Issue 16 Cover story: PricewaterhouseCoopers' Hugh Crossey looking forward

hugh crossey

Hugh Crossey leads Northern Ireland’s largest professional services firm, having taken over the reins at PricewaterhouseCoopers last July. Owen McQuade met with him to discuss his priorities in leading the firm and also how PwC is exporting its know-how from the province.

What has been your priority since taking over the firm?

PricewaterhouseCoopers has enjoyed a remarkably successful decade and the challenge is how we continue that in the future. While we have continued to grow in the Northern Ireland indigenous market, in both the public and private sectors, one of the things that differentiates us has been our focus on the export market. Recently, we have become particularly focused on exporting our expertise and today 25 per cent of our revenue comes from outside Northern Ireland.

We are actually heavily engaged with the public sector outside Northern Ireland, working for central government departments and advising at policy level in Great Britain. We are also doing transformational work for local government, in helping them deliver better services to the citizen and to deliver them more cost-effectively. One of the key things in this type of work is a complete transformation of the traditional public sector business model, making it very customer-centric – and these developments are self-financing, and that makes it a compelling proposition for government. We have also been doing quite a bit of work in the US with our International Survey Unit. The PwC Chief Executives’ Survey, undertaken from Belfast and presented at Davos, gathers the views of some of the top chief executives in the world. So we are not only influencing what is happening in the UK but also on a much bigger stage, and that is a fundamental plank of our business strategy going forward.

The 25 per cent export figure is quite an impressive figure.

Yes, when you look at some of the clients our influence outside the UK is quite remarkable. We even have the City of New York as a client and we are doing that work from this office in Belfast.

You have a keen interest in the Northern Ireland economy. What should the economic priorities be for the Executive?

At PwC we are very supportive of the Programme for Government. Putting the economy at the top of the agenda has been long overdue. However, we should not underestimate the scale of the challenge. It is not about delivering economic strategies on paper, but delivering tangible economic regeneration on the ground. We need to be careful about not thinking there is a quick fix for it. From our perspective it could take 10, maybe even 15 years, to really change from a public sector dependent economy to one that is led by a vibrant private sector.

How do we actually do that? Firstly, we have the situation that although Northern Ireland has 57,000 VAT-registered companies, only 2,300 of those are Invest NI clients. Today those companies actually account for 90 per cent of local exports and 98 per cent of R&D expenditure.

There are a number of challenges with this. Invest NI probably needs more freedom to become more entrepreneurial and more innovative. It also needs to break some of the immediate ties it has with government where DETI and to a certain extent the Civil Service, sets economic policy, which Invest NI has to implement.

Within the context of helping stimulate the private sector economy, we need to look at how we ‘incentivise’ companies – for example, with tax breaks for expenditure in R&D, in training and export marketing. I know that the Varney Review takes a different perspective on that, but our view is that tax incentives – as distinct from simply cutting corporation tax – could be used to stimulate these areas. If you look at regions where that approach has worked well, it is incentives to encourage R&D, innovation, training and export development which make a difference.

Attracting foreign direct investment is crucial. When we talk to companies thinking about investing in Northern Ireland, the first question they ask is: “These are the skills we need, do you have them?” If we can’t deliver the right skills in the right numbers, we’re in trouble. An added bonus would be tax incentives, but tax incentives alone won’t get us the foreign direct investment we need. Invest NI must be allowed to take a more portfolio view of risk.

If you take a private sector organisation like ourselves, we might take 10 initiatives and would probably do exceptionally well, if six or seven of them paid off, but we wouldn’t get crucified for the three or four that did not. We need to consider how a more portfolio approach to risk could stimulate Invest NI to deliver more economic development. Economic policy created under the shadow of Audit Office scrutiny and the fear of a grilling by the Public Accounts Committee will be riskaverse and won’t embrace imaginative strategies that can deliver the vibrant private sector economy Northern Ireland so badly needs.

How do you see the all-island economy evolving?

The all-island economy is here today and represents a significant opportunity for Northern Ireland business, including ourselves. If you look at the three strands of the Belfast Agreement: strand one is essentially internal. I suppose there’s been some suspicion in terms of the strand two, North/South perspective and we have done virtually nothing on strand three’s East/West perspective. So I think there are tremendous opportunities for better business co-operation between North and South, and between Ireland and other UK regions like Scotland and Wales. Within our own organisation, we are talking about how we approach the whole of Ireland holistically. We see a lot of opportunities around the ironically-named BMW – Border, Midland and Western region – and are looking closely at the areas of legislation that are actually barriers to trade and collaboration. When we talk to organisations from North and South, too often they see themselves as competitors but in fact creating all-island supply chains offer potentially enormous opportunities for closer – and more profitable – collaboration.

Have you had much engagement with the devolved administration? How has it made a difference?

I think the devolved administration is potentially the best long-term solution for Northern Ireland. Direct rule ministers tended to articulate one-size-fits- hugh crossey all London-centric; Treasury-led policies which did not deliver regional solutions to Northern Ireland’s regional problems. So from that point of view I think devolution is good for Northern Ireland, although it is still work in progress and early days in terms of the administration. I know there has been considerable criticism of the Programme for Government, but PwC is supportive of policies – no matter how challenging – that put economic development and social inclusion at the top of the political agenda.

I think every citizen could subscribe to the principles outlined in the Programme for Government. The challenge will be delivering on those aspirations; it is too soon to say how well the Assembly will do in terms of delivering radical change in the economy, and frankly the jury is still out, but certainly the intentions are very well-founded.

