Richard King has a fearsome reputation as one of the Big Four’s most straight-talking and effective managing partners. He spent 35 years at EY, became one of the UK’s youngest partners, and then worked his way up to managing partner of EY UK and Ireland. Here BDLN founder John Maffioli chats to Richard to discover the insights that helped to forge his career…
JM: Hi Richard. Thanks for agreeing to be interviewed by BDLN.co.uk – we’ve heard a lot about you! To get the ball rolling, please briefly outline your career at EY.
RK: I joined EY – or Arthur Young McClelland Moores & Co as it was back then – in 1976 as an articled clerk. I was made partner aged 29 in 1986 [EY’s youngest ever at the time] and in 1991 became managing partner of EY’s Luton office. In 2006 I became managing partner of EY UK and Ireland (excluding London) before retiring in 2010. Today I’m chairman of a number of companies including Grass Roots Group, Corac Group and The Willow Foundation, plus an investor and shareholder in several start-ups.
JM: I understand your career really kicked off when you joined EY’s Luton office. How did that come about?
No one outside the office thought we could do it. It was great fun proving them wrong.
RK: When I decided to go to the Luton office in 1989 most people said I was mad – it wasn’t a very profitable office, growth rates were low and the clients were mainly subsidiaries of plcs or overseas businesses.
But we set about trying to transform the office. We said: “Look, broadly we need to take this from a £10m office to a £25m office.”
We set up sales teams, got all the partners involved and motivated the enthusiastic younger managers. A lot of partners left the office, which certainly helped with the average profit-per-partner calculations. We grew the office very dramatically and by the end of a five-year period it was one of the most profitable offices per partner in the UK.
It was a small partner team and what we had was a real sense of direction. We got people engaged by recognising that running a financial services business is actually pretty simple – it’s about delivering great client service and really engaging the people in the business. We were one of the first offices to do that.
Later, Nick Land [ex EY chairman] invited me to an event called Leaders For Change to talk about the sales culture in Luton. I said we had a very focused approach to growing the business and engaged all of the senior team in proving to the rest of the firm that EY Luton could become one of the fastest-growing offices and best in the country. No one outside the office thought we could do it. It was great fun proving them wrong.
JM: So you basically created a very dynamic, highly focused, action-led culture?
RK: Yes, we were young, dynamic and pretty uncompromising.
JM: Uncompromising how?
RK: We had conversations with partners about what they were going to do and expected them to do it. We didn’t expect them to come back in a month to say they’d been too busy. We were focused – even if you met someone in the loo you’d ask them about cold calling, sales targets and revenue.
Running a partnership is not that difficult. People think it’s much more difficult than it is.
JM: I love the fact there was so much significant growth because of your target-driven, action-led approach. That’s very relevant in the post- recession economy we’re now in.
Let’s fast-forward to when you became managing partner for EY UK & Ireland. How did you win people round to your vision of replicating what you’d achieved in Luton and spreading it out across the whole company?
RK: You talk to people. Running a partnership is not that difficult. People think it’s much more difficult than it is.
JM: Really? Some people seem to struggle with it. Why do you say it’s not difficult?
RK: OK, it’s not easy but the principles are very simple. It’s no more difficult than running any other business. The only difference between a partnership and another company is that your shareholders work for you. If you had 100 shareholders and spent your entire life trying to work out exactly what each of those 100 people wanted, you’d never get anything done. Same with a partnership. You can listen to the views of those 100 partners but then you and the management team need to decide what to do and then you need to do it. And you need to keep the lines of communication open.
So the most important thing is having some clarity for you and your team in terms of what you’re doing. Remember the fact that your partners only really ever get one vote – and that’s the vote for you as managing partner. They have trusted you with running the business. And then you create a team, create the right strategy, you set objectives – mission, visions, values – all the kind of stuff you’d do in any business.
It’s not a committee; it’s a business. The only vote a partner really has is to vote for you as managing partner.
JM: I find a lot of senior partners struggle to formulate one clear vision because they’re always trying to take what everybody wants into account. How do you balance all those views?
RK: The same as you do with any business. You have the conversation, get people to pitch for what they want and then you prioritise. You say: “I like those three ideas, John, but I like that one more.” You’ve got to choose. And you’ve got to explain why you’ve made that decision.
