Scott Barnes, GT’s chief executive
Scott Barnes was first approached by the management board of
about his inclination for stepping into the chief executive’s role in July last
year. The credit markets at this time had tightened, but few could have
predicted the enormity of the downturn that was soon to unfold.
He had ‘a couple of months’ to mull over whether to accept the post, and his
commitment to the Grant Thornton brand is evidenced by the fact he formally
accepted the role at a time when arguably the single most profound banking
collapse that of global financial services firm Lehman Brothers, hit UK shores
and sent shockwaves throughout the international business community.
‘The economic outlook was different from then onwards. The thing I was really
thinking about was, for me, what would this all mean in terms of business
planning? What was the business going to look like in the next 12-18 months?’ he
So, just how is he planning to shape the future face of Grant Thornton? Where
does he see the brand positioned in relation to the Big Four? And can he rule
out further job cuts at the firm?
Barnes has transitioned into the role since November last year, alongside
former CEO Michael Cleary and formally began his five-year term on 1 January.
Two and a half months in, he concedes the challenge he had been expecting has
proved tough, but not overwhelming ‘I was expecting to be in uncertain times,
even before Lehman. The only surprise was just how quickly the credit markets
tightened up,’ he says.
Shifting into the CEO position has afforded Barnes the time to fine-tune his
business plan, which will see the firm through to at least 2012. The theme
embedded throughout is the positioning of the brand against its competitors, and
he unapologetically admits it’s been a thorn in the side of Grant Thornton for a
number of years.
‘One of the issues for all firms is being able to say, well, what are we best
at and then pursuing that as the strategy. We don’t want to be a firm that’s not
good at one thing or another,’ he says.
Top of Barnes’ wish-list is driving the core practice of assurance and tax
for the top 2,500 private businesses, small capital market and AIM-listed
companies, all of which include large companies with the capacity to generate
large fees. The decision to shy away from the FTSE 100 in audit is arguably one
that’s been made for the firm.
‘There are firms who say they want to compete against the Big Four in that
space, which I don’t think in the present environment is a credible strategy.
That market – in terms of institutional acceptance, is tied up by the Big Four,’
Grant Thornton has acted on behalf of one in six of the FTSE 100 for tax and
advisory work, but plans to attract a greater market share isn’t something
Barnes would be drawn on. While he stresses the business plan features ‘some
hard, measurable targets’, it’s yet to be distributed to the firm’s partners.
‘It’s being put together as we speak and that’s the thing I’m really
concentrating on over the next three months before it’s launched in June. I’d
rather the partners didn’t read about it in the press first, although what I
will say is there will be a big focus on the top 2,500 companies and there will
be a big focus on the small capital markets and just continuing building on the
areas of strength that we now have following the merger,’ he says.
The merger with smaller rival RSM Robson Rhodes in mid 2007 is one of the
largest integrations of its kind in UK accountancy in recent times, and one that
had a definitive impact on Grant Thornton’s bottom-line.
Pre-tax profits for the firm dropped 5% to £72m for the year ending 30 June,
2008, and Barnes speaks candidly about the drain on revenues. ‘We knew when we
did the merger the cost involved in a merger of that size will have financial
implications. Nobody has ever done a merger of that size without there being
some cost implication,’ he says.
Despite the initial financial impacts, he says the merger is ‘going well’.
The firm has since made additional investments on the back of the merger,
including office openings in Norwich and Leicester, and assimilating the two
cultures has also been integral to success of the merger.
The deal with RSM Robson Rhodes is the last, he says at least in the
short-term. And, while some in the industry say that further consolidation among
top 20 firms is inevitable, the likelihood of that including a GT/BDO deal is
Four into five?
‘There are no discussions going on with BDO and from my perspective I
wouldn’t see that as an option. Even if that were to happen you’ve got to be
very careful about saying there’s now a Big Five. I don’t think the firms
outside of the Big Four are going to necessarily want to position themselves as
a poor relation of the Big Four.
‘Any organisation who’d undertaken a merger in the 18 months prior would be
foolish to consider another merger unless it was so, so compelling to do it and
it made a lot of sense,’ he says.
Barnes rejects suggestions a recent round of staff redundancies stemmed from
cost implications in the merger. A total of 160 staff were made redundant, a
figure he describes as ‘very modest’. He says the firm has been able to offset
staff at risk of redundancy, namely those in corporate finance, into growth
areas of the business, such as corporate recovery which is ‘incredibly busy’.
The firm has redeployed approximately 50 people from corporate finance.
‘What you don’t want to do is lay off people who you will want to have in the
business at a later stage.
‘It’s expensive to do it in the first place and then it’s expensive to rehire
them when the market improves and corporate finance people are at a premium. I’d
rather we kept them in the business,’ he says.
The forthcoming end of the financial year and Budget will see a peak in
business for many firms, and Barnes says this could serve to stave off Grant
Thornton having to make additional staff cuts.
‘April/May time is the busiest time of year for the core practice but we’ll
have to see what happens in the economy. I’d be surprised if we did anything
significant in the future but one can never tell,’ he says.
For the time being, he’s intent on rolling out the business plan to partners
and completing a UK-wide office visit program. He’s 70% of the way-through, with
another seven or eight to visit before the end of March.
‘I’ve been talking to partners but also to the staff. I’ve really enjoyed it
it’s been humbling in terms of the support. It’s been hard work but
enjoyable,’ he says.
His work/ life balance: ‘I’m pretty good at leaving the Blackberry off – my
mentor was always good at the work/ life balance when I was working up in Leeds.
I’ve stopped playing sport but I watch it a lot and enjoy getting out to the
theatre. I’m also involved in an educational charity.’
The transition with former CEO, Michael Cleary: ‘It was a pretty well
thought-out handover from Michael. It’s important to communicate openly and get
out and create a profile around the firm, and be clear about our direction
internally and externally. All leaders have different styles.’
Competitor CEOs: ‘We all talk to each other – there’s always contact, but I
haven’t looked to one of them in how they lead their firms. I enjoy talking to
my peers but are we pinching any ideas from anybody? Not to my knowledge anyway.
The Big Four: ‘Making it into the Big Four isn’t a goal for me. My goal is
for us to be positioned as the absolute leader in terms of the mid market
internationally. It suits the Big Four for that the phrase to be used because it
gets around the issue of competition for them.’
His leadership style: ‘I like to create consensus and once that’s achieved
I’m pretty direct at executing. The role of the leader is to set a direction and
I’m good at that. I think I’m fair. I’ve always been interested in being in
senior, influential roles within the firm .’
Grant Thornton International: ‘ Outside the Big Four we’re the most cohesive
international organisation and I can say that because I’ve just come from Grant
Thornton International. In some areas we’re more cohesive and regularly win
assignments because we’re seen to be cohesive and international.’
His insolvency experience: ‘It’s good training for being a CEO. You have to
take on leadership positions in the insolvency and restructuring world and it’s
a damn good trade because you have to assume control.’
His biggest regret: ‘I would’ve done an overseas secondment. I was involved
with Grant Thornton International for two and a half years. I’d encourage our
young people to have a look at that…it’s amazing how many people do it.’