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’.
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
‘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
‘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
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
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.’
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
‘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
‘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.
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
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.’