efforts to lead in sustainable procurement, Interserve builds elements such as working with local suppliers and providing access to work and skills to local communities into its contracts. As part of its longer-term sustainability plans the firm eventually wants to ‘enable projects to be jointly-owned, managed or operated with community groups’. “It’s not just about making money but how you go about making money,” Ward feels. “It becomes a virtuous circle. If you are undertaking business on this basis the benefits flow both out to society and back to you. This is an organisation that reflects the communities in which it is working, which makes it a more attractive supplier to work with.”
What about the sticky issue of pay? When George Osborne announced the National Living Wage last year Interserve’s chief executive Adrian Ringrose (who will be stepping down in 2017) said the pay rise would wipe up to £15 million from the firm’s profits. Now, Ward says, “we’ve absorbed it all and it’s back to business as usual”.
The voluntary living wage “depends on whether the client is willing to pay it”. “There’s a real issue there,” says Ward, adding that although Interserve sometimes puts in two bids, often the client is looking for the lowest possible cost, particularly in the public sector. “I remember being in a roundtable around the time of the last election,” she recalls. “I said ‘the best thing you [in government] could do to get the living wage would be to pay all your contracts on a living wage basis. That would have as much impact as anything else.’”
Calling for higher wages while not paying it in many of their own contracts is not the only contradiction coming out of the government worrying Ward right now. Another is conflicting messages on diversity, an area she is passionate about (Interserve is currently working towards the National Equality Standard). “It’s this contradictory mood music that really worries me,” she explains. “On one side we have the Parker Review and [former Mitie CEO] Ruby McGregor-Smith’s work looking at increasing ethnicity in the boardroom, which is really positive. Then on the other there’s talk about stopping free movement of people and a mood that says ‘everyone might have to show they have a UK passport’. What is the debate now? It really worries me. A lot of us in HR have worked a long time on these issues, creating the pipeline [of diverse talent]. Things are moving, and there’s so much good will behind it, and then the wrong messages start coming through.”
Internally Ward has found “making it much more personal” the key to “unlocking” D&I success. “Inevitably HR is the driver of diversity, but HR can’t own it; it has to come from the heart and the will of the business,” she says. “[HR] going out with a freight train of messages doesn’t work; it’s about finding the trigger point for people. Once they’ve found it they become powerful advocates. It’s different things to different people, but once people find out what it is for them they can be authentic.”
HR taking a lead to ensure the diversity and wider people agenda stay front of mind during a period of uncertainty means the function is “potentially at its most influential point for some time”, Ward believes. “Right now there are areas of complexity that can have material impact on the business: making sure you’ve got the right people who can lead through this complexity, making sure you have the right skills for the future, the right operating model, having a culture people want to join and stay with when the alternative is working for themselves,” she says. “HR has the ability to look across all those things, see the integration points between them, and help organisations make sense of it.”