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Interview

HARVEY FRANCIS
EXECUTIVE VICE PRESIDENT, SKANSKA UK

Construction has many challenges to overcome. From a resourcing point of view, this all-too traditional, maledominated industry has a biting skills shortage, with a third of the workforce to retire in the next five-to-ten years. Brexit simply adds fuel to an already raging fire. Skanska is taking on the task in hand, demonstrating to the up and coming workforce that this is now a highly-technical industry, calling for the smartest digital natives.

Tell us about your early life and career and how HR became a focus?  

The first part of my career went nowhere near HR, and the route to an eventual career in HR was unplanned and unintentional. I was a regional manager within BT Retail, and we had a new general manager who wanted to make lots of changes, particularly within the training function. I was approached for the role and was asked if I wanted to manage the national training function. This was a very full-on role with wide-ranging responsibilities, and the onus was on moving away from taking people to the training, and instead, taking training to the people. BT Retail was part of BT’s consumer division, and it decided to go for Investors in People accreditation. Leading IIP for BT Retail became a big focus for me, and this was when I met the BT Divisional Change Manager who was leading the project. We got on well, and she explained that they were building up the HR function, and that with the planned changes and a more dynamic approach, she thought this was an environment in which I could potially thrive. There was also a new divisional HR director who had impressed me, very forward-thinking. We had a few conversations and I decided that joining the team was an interesting prospect and could become a sound career move. What was really appreciated was my commercial background and that I had a good grasp of what the planned culture change would mean for line managers and employees in general. There was a good deal of re-organising going on, so my first role was essentially in organisational development, leading a culture change programme on behalf of the divisional MD. That’s really where my career in HR took off.

How did your move to Pfizer come about?  

I was headhunted by Pfizer. They were looking for somebody to set up a new HR shared services function. I joined in 2001 with six years or so spent in different HR roles. In 2003 I was offered a nine month secondment with Pfizer corporate in the US, leading the implementation of an employee self-service platform for all non-US countries, working with IBM. This really gave me invaluable insight into HR technology, as a forward-leaning HR initiative. This was definitely a very useful calling card for when Skanska made some tentative enquiries about an opportunity that would turn out to be my first HR director role. With a focus on infrastructure operations, and looking at the HR structure with a view to propose a new delivery model, I joined at the end of 2007, almost exactly the same time that much of the world, including the UK, was plunged into recession. A year later in 2008, Skanska UK experienced some financial issues, and it was decided that the old UK board would be replaced with a new executive management team, resulting in a management reorganisation. I was asked to join this new leadership team, reporting to the CEO, and so began a long and complex journey of transformation. It was a very different world back then.

In terms of the economy, I've read that because of the long term nature of construction projects, the building sector is in lag to the rest of the world.  

When recession hits, a number of things happen; recruitment stops for some of the furthest away planned projects, most projects that are fairly well advanced continue, and projects that are just off the blocks might or might not get stopped. Around sixty percent of our business is publicly funded projects, and, up until this point, Skanska had been working on many, very large publicly funded jobs; municipal buildings and hospitals for example. So, although there is turmoil, things have to be adjusted. It’s true to say that construction tends to pull out of recession faster than most and certainly, in terms of our own business plans, a good deal changed – initially we planned for growth and then we planned for contraction and then again for growth – it really epitomised the need for agility which, on the scale of it, is quite a feat.

Skanska is historically a Swedish organisation, give us an idea of how the business is set up and operates internationally?  

We call ourselves “decentralised and integrated” which is an interesting conundrum and whilst we are Swedish parented, each individual country of operation is given a great deal of latitude in order to operate with autonomy in local markets. Indeed, in each country, construction and how Skanska operates varies significantly. In 2007, Skanska UK was very decentralised with a very small corporate centre, and many functions sitting within each of the operating units. We had more operating units than we have now and each had an MD. There was a lot of talk about “One Skanska”, but not so much evidence of it in practice, because so long as units delivered profit every year, the impetus to work more collaboratively wasn’t always there. A lot has changed since then, the recession, which although was a bleak time, was also the catalyst for much of the large scale change to operations and culture that has happened since. The whole essence of “One Skanska” is, if you have all of the organisational capabilities working together, how much stronger a proposition it is to the customer. And of course, much more efficient from a process and systems perspective. But that hadn’t been fully appreciated and some of the MDs were very much focused on their own individual concerns, as opposed to thinking about the business as a whole.

