The chances are that if you joined one of the major firms in the last few years, you were probably tested for your worthiness by Emma Lancaster ­ or at least by her company.

Lancaster is the group finance director of SHL, a psychometric testing business, where she has held the top finance post for the last five years. During her tenure at the company, which began ten years after starting her accountancy studies, Lancaster has led the business through a bitter battle for control of the company that saw its founders ousted, a de-listing, and a subsequent management buy-out.

After so much drama it’s perhaps not surprising that Lancaster says she’s at the company for ‘new and exciting challenges’. For now, these challenges are about meeting the company’s strategy of aggressive growth of its sales force.

‘It’s a great product and clients like it ­ the issue was getting it in front of them,’ and finding investment to create better online testing products, ‘we need to make sure the systems are robust’.

Open minded

Driving forward the next technological and market-opening leap for SHL, to provide mass online testing, is a major step, especially with the ever increasing battle for accounting talent among firms and businesses. Getting to this point with SHL has been turbulent, which belies her steady career path.

Joining Arthur Young to fund a holiday prior to starting a law degree, Lancaster found herself enjoying corporate recovery. Ditching law altogether, she took a break then joined Arthur Andersen’s corporate recovery department in 1991. One of her first jobs was to open Robert Maxwell’s post as part of the firm’s handling of the Maxwell administration.

She classed her role as ‘back office’ at Andersen, not the same as being a fee-earning partner in a big firm. Lancaster went on to work alongside current M &S group FD Ian Dyson at Rank, where she served as financial controller, and honed her skills for life in a public company.

‘The Rank Group was small from a corporate end, so I picked up enough PLC experience to throw myself in at SHL, having had responsibility for statutory accounts, budgeting, and forecasting. But while Ian was doing analyst meetings at Rank with 150 analysts, there would be five at SHL,’ says Lancaster.

Despite the general negativity towards private equity, Lancaster believes that it has given the company a platform for stability, but allowed the business to take risks that were ‘almost impossible’ in a public company. It has been a welcome respite after a few turbulent years, which saw the company’s share price slip to a low of 48.5p in May 2003, from a high of 325p four years earlier. Her defence of private equity is strong.

HgCapital, which bought the business through a public-to-private MBO in November 2006, is the perfect example, she says, of giving a struggling business with big ideas what it needs: investment, and time.

‘It’s costing us a lot of money but it’s key to the strategic decision,’ says Lancaster.
‘In the public environment we decided it would be very difficult to take this kind of risk. Investment in sales would dilute profit, as bringing in new people, takes time for them to get up to speed.

‘In that environment we were very conscious of interims all of the time ­ it made taking the risk of doubling the staff force not possible,’ she says.

Lancaster adds that while investment institutions say they take a long view, they have a welter of businesses to pick and choose from in which to invest, which colours how they approach their decision.
Private equity, on the other hand, Lancaster says, despite having a reputation for build-up, trim the edges and depart, will be in there for the long term ­ several years.
‘The real plus with PE is that they’re heading to an out, which forces them to create value quickly ­ if you force it you’re more likely to take risks.’

She is ‘less worried’ about hitting interim targets, instead focusing on ‘broadly’ reaching milestones.

‘PE is prepared to make bigger bets because they want bigger returns, whereas the public all want different things, bigger dividends, more capital appreciation, some are in for the longer term, some are hedge funds who are in for a few weeks,’ she argues. ‘[For SHL] it’s one shareholder with a clear view of what they want.’

But before private equity steps in it needs to have something to get hold of.
After the troubles with the company’s former founders ended, private equity was far from the minds of the management team and PLC board. Getting the company back on track was required, following a failed expansion strategy and a lack of online products.

Lancaster and the board pulled SHL out of 18 localities, leaving it in just 20. She then led a roll-out of new financial software across the group, as each country had previously introduced its own system.

‘It had been a different business in each country, which was all consolidated in spreadsheets, we couldn’t [access] sales data. SAP was too big for us so we chose SunSystems.’

The systems integration was part of a three-year scheme known as ‘Project Champion’, which began soon after the founders had left.

‘We went to the market and said we were committed to improve return on sales by 3% a year for three years, by focusing the business on products. We achieved those goals and the share price went from 50p to 180p, where we exited.’

Expert analysis

Because Hg has only worked with SHL for a year there is little chance of them selling up any time soon, which could well see the company through possible issues with the capital markets. The credit crunch will be a relatively easy ride due to a ‘good debt package’, says Lancaster.

Even if recruiters struggle in tough market conditions then Lancaster remains confident about the company’s ability to ride the potential choppy waters.

From what she hears the only jobs likely to go would be those in the square mile,
‘derivatives teams etc’, which should not really impact on SHL.

‘Our tools are used a lot in recruitment, but also internally for employees’ development, we tend to see things slow but not go down.’

The business has begun to build close contacts with its customer base, so much so that it has on occasion pointed out to recruiters when they are failing to recommend the best candidates for jobs, explains Lancaster.

‘Where we have a deep relationship with a client we test it with their recruits to look at the type of recruitments they’re getting. One client was getting good staff globally, but not in Germany. The Germans blamed the test, but we said it’s who you’re sourcing from.’

Unsurprisingly recruiters are wary of psychometric testing, and Lancaster admits it should be just one aspect of recruitment, and not the whole. But on the subject of the quality of recruits, chartered accountant Lancaster says it ‘never ceases to amaze me’ that so many qualified accountants do not have good numerical skills.

‘They’re not good at it,’ she says bluntly, ‘so I’d always test on this’.
As long as SHL passes the ‘challenging and exciting’ test, she will stay to push the company on through the next stage of its evolution.

Testing times

Lancaster’s one twinge of regret is that she didn’t do proper research into the goings on at SHL when she first joined in 2001 when the company, formed in 1977, contained two of the founders on the board, Peter Saville, and Roger Holdsworth.

By the end of 2002 the company found itself in the acrimonious position of a power struggle between the founders, who were non-execs, against the chairman and chief executive.

A move to provide more internet-based products was reportedly the key argument. The founders were so unhappy with this strategic direction that they called for the chair and chief to step down, which led to what Lancaster describes as a ‘messy and public dispute’.

At an extraordinary general meeting, from which the media was banned after the wrangling had filled column inches for weeks, the management team (including Lancaster) threatened to step down unless the founders were ousted.

The management team won.

‘We said “choose” to the shareholders, and they chose the management team. But we lost a year in that process,’ says Lancaster. While it had all got ‘very nasty’, Lancaster learnt from the experience.

‘I should have joined knowing a bit more than I did ­ but to be plc FD at that point in my career was fantastic.’