It’s not a committee. I think a lot of people – particularly in some smaller partnerships – think it’s a committee. It’s not a committee; it’s a business. The only vote a partner really has is to vote for you as managing partner. If you do a good job and make loads of money they’ll vote for you again; if you do a bad job and make no money, they’ll fire you. That’s the end of it.
Martin Johnson, former England rugby captain, had a thing called the ‘eye test’… We created the equivalent at EY UKI.
JM: What happens if partners don’t agree with your vision and strategy?
RK: It depends. If you’re clear and your management team are clear with what you want to do, then you need to have those conversations with your partners individually. At EY I had a management team whose judgement I really trusted. I also had 150 partners; I knew them all. You’d say to them, basically, this is what we’re trying to do, this is how we’re trying to do it and this is what it means for you.
Martin Johnson, the former England rugby captain, had a thing called the ‘eye test’. He’d go round a dressing room before a game and look each of his players in the eye and he could tell who was up for it – forget all the psychometric profiling (although we did all of that too). He’d look them in the eye and say we’re playing the All Blacks today, are you up for it? And he knew the ones who were up for it and who weren’t up for it from their demeanor.
We created the equivalent of the eye test at EY UKI. We asked three questions – the first was about will, the second was about skill, and the third was about capacity. First we’d ask: “This is what we’re trying to do with this business. Do you want to do it? Do you want to be part of this journey?” And you’d know just from their response.
Then it was: “Can you do this? Do you have the ability?”
Finally it was: “Do you have the time to do it?” And a lot of partners would say they don’t have time, which is rubbish because as managing partner you have the ability to prioritise their time for them. So you can make time.
If you really don’t have the will then you’re a goner. You’ll go.
It all starts with will. If they have the will but aren’t quite sure they have the ability, you can coach and develop them. And you can make time for people by saying stop doing that and do more of this. The most fundamental question is the will. And a lot of people make excuses.
If you really don’t have the will then you’re a goner. You’ll go. If you don’t believe in the strategy and don’t want to deliver it, then you have a choice to be somewhere else. If you’ve got the will but not the skill or the capacity then we can help.
We went through all the partners and we knew – this lot are not up for it and need to do something else, this lot are up for it and can do it, and this lot are up for it but need help.
JM: That seems like a really good managing partners test.
RK: And the managing partners will all know the answer to those questions but sometimes they haven’t got the courage to do anything about it.
It really isn’t easy having conversations with people you have known for many years who have lost their edge or sense of direction – but it’s vital to the business. Rest assured the staff are well aware of these issues and if you as managing partner won’t sort them out then no one else will.
If you can’t sort out the basics – why should they trust you with the strategy?
So you do all that and have those conversations. Then you’ve got to do the toughest thing in any partnership: allocate the earnings…
There’s a lot of self-interest from partners who earn a lot of money, end of story.
JM: OK, this takes us on to partner remuneration. This is something I think a lot of senior partners bury their heads in the sand over and take a very, very safe route. Do you agree Richard? What are your thoughts on the best way for a partnership to be remunerated?
RK: Well, there’s a lot of self-interest from partners who earn a lot of money, end of story. I mean, if they’re sitting there earning a million quid and someone all of a sudden says, “We’re going to do something different now”, they don’t really want to be saying, “Well, actually, I’m not sure I fit in here anymore”. And of course they don’t want a big earnings reduction either.
So the key question is: how do you get a distribution model that allows you to properly reward the right people, not just the people who have been there a long time, but those who are doing the right things?
You have to allocate money on where you think partners add real value by doing things like winning and executing work, having great client satisfaction levels, and keeping your people engaged. These are key.
If you’re not careful you get into the situation where just because you’re there another year, you get more money. And that’s not fair.
JM: That culture exists in some places.
RK: Fat cats don’t hunt. So you have to be very clear on what the strategy is; you need to be very clear on measurements.
The other point – and it varies from partnership to partnership – is whether you have an open system where all partners know what everyone else earns, or whether you have a closed system, where partners don’t know what anyone else earns.
My preference is for an open system.
If it’s a closed salary system then the suspicion is always there that something underhand is going on.
JM: Why is that?
RK: Because it forces you to have a conversation: I’m earning £200,000, he’s earning £500,000. Why? And the leadership team should be able to say it’s because that person is delivering two-and-a-half times the value that you are, and this is how I measure value. Achieve that and you can have £500k too.
If it’s a closed system then the suspicion is always there that something underhand is going on – that the managing partner is looking after their mates or something.