Despite some resistance, we set about making some wide scale changes to the structure and culture, in which HR had a central role. We created a senior management team with the emphasis on greater visibility and connectivity of our top 25 leaders. Our current CEO and President, Greg Craig, was an operations director in our London building business at the time, and he was promoted to MD of our civil engineering business. This sent a very clear message that you could move between civil and building divisions successfully. Slowly but surely, we changed the mindset so people could understand similarities rather than differences. The new senior management team met once a month and took ownership in the reshaping of the culture. An interesting exercise was to work with the new management team to define “what culture meant to them”, in terms of what we were trying to create. Although they sometimes talked about it in an abstract way, we took the output, ran it through focus groups and configured it to ask people if it resonated with them. The resultant feedback was really useful, resulting in the publication of ‘The Skanska Way’. It set out our cultural aspirations clearly, helping our existing people and prospective new joiners to understand how and why we can work better together to achieve a common goal. We also changed the bonus scheme for the most senior managers, so that success was measured against targets set for the overall UK business, rather than any one unit.

What were the first signs that you were making progress?  

Funnily enough one of the indicators was feedback from delegates on one of our leadership development programmes. In the wrap up session, one of the core benefits of the programme people spoke about was meeting people from other parts of the business, and realising that they weren’t so different. We have also seen a massive increase in the number of people wanting to move between units. We focus a lot on developing our own senior leaders in order to preserve the culture, and we have put in place programmes at every level of leadership transition to support people’s needs and aspirations. The other interesting thing is the change in momentum, whereby there was always a necessity to push, and now that has turned to pull, with people setting the pace. A good example of this is our mixed-gender mentoring scheme, which we piloted with just a handful of people back in 2009. The initial mentees got so much from the programme, they asked to help shape the next cohort. It’s continued to develop each year, to the point that this year each mentoring pair can represent any difference, be it gender, background, sexuality, nationality. It’s all about helping to understand and appreciate difference and encouraging new, fresh ways of thinking. Given that the industry struggles with gender diversity, it’s great that seventy percent of the women who have taken part so far have gone on to enjoy a promotion.  We benchmark our employee engagement with the industry, and set against the median turnover of about around 12 percent, we are at the lowest quartile. Skanska is now only one percent off world class across all sectors.  It’s always difficult to make the absolute correlation, but it’s difficult to argue that these results are not the fruits of the investment we have made for our people.

Sometimes you need a forest fire to make real change.  

Your analogy is appropriate because, before 2008, the business sensed it needed to change, but struggled to make things happen. When suddenly it had to change, the momentum became selfgenerating. A new CEO came in, and we went on a journey from being a UK company that happened to be parented in Sweden, to a Swedish company that is working in the UK. Collaboration was where the real change had to happen.

In terms of your HR function, what were the core issues during this time of great change?  

The challenges we faced in HR in our organisation are pretty much the same as in every large business I guess. I brought the function together, standardised job titles and structures right across the business, and set a clear mandate of what HR was about. We reconfigured the role of the unit HR managers, introducing the concept of business partnering, and there was some resistance from within the HR team as to the changing role for HR I had set out. I clearly remember someone saying “so who will sort out the bottles of wine for the PAs at Christmas”? I said I don’t know, but it won’t be anybody in this meeting, but we will figure it out”. We have truly repositioned what HR is here to do, but in terms of getting HR to be seen as an equal business partner at senior level, it hasn’t been cut and dry.

I guess it's a case of showing real improvement and progress that is directly linked to your strategy.  

For every business changing to improve, it’s an evolutionary journey, and when you now compare what we are today against the old Skanska, I cannot fathom how anybody would not “get it”. If you just isolate one aspect, it’s the improvements in collaboration and a more rounded understanding of how the business operates, which has stimulated more people to move across divisions, accessing untapped capability and skills, and that would never have happened before. We have more people going through corporate programmes, greater diversity, and the benefits of people meeting peers and having empathy and understanding with them is hugely impactful. One of the beneficial parts from the programmes is meeting people across the business and seeing that “they are just like me” or “I could really benefit from that difference”, as that helps create movement and gets rid of the silo mentality. There’s no doubt that the work that HR has put into opening up the business is creating a more diverse and empathetic organisation, and the improved culture is there for all to see. As I see it there are three key roles for HR, supporting and enabling, exercising appropriate governance, and thought leadership, and we are unquestionably turning an aspiration into something that is workable and realistic for all.

