Executive interview: Ken Smith, Bureau Veritas

Erin Gill talks to Ken Smith about managing change and building a strong environmental consultancy within a long-established brand

Ken Smith is director, Bureau Veritas UK & Ireland health, safety and environment

Like many leaders in the UK environmental consultancy sector, Ken Smith has a few academic qualifications under his belt. In fact, over the years he has completed no less than three MScs. One of these is a slightly unusual choice for the sector and offers a clue as to what makes Ken Smith tick: it's an MSc in organisational change from the University of Buckingham, which Smith describes as similar to an MBA.

Speaking with Ken Smith, it quickly becomes clear that deploying his skills in this area has been a key focus of his work with Bureau Veritas’ UK environmental consultancy business. “I've been with Bureau Veritas for five years and a lot of what I've been doing has been supporting the management of business change. We're still getting ourselves right structurally. We've taken a huge step forward this year. Change takes time, and some of the big contracts we’ve won recently are the reward,” says Smith.

An interest in how businesses succeed through the implementation of well-managed change is, no doubt, a useful one for any senior manager, but perhaps particularly so for someone in Smith's position. Through its acquisition of Casella in 2005, Bureau Veritas secured an instant and substantial presence within the UK environmental consultancy sector, but it also took on the job of realising Casella’s potential and integrating it into the Bureau Veritas group. Smith sees his and his team’s overarching challenge as one of building a new environmental consultancy brand, but within the context of a long-established, indeed venerable, company.

Historically, Bureau Veritas has not been well known in the UK, but it is practically a household name in its home country France and also has a similarly high profile in some of the other 140-odd countries in which it operates globally. Founded in 1828 in Antwerp, its headquarters soon moved to Paris. Over time, it built a reputation in quality control, winning contracts to test materials used in the manufacture of diesel engines, the right to inspect new buildings for structural integrity, and the job of issuing airworthiness certificates for civil aircraft.

This is a company with pedigree and one that has, in recent years, expanded quickly. Its latest financial results paint a picture of revenue and profit on the increase. Total group revenues rose by 24% (29% on a same currency basis) to €1.2 billion (£936 million) during the first half of 2008, while operating profit grew by 28% to €180 million (£141 million).

However, the financial performance of its health, safety and environment (HSE) businesses in France, Spain and the UK is a weak point. Bureau Veritas reports that the HSE division achieved turnover of €117.8 million (£92.1 million) for the first six months of 2008, growing by 20.2% (or 27.2% on a same currency basis). But much of this growth must be attributed to acquisitions, which included the Spanish inspection, control, testing and certification company ECA Group in 2007 – with organic growth accounting for just 1.1% of the increase in turnover. The adjusted operating margin of the HSE business declined from 6.3% for the first half of 2007 to 5.0% in 2008.

Smith acknowledges that Bureau Veritas' Paris-based senior management team is eager to see the profitability of the UK environmental consultancy business – which is understood to achieve annual revenues in the region of £25 million – improve. But he says "it's important to remember that Bureau Veritas' environmental consultancy, on a global scale, is very new. In fact, the UK environmental consultancy is seen as a bit of a model for the group's environmental consultancy businesses in other regions.” Smith says that having laid sound foundations, the end of 2008 will be as strong or stronger than the first half of the year - and that "2009 will be a very strong year".

Business model

Bureau Veritas' group focus on inspection, certification and verification lends its environmental consultancy business a perspective that is subtly different from many of its competitors - environmental consultancies that are part of organisations with an emphasis on, say, engineering or planning. "At a group and global level, our competitors are other standards organisations, such as BSI, SGS and Intertek," explains Smith. "A few years ago, Bureau Veritas decided to build up its competency in environmental consultancy, whereas some other certification bodies have reduced their emphasis on this area.”

Smith believes that Bureau Veritas' focus on quality control means its consultants are well placed to offer genuinely independent advice to clients. They are environmental consultants pure and simple, he argues, as opposed to consultants who can only see things through the prism of planning or who view problems in engineering terms. "We make it clear when we speak to potential clients that we view our work as about driving improvements within their business, improvements in performance and standards."

Another strength of Bureau Veritas' environmental consultancy, according to Smith, is its capacity to provide a comprehensive hierarchy of services: "We can deliver the pyramid of top to bottom services, from strategy development to technical delivery. Not many consultancies can do that – they're either strong on technical auditing, or on performance delivery, or they're more niche and focus on strategy and blue sky thinking. We marry all of that up for clients," says Smith. With economic conditions worsening, this top-to-bottom approach is an advantage, believes Smith, who observes that some organisations are reviewing their use of consultants and contractors with a view to "slim-lining their procurement. They are simplifying their supply chains and trying to bundle together the services they buy, so that their procurement is lighter and leaner.”

Hot spots

Despite doom-filled economic forecasts, Smith sees areas of growth amidst the gloom, not least in the field of energy auditing and management. Like many environmental consultancies, Bureau Veritas is keen to take full advantage of the new EU requirement for commercial buildings to be issued with energy performance certificates (EPCs). This legislative driver, coupled with high energy prices, is prompting clients to ask for more than the bare minimum of simply ensuring compliance with the EU energy performance of buildings directive.

"The demand for HSE and sustainability services within the European property market has been very resilient. Landlords and their agents seem to have understood that the sustainability agenda really can differentiate them from others and will cut costs," says Smith. "Maybe it will give a little something back to tenants, in terms of reduced service charges, and that will help them in the marketplace. For a lot of the higher end property owners and managing agents, we find that they are pushing harder for sustainability services than they ever have done."

With its focus on standards at the group level, it isn't surprising to learn that Bureau Veritas' environmental consultancy business has considerable experience in the development of tools to help clients measure and improve their performance. "We're developing a lot of services for the energy performance market," explains Smith. "We've developed a product called the Green Rating, which is for existing buildings and buildings in use and is a lighter version of, say, a BREEAM rating. We also have a benchmarking tool for portfolio owners, so that they can look at their whole portfolio and compare the performance of different properties." In its work for oil and gas clients, Bureau Veritas has created training programmes designed to improve HSE standards by facilitating behavioural change amongst staff.

Interestingly, the financial services sector is providing Bureau Veritas with an increasing amount of work. "In markets that are actively trying to reduce costs, like the banking sector, we're finding that many organisations are interested in outsourcing. We have provided staff as long-term secondments for quite a few financial service companies. This way, the client has a link to a large consultancy with expertise in best practice for this field. It's a good solution for them," explains Smith. Once again, Smith comes back to the question of real, pragmatic solutions and the task of offering clients something that will make a difference.

Client and consultant

Perhaps Smith's interest in what it takes to create a successful business - and how environmental consultants can assist their clients in maximising success - is thanks in part, to his early career in industry. His career began at Unilever, with a placement focusing on eco-toxicology, after which he worked for Anglian Water as environmental manager and then sustainable development manager. When Anglian Water purchased Morrison Construction, Smith became environment and sustainability manager for a large infrastructure portfolio. "Eventually, having laid the foundation for sustainable development performance there, I thought it was time for a change and joined Casella as a business director. Through the acquisition process I came to Bureau Veritas."

Smith's grounding in business makes him inclined to hire people with some experience outside consultancy: "It's essential for consultants to understand business and the pressures their clients face. It's important that consultants know why clients respond in the ways they do - why they can't always be as fast in responding as we'd like or why they face difficulties implementing, for example, a management system we've recommended.” As he focuses on building Bureau Veritas' environmental consultancy and introducing the changes it needs in order to grow, Ken Smith is also keenly aware of what clients need, not least because he once was one.

• Bureau Veritas financial statements
• Bureau Veritas website