Moving on to the public sector, which I guess makes up the bulk of the work ...

I would like to put that straight. For the record, the public sector does not make up the bulk of our work. Our revenues are much more private sector-driven than public sector-focused, with a substantial share of income now earned outside Northern Ireland – and indeed the UK. I think this notion of PwC as simply public sector consultants is a completely flawed perception. For example, we are, by far, the largest provider of professional services to family and owner-managed businesses in Northern Ireland.

What is the biggest challenge facing the public sector in Northern Ireland?

I consider the big challenge as delivering the modernisation and reform agenda. People talk about how we modernise government, but for us – if you look at some of the financial constraints being put on the public sector – incremental change is not really an option.

It is a much-abused word but we are in the world of transformation – transforming the public sector into a flexible, citizen-centric service that constantly evolves to the changing needs of society and the increased ability of technology to deliver better services at less cost to the taxpayer.

That doesn’t mean privatisation, although I do think there are, potentially, some things done within the public sector in Northern Ireland that would be better done by the private sector.

One of the challenges, simply put, is addressing the number of departments and the number of agencies. The recent announcement of the reduction of the number of councils is a useful start, but we also need to shrink the number of government departments. Smaller, more cohesive government can deliver improved services to citizens at reduced cost – the major challenge is simplifying the business models currently operating in the public sector. The potential barriers are significant but I am extremely optimistic about Northern Ireland’s ability to overcome these.

Tell me more about the public sector work your team is doing outside Northern Ireland? Have you come across any particularly good examples of best practice?

In Great Britain, we are heavily involved in the health sector, applying what we call ‘business recovery skills’, as well as advisory skills, to health trusts that really were in financial distress. One of the things we learned was what we call ‘health turnaround’ – turning around the finances in the health sector. If you look at some of the challenges the Health Service in Northern Ireland has going forward – notwithstanding the reorganisation going on – the lessons learned in Great Britain are equally applicable to the Northern Ireland scenario.

As I said earlier, we have been at the forefront of a number of policy initiatives in the rest of the UK. For example, we have done quite a bit of work in terms of delivering better educational outcomes, evaluating education structures and the importance of leadership in delivery. When Alistair Darling said in his Budget Statement that “every school should be an improving school by 2011,” that referred to some work which we did at ministerial level on school leadership. One of the things we are keen to do is take the lessons from Great Britain and further afield and bring them back to our public sector clients in Northern Ireland.

Coming back to the economy, creating a vibrant private sector, which is at the heart of the Programme for Government, can’t just be seen as the public sector’s responsibility or even the private sector’s responsibility; it can only be done as a partnership arrangement. So the challenge is how do we get better communication between public and private sectors? I think we should break down some of what I call the ‘historical and unfounded’ perceptions, where one has just a profit-making, non-caring approach to life and the other comprises cocooned civil servants looking for an easy life. I strongly believe that there are many very talented people within the Northern Ireland public sector who would perform equally well in the private sector.

Another challenge is: how do we harness the skills and capabilities that both sectors provide? It is not an easy challenge but there is now an opportunity and it would be a shame for future generations if we miss it – this is certainly a great opportunity to move Northern Ireland forward in a very positive way.

Whether you are in the public or private sector in Northern Ireland, you are facing significant change. Not just change in terms of business processes, but also in terms of culture and ethos. As always there will be resistance to change – I am experiencing this today in trying to change PwC. The challenge is not to be deflected but to deliver the necessary change in a constructive way.

What is the secret of changing the culture of an organisation?

It starts with a vision and strong leaders with the skills and strength to make their vision a shared vision throughout the organisation. There is now a real onus on Ministers in the Executive to display such leadership, and if that means taking tough decisions, so be it.

Well, talking of tough decisions, let’s move onto education. I know you have worked a lot with the education sector. What are the challenges for the sector?

There are certainly challenges in terms of the Northern Ireland education system, where at one end we produce the best GCSE and A-Level results in the UK, but at the other end we have more people leaving school with no qualifications than any other part of the UK. So it is a bit of dichotomy in terms of outcomes. The establishment of the Education and Skills Authority should help in terms of the ability to take a more holistic view of how we deliver education in Northern Ireland.

As regards educational outcomes, there has been a lot of research. Stating the very obvious, by far the most influential person is the teacher in the classroom, followed closely by the head-teacher. Other factors such as ICT and buildings have a lower impact, but an impact nonetheless. One of the key challenges therefore, is the professional development of teachers and heads to make them at their most effective in the classroom.

One of the things in which we have been closely involved is the pilot of ‘Teachers in Industry’ – where school principals come to work with us for three to six months and get a perspective of what it is like to work for a large private sector organisation.

This has helped with their management and financial skills, even marketing skills. The feedback is very positive in that they have learned quite a lot and have gone back and applied these new skills in their own working environment.

We have also adopted two primary schools in the area close to us and we have spent a lot of time working with the principals and the senior management teams in terms of personal development. All the feedback has been hugely positive. Hopefully these initiatives are helping to make a difference.

One final question. How do you lead a large professional services organisation in this day and age?

It is certainly not without its challenges. We are a complex business and a complex organisation with around 1,000 talented individuals, with a wide range of disciplines and skills, on the payroll in Northern Ireland. Therefore I think that leadership is not necessarily invested in one person in an organisation like ours. We have very intelligent, ambitious people in our firm so the challenge for me is how do I inspire them to support my vision?

Fundamental to our continued success is ensuring our people have the opportunity to continually develop through interesting and challenging work that stretches them. So those are some of the challenges for the leader – as well as always looking forward with confidence.