MITIE’s Ruby McGregor-Smith is no stranger to fighting for what she believes in. Now she’s determined to give outsourcing a better name.
Who would take on the job of championing the outsourcing sector at the moment? Just when its value should be becoming more clear to more people, the prospect of a witch hunt is looming ever closer. Now, following fraud allegations and negative publicity, it has never been more important to make the case for the benefits to taxpayers of private involvement in the public sector.
It’s a situation that makes Ruby McGregor-Smith, chief executive at MITIE, all the more determined to support the business as the new chair of the CBI’s Public Services Strategy Board. “It’s a young industry learning in tough economic times. It’s still got a lot to learn,” she says.
The concept of outsourcing has been around for less than 30 years, yet it’s grown rapidly – according to Oxford Economics, turnover from outsourced services in the UK had already crossed the £200bn mark by 2011. That has inevitably caused some growing pains.
It doesn’t help that the industry has been pretty much under the radar – and McGregor-Smith says it needs to be more open and talk more about what it achieves. She emphasises the tax take from the industry (£30bn+), its contribution to GDP (eight per cent) and the jobs it supports (10 per cent of the UK workforce). But she’s more keen to get across the success stories driven by those within that 10 per cent: “It’s been a sector that hasn’t sung about what it’s good at. We tend to do things for our clients, rather than focusing on the wider picture. The public deserve to know exactly what we’re doing.”
It goes without saying that she believes the sector can deliver great value, innovation and best practice. And she describes the reasons things haven’t worked in the “one or two extreme examples” that have attracted huge negative reaction as “complicated” – adding that the issues need to be dealt with “properly and appropriately”. There are examples of both good and bad procurement, she says.
As chair of the CBI’s board, McGregor-Smith wants to end the latter. “We need to focus on how we are going to deliver public services in the most effective way, what the learnings are that we can take from some of the recent challenges, and how we can ensure that we are seen as transparent, as real experts and really good at what we do.”
She doesn’t just want the sector to be seen as a supplier of services. “We want to be seen by everybody across the public sector as a partner that is actually helping them sort out some really big challenges around their budgetary spend, delivering great innovation and making the UK’s services better,” she says.
Accidental role model
McGregor-Smith has had plenty of practice of standing up for what she believes in. She was thrust into the limelight seven years ago, as the first Asian CEO of a FTSE 250 company. “It never occurred to me for a minute that anybody would think of me as a role model,” she says. “But I’ve learnt that until there is equality on every front in business you are a role model, because others need to realise that they can get there.”
So she’s been vocal about being a mum and the difficulties of balancing that with a high-powered job. “It may not be for everyone, but I want to raise aspirations in people and make them all realise they can do so much more if they choose to,” she says. But she also worries the diversity debate is too centred on gender – that it is somehow easier for people to grapple with that topic, while few speak up on the challenges around race, disabilities and age.
“Diversity is about diversity of thinking,” she explains. “That doesn’t come from an equal gender split. How can you possibly know what it’s like to be disabled, when no one around you has been and you haven’t had those experiences? If you look at the race statistics around senior leaders from a BME [black and minority ethnic] background they’re really, really poor. Why? And what are we going to do about it?”
Just as the challenges that face outsourcing can be improved by a greater level of understanding, she argues that the issue of diversity won’t be solved until they are really understood. She has undergone bias training herself – and, of course, leadership is important. But she adds that policy could better support the agenda, especially if the government joined up its own approach between the different issues.
In November, MITIE won the Leadership Diversity Award at the National Business Awards, which McGregor Smith says was one of the most important things the company has won. But she won’t rest there. “I want us to get better every year,” she says. “And we need to get on and change the workplace. Every business leader should want to encourage their teams to want to be like that.”
Despite the depth of feeling she obviously has around diversity, she doesn’t want championing it to be her legacy. She’d rather it was simply: “Ruby McGregor-Smith, she grew a great business” – with no reference to her gender or where she was from, because there would be nothing unusual about it.