Skanska's considerable input in bringing together the infrastructure of the London Olympics must have been inspirational and rewarding.  

Yes London 2012 was a huge positive for us. It was set up very well and we enjoyed excellent relations with our customer. It was a great platform for us, no question about it. We delivered well on our commitments – a blueprint of what success looks like – in terms of Skanska as a contractor. Also, in terms of working with the local environment and neighbourhoods, this is now firmly enshrined as part of our new purpose which is to ‘build for a better society’. That is an important mantra, it’s how our business and our projects connect with that purpose and work to improve environments for people, just as the Olympics regenerated an area of London, which had really been left underdeveloped for too long. A big part of that is getting the neighbourhood on board, because of course, a lot of people don’t want work happening on their doorstep. We invite people in, go out and do work at schools and explain what we are doing. If people have concerns, we make ourselves available so that people feel connected and informed from start to finish.

Let’s move on to the current state of construction. An ageing workforce, a short pipeline and a struggle to draw young people into the sector. Is there still an image crisis?  

It’s probably one of the most interesting, complex and challenging times for our industry, and makes struggling against recession look like a walk in a park. We came out of the recession quickly, and our revenue increased over two or three years. A number of our competitors have declared losses, partly as a result of focusing on the top line rather than the bottom line, and took work at near zero margins. That sets a dangerous precedent across the industry. We decided at the outset we would not take work without a sustainable margin and that we top. The other serious issue to contemplate is skills. Thirty percent of the construction workforce will be retiring in the next five-to-ten years, and that is a focus for us, set against Brexit of course, which is causing great uncertainty about both the right to remain and future availability of EU labour. For many years the industry has been reliant on a workforce drawn from right across the EU, and the rest of the world. So, all things considered, we are at a major crossroads, and Government is left with significant challenges to contemplate.

There is an ambitious national infrastructure plan which needs to be delivered, against the backdrop of a possible hard Brexit, meaning we may not have access to the skilled labour we need. If this proves to be the case, then the industry will struggle to get the infrastructure plan delivered. Construction is so important to the economy, for every pound invested over two pounds is created from that. Where the industry is, it’s trying to get its head around a different commercial way of thinking and working, and what that means for margin. It’s in everyone’s best interest to ensure that the construction industry makes a sustainable margin, including our customers. This is the only way the industry will be around to build the next generation of iconic projects and keep the country moving.

I think I have three big challenges. One is continuing to evolve the culture and maintain strong momentum, and that is a culture that’s part of us as an organisation that is seen as being attractive, that people want to be part of. The second challenge is the impact of digitalisation, insomuch as, like every sector, the digital revolution is forging the future and we are working to conceive what that will mean to the business and the workforce in the future. Digital technologies such as robotics and Building Information Modelling are core technologies for construction. But it’s also planning to have the necessary skills for the future. We know broadly what’s coming but its translating that into what we will need that is under discussion. The third big challenge, as already touched upon is, if there is a hard Brexit, what does that mean for the industry and in particular our supply chain?

And in terms of young skilled people coming in, is that still a cause for concern? Can you see signs of improvement, in terms of engineering and construction as an attractive career prospect?  

We are seeing improvements. Construction is such a significant employer, with some 260,000 construction companies, ranging from small businesses to large organisations. Skanska attracts a lot of highly-educated and values driven people in construction, but we have to continue working on improving the image of construction, that it is a very valid and exciting career choice. The people who come into the workforce now are very different to the outgoing generations, and the interaction is interesting. We have been successful in hiring diverse people that are more reflective of all parts of society, who think differently, which is timely, as construction is evolving rapidly. We are not competing for people just in construction. We have to create the climate where people are included, and make sure we allow them to make changes and pass their experience on, and we have to facilitate that climate of collaboration. We have changed how we attract talented people to join our business. We call it “Naturally Skanska” which no longer just shows people in hard hats and high-viz. We have to sell people the bigger picture, it’s about showing people that construction is an aspirational career choice where you can leave a real legacy for future generations, back to our purpose again. We will continue to build on our values and culture, as we believe these are becoming a significant attraction. You cannot underestimate the importance that people place on values and ethics, and we are really encouraged by the impact that work is having on the next generation of Skanska employees, across the organisation.