ECONOMY

Ruby McGregor-Smith: build teams with complementary skills

Ruby McGregor-Smith has collected a lot of titles during her long and varied career in the business world.

The Conservative peer, 58, was the first, and so far only, British-Asian female CEO of a FTSE 250 company as chief executive of outsourcing group Mitie until 2016. She then led the UK government’s 2017 ethnicity pay review and became a senior adviser to Mace, another outsourcing business, and took on non-executive roles at Tideway, the 25km super sewer for London, and the Airport Operators Association. She is now chair of behavioural science business start-up MindGym and president of the British Chambers of Commerce.

We meet in the UK government’s Department for Education in central London because McGregor-Smith has just accepted another role as chair of the Institute for Apprenticeships and Technical Education, the regulator for workplace training programmes in England.

But she seems unhappy to be defined by any of these high-profile roles. “I don’t really care about titles too much,” she says. “I am a mother-of-two who has a real passion for business.

“I have not followed a rule book that says you should go and be a chief executive here and then a chief executive there. I have not done that. I have loved to grow businesses, but I am trying to do it on my own terms,” she adds.

A drive to improve workplace diversity has been a theme throughout McGregor-Smith’s leadership positions. “As I got more senior in business I was really struck by the fact that there wasn’t a huge amount of inclusivity,” she says.

“Whether it’s social mobility, whether it’s women in senior leadership positions, whether it’s around race, whether it’s around disability, as you get more senior you see fewer people like this participating . . . It was something that I always felt, and still do feel, is really important to correct.”

McGregor-Smith has become increasingly vocal on diversity and inclusion. Although she sits on the Conservative benches in the House of Lords, last year she criticised Boris Johnson’s Tory administration for failing to act on her report’s recommendations for inclusivity.

She practised what she now preaches about inclusivity when running Mitie, she says, changing maternity and paternity benefits at the company so that anyone taking time off was guaranteed their old job back when they returned.

“The thing for me is that to create more change, to say culturally it is OK to take time out, you have to tell people,” McGregor-Smith says. On one occasion this meant personally reassuring the director of a Mitie division that her job would be safe if she chose to take time out to raise a child, she adds.

“It is not about nice words in an employee handbook. It is about what action you have made to ensure that different people are getting senior roles in business.”

McGregor-Smith notes that she worked on inclusion while significantly expanding the business. She took Mitie into new contracting work, from cleaning Britain’s courts, to handling the baggage at Heathrow airport and providing home care for the elderly.

During her tenure, from 2002 to 2016, the company’s annual revenues rose from £518.9m to £2.23bn through a mixture of acquisitions and organic expansion.

McGregor-Smith’s time at Mitie did not end well, however. She left under a cloud, stepping down at the end of 2016 with the company issuing a profit warning. Shares in the group lost more than a quarter of their value in a day, and the business exited the home care market that McGregor-Smith had led it into.

It was about this time that she acquired another (unofficial) title, “prickly peer”, following several testy interviews with journalists. The catalyst was her being asked to defend her £2.6m pay package, then 82 times the average salary of a full-time employee at Mitie.

She bristles when I raise the subject. “That was a difficult period,” she says.

What was never fully explained at the time in the press coverage, according to McGregor-Smith, was that Mitie did not set the wages of its lowest-paid staff because those were terms dictated by clients.

“It was very frustrating because I knew that they [the journalists] worked for organisations that were asking us to pay their cleaning staff the minimum wage. We had lots of FTSE clients who were doing this, so our hands were tied,” McGregor-Smith says.

“At Mitie, we were doing as much as we could. We looked to offer other incentives such as SAYE [Save as You Earn] and more flexible benefits.”

McGregor-Smith says she was not passive about the problem. “I always felt it was important to recommend to clients to increase pay above the minimum wage and was incredibly supportive of the living wage being brought in,” she says.

“Some of our private and public sector clients [at Mitie] were willing and supportive, but many were not. It is something I would continue to urge companies to do and it was one of the reasons I was delighted to lead the In-Work Progression Commission.”

McGregor-Smith also wants to set the record straight on her departure from Mitie, saying that she had decided to leave months before the profit warning.

This decision was partly driven by a desire to rebalance her work and family life, she says, as well as feeling that she had been in the job long enough.

“I was always very keen that a decade [as CEO] was enough, [and] I said that quite publicly at the time,” she says. “People always think that there was more to it, but there wasn’t.”

Three questions for Ruby McGregor-Smith

Who is your leadership hero?

Could I have two, Richard White and David Telling? They were both chief executives who were instrumental in my career. [White was the founder CEO of Serco who promoted McGregor-Smith to senior executive roles in the outsourcing company and Telling did something similar as CEO of Mitie.] I admired hugely their passion for wanting to grow incredible businesses.

What was your first leadership lesson?

That you need a really brilliant team to support you in all that you do, who have complementary skills to you. When I was first appointed CEO at Mitie — they are pretty lonely jobs — and I was the first [British-]Asian female CEO [of a FTSE 250 company] and suddenly that became quite high profile, which I wasn’t expecting. It was making sure I had some people around me who had seen that sort of thing before and had the relevant experience to know what to do.

What would you have done had you not become a CEO?

I wanted to go and work in IT. I would have been working in tech I am sure. I was quite interested in coding at the time. But then I got a role at BDO [the accountancy firm, where she trained as an accountant] so I went there.

As hard as that time was, she adds, others were more difficult.

“Some of my tougher moments were taking the business through the financial crisis,” McGregor-Smith says. “Twenty per cent of our work at the time was with banks and I remember watching the television, seeing the news and thinking would we lose all of this business.”

Mitie was able to grow through this period by supplying companies with new services, such as security, and pursuing acquisitions. “I didn’t get it all right on M&A,” she adds.

McGregor-Smith is more relaxed when talking about what enabled her to get a foot on the corporate ladder and rise through the ranks. For this, she is thankful for the support of others.

“Serco was my first role in industry. I joined it just after float so met the original management team led by Richard White [Serco’s CEO] who was very inspirational, and took a view that you should be promoted on your talent not necessarily on your hierarchy, and so promoted many young people who were very early in their careers as they were building their business.”

Success, McGregor-Smith says, has been about repeating that process herself. “I build teams based on finding people with the expertise you lack.”

Although business is her passion, McGregor-Smith says she is not looking to run another company. Instead, she is supporting previous colleagues.

“I am still very much in touch with people I hired at Mitie even though we all work elsewhere now,” she says. “I take the view that you should support those that have supported you in your business.”

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