Take a closer look at MITIE though, and the fact that McGregor-Smith is growing a business is not in doubt. In just under seven years at the helm, she’s seen revenues increase from £0.5bn to more than £2bn. In November alone, the company won five significant contracts – two of which were in the public sector. And over the last year it has mobilised its largest ever contract, worth £775m, for Lloyds Banking Group. At the other end of scale, it’s trialling MITIE Local in London, which is designed to attract cleaning contracts from SMEs.
Although it now has 74,000 employees, McGregor-Smith insists the company has a small business attitude – and ambition. “The business is flat structured. We never ever think we’ve reached any dizzy heights. We feel very humble about what we’ve achieved,” she says. “We think we’ve only just started.”
In some sectors, it has. Energy and healthcare are new, and fast growing, areas for the business as it has adapted to the opportunities. It launched MiHomecare following the acquisition of Enara, the UK’s largest provider of home care services in the UK, in October 2012. Earlier that year, it bought energy and carbon management specialist Utilyx, complementing the purchase of the British arm of Veolia and EDF’s energy management business Dalkia it made in 2009.
“That was about building capability,” says McGregor-Smith. “What you’ll see us do more of as we grow is to focus much more on some of the smaller niche markets we’re in. M&A remains part of the strategy, but we’re really passionate about growing what we’ve got organically.”
For someone who is quick to highlight the sector’s achievements oversees – Britain is seen as the world leader in outsourcing – MITIE is yet to exploit many of the opportunities, choosing to expand with existing clients. Meanwhile, the Lloyds contract demonstrates the success it’s having in moving clients which take single or bundled services across to a broader, integrated model.
It’s not all easy. In a business designed to save its clients cost, maintaining margins is challenging – although McGregor-Smith says it’s as simple as “delivering great service” that clients are happy to pay for. MITIE, like others in the sector, has also been criticised for its use of zero-hours contracts. Its workers for First Great Western, for instance, went on strike over them for a third time in November.
On zero-hour contracts, she says: “We’re not doing anything that’s not the norm in certain industries. You have debate on both sides, and many of our people will say it suits them. Equally, it’s about what our clients want too – and our clients are very keen for those models as well.”
It’s difficult to square those problems with a business that has also featured in the Sunday Times Top 100 Best Companies to Work For list for three years running. McGregor-Smith also spends a lot of time talking about the talent throughout the company, pursuing recognition for them with both international and external awards. On several occasions she refers to the “unsung heroes that deliver great things across many contracts,” who deserve greater levels of public support. She adds that the apprentices that MITIE recruits (which now number in the hundreds) are “as important as graduates”, contributing “hugely to the growth of the group”.
She’s also quick to deflect any talk of her own success as a CEO. “It’s not just about me. There are many people across MITIE who share a real passion to grow our business. I’m just one more employee that happens to have a rather fantastic job title,” she says. “I never want to be seen as a conventional CEO, that’s for sure.”
And she finishes the interview as it started – chatting and laughing with the colleagues she hot-desks alongside, in their new offices on the outskirts of Reading. The environment gives a good insight into what sort of firm she wants MITIE – and the wider sector – to be: modern, fresh and open. For her it’s all about doing things differently, and better. She just needs to deploy some of her powerful persuasion tactics to win over the public sector sceptics.
On social media
Ruby McGregor-Smith is a big fan of Twitter – and questions why so many businesses are scared of it. “Why aren’t we all on social media? Why aren’t we all communicating more? The fear of the unknown stops us,” she says, and turns the question on its head: “I’m surprised more of us are not on social media when every teenager is. They’re my next generation of employees and if I don’t understand the way they communicate then that doesn’t make me a great people employer.”
The McGregor-Smith CV
- March 2007-present: CEO, MITIE.
- 2002-2007: Group finance director, then chief operating officer, MITIE.
- 2000-2001: Joins SGI | Babcock International.
- 1991-2000: A range of operational and financial roles at Serco.
- 1985-1991: Accountant, BDO Stoy Hayward.
- Other roles: Non-executive director at Michael Page International and on the board of the UK Government’s Department of Culture, Media and Sport. In 2013, she chaired the Women’s Business Council.