JM: And yet lots of firms are happy to have a closed system. Why?
RK: Because they don’t like the conversations. They don’t want the debates. These are not easy conversations. It’s not easy to say, “This is how much I value you”. That’s difficult. And getting enough evidence to back up your decision is hard too.
But you have to ask yourself: do you want an open, direct, robust conversation with your partners, or do you want to do it behind closed doors? My preference is for the robust conversation – much like the will, skill and capacity conversation.
Although I prefer an open system, it’s also much more complicated to run because you spend a lot of time justifying the differences.
People in partnerships can be pretty good at talking about others behind their backs.
JM: What have you learnt about juggling the demands of a high-pressure position with a family life?
RK: You never really learn to crack it. Periodically you need to have the conversation with yourself and with those close to you and try to agree some ground rules.
JM: And then you just stick to them?
RK: You try to stick to them. My secretary would know what my ground rules were. She knew I didn’t want to be many places before 8.30am on a Monday morning. I didn’t want to be out on a Friday night. She could book me for dinners or events anywhere in the country on a Monday, Tuesday, Wednesday or Thursday night, but that was it. My Sunday, Saturday, my Friday nights were to be left free. I wanted to go to the school plays, to open days, to sports days – frankly they took priority over anything client and business related. You have to get people around you who understand your priorities.
If one of these personal situations ever clashed with a client meeting I really can’t remember a time when the client objected to changing the meeting once you explained the reason to them.
I respond to all emails in the same day, even if it’s to say I can’t respond properly yet.
JM: At one of our recent BDLN seminars, First Direct and Egg founder Mike Harris said he was always very clear on what he wanted his organisations to be famous for. Can you remember what you wanted EY UKI to be famous for?
RK: We talked about values. Nick Land focused heavily on values. Because ultimately it’s not what you do, it’s how to do it. Everyone does audit, tax, consulting, corporate finance, etc., so you can’t differentiate yourself by what you do, unless you focus very hard on a particular niche. So at EY the differentiator was that we wanted our client-advisor relationship to be different to any other client-advisor relationship – ours was a relationship based on doing the right thing. So we had to define what doing the right thing was.
At EY UKI our major mission statement was to grow more quickly than the competition. That was the deal.
JM: If you visit most firms’ websites you see hundreds of values listed. But it’s clear when you walk into many of these firms’ offices that some are not living their values. So I take it that at EY the values were at the forefront of the mission.
RK: As soon as I became managing partner we took all the partners away and got them talking: if we could fix three behaviours in the partnership, what would they be?
The one that sticks in my mind – because people in partnerships can be pretty good at talking about others behind their backs – was one we called ‘so what did they say when you told them that?’
The concept was that if someone bad-mouthed someone, you’d immediately ask them how that person responded to the criticism when it was put to them face to face. And when the inevitable reply came back – “Well, er, I haven’t actually spoken to them about it yet” – you’d say we would discuss it again when they’d actually had the face-to-face conversation.
JM: Was replying to emails efficiently another behaviour that came up? Because I notice you are very quick to get back to people!
RK: That’s a personal thing – I respond to all emails in the same day, even if it’s to say I can’t respond properly yet.
It’s these behaviours that drive a business. It’s getting a receptionist to realise he or she is the first line of client service, not just a receptionist.
JM: What was your biggest failure?
RK: Appointing someone pretty senior to the wrong job and then not dealing with the mistake quickly enough.
Getting the right people in the right roles is the most important thing you can do, so getting it wrong is the biggest mistake you make.
JM: What will be the biggest challenge to the professional services industry over the next two years?
RK: I’ve been out of professional services for four years now and it’s been really great not filling in time sheets! But I think the biggest challenge for any business is the war for talent – getting the right people into the business. It’s the biggest challenge and the biggest joy when you succeed.
There’s lots of opportunity out there but you’ve got to get the right people.
Your job as managing partner is to attract the most talented people you can into the business. It’d be interesting to ask managing partners today how they spend their time – on clients, on talent management (retention and recruitment), or on operational matters?
I’d say you should spend 40% of your time on clients, 40% on talent management and 20% on operations.
As managing partner your real value is not operational management; the most important thing you can do is win new talent. A lot of managing partners get bogged down in managing operations.
They are called managing partners but maybe they should really be called leading partners…
JM: That’s a really interesting line on which to close the interview. Richard, thanks very much.