[speaker001:] To another vital topic session. As you know I've er been holding a number of er small meetings with staff er and one of the questions I've been asking is whether or not there has been a need for the building presentation that we've done for a couple of years er and generally there was the view expressed that yes it was desirable but perhaps in a different format. Er and maybe later in the year when we've got all the details of the firm's financial results for the full year ie after the end of April. So wh what's requested was a a sort of interim report er and so here goes. On major business issues affecting the office, in the July or thereabouts er the Partners prepared their business plan and this is the business plan for the. It's a rolling dynamic plan it's not just an annual plan and it's updated hopefully on a fairly regular basis. We also have a a budgeting process er for the er for the firm's year and we're right in the throes of that right now for next year for ninety four, ninety five... but it won't be any surprise to you that the recession er hit the office like any other business or the businesses that you go and see, er quite significantly, er the businesses that we've been looking after, they've stopped investing, they've stopped looking at I T issues and have become very cautious and they've basically taken stock as to where their position is. So it wasn't surprising against that backdrop that we had a fair special work er that corporate activity was pretty flat, er that the price situation was highly competitive, er and of the main part of our practice that was really succeeding was insolvency and corporate care side of our practice. But now, I think, there are signs that er things are beginning to pick up, certainly we're being told things are beginning to pick up and I think probably as an office generally, we're experiencing that upturn, although er every time we get some special job in, suddenly we think we are at the end of a recession and perhaps, you know, it's the next job that really we ought to be looking to. So we were faced with this very competitive market situation and as I say prices and we are really being squeezed on the price front and it was very difficult to get any form of increase in the er in the fees that we were being charged, that we were charging. So the net earnings of the of the office, coming back to nineteen ninety, ninety one, er were fifteen million, they've dropped to fourteen point four million in ninety one, ninety two and hopefully this year, they've steadied at that and maybe will increase a small amount to fourteen point six million. Now against this backdrop we, as a national firm, er have set out our stall to be the leading business that's our our mission stake. So how we're going to actually interpret that and er act on that here in Manchester and we set out our against er er to achieve that on the simple basis of quality and you've heard enough about quality over the last two years to not be too surprised that that's what we've said was going to give us the cutting edge and perhaps put us in the leading position here in Manchester. So we said wanted to be absolutely certain of the quality of the service that we delivered was absolutely second to none. The quality of our clients perhaps could be improved, we don't have very many large plc clients here in Manchester, the competition, er P W's and K P N G have a better or bigger let me say that, bigger er P L C client base than than we do. The quality of our people have to be second to none and so our only asset would again be sensible to ensure that the best people, that we recruited the best people and we retained the best people [cough] and we wanted to be profitable, wanted to be lean and mean, hungry and er any profitable organisation is going to be a better organisation as a result of improved profitability and we then finally wanted to improve the quality of our image out there in the market place, we were seen and at least that was I think the Department, certainly my perception we were seen er as being a sort of gentle giant out there. There was nothing really special about that distinguishes us, distinguished us from the pack. So those are our er quality initiatives that we want to er to take and so we set ourselves really basically three broad objectives. Further changes were required to the to the office and to the practice generally er we wanted to maximise on the er er o on the benefits that were going to be derived and the qualities and the skills that we have already got in place er and we wanted to move towards market leadership. But in those general objectives, we then set ourselves the top ten, top ten objectives and how we are going to actually action those objectives er to er move forward and if they were achieved, we thought if we achieved those ten objectives and that's going to take time and as I say it's a dynamic plan, it's going to take two, three years to achieve and if we achieve those objectives then we will have achieved our own rule er our overall mission. So I wanted to raise the profile er of the Manchester office er and er in the north western community. The situation as we saw it was that there were no obvious leading firms er there were firms that had a particularly they were leaders in a particular niche markets for example "s being very aggressive, they were certainly nationally leading on insolvency and they were getting a lot of a lot of beneficial er publicity from that, locally we saw them er as erm th they were very good in the tax field and certainly in the consultancy field, having one of their major consultancy based in by the airport. we saw as probably being fairly strong in the corporate finance field. we saw as being very strong again in tax er and certainly in the er, in the major fields, these fields. So how we, so there was no obvious leader and how are we gonna pull ourselves ah ahead, well we have to improve our media coverage and we've done quite a lot on that, John's been very successful in getting quite a lot of media coverage both for individuals within the firm and for the the firm as a whole. Er we're going to continue our focus sponsorship on and corporate hospitality er we're going to set up er a chairman and chief executives' club which we er, we have now done being and that it's the chief executives' club, it's their club, we facilitated, have er four or so er lunches er a year and a launch lunch for example we have as a keynote speaker. Er and that's been quite successful, about twenty five or thirty chief executives, chairman come to that lunch er each each quarter or so er we hosted about six of us and it's a tremendous opportunity to get to know and be known er in the business community. Continuing with our high profile er lunches, there was another objective, objective, overall objective of raising the profile of the office and finally, within that heading our action point was that er we would look at partner representation on various various bodies, not only partner representation, senior staff representation on various bodies. It's important again that we were seen around in the business community. Seen around er in the city. Er for example Claire 's on the er board as you know non Executive Director on er I've just er become honorary treasurer of the I'm, not quite sure whether that's a plus or a minus at this point in time er and also volunteered to be Chairman of an Airport Supporters" Group so please don't tell anybody where I live
[speaker002:] [LAUGHTER].
[speaker001:] on that. come and sit down the front here to.
[speaker002:] [cough].
[speaker001:] O K so that was the first objective, next objective
[speaker002:] [cough].
[speaker001:] win more quality plc clients. That [cough] it's quite a long time to achieve. We audit ten of the forty main requirements in Manchester but as I said earlier taking P G's and P W's as being er predominant in the larger plc markets. So we have to er set out our stall there to form, first of all identify those target P L C's which we really did want to get close to. Probably we felt they were the sort of client that we wanted or that there was already er a connection that we had er or there was a particular service that we thought we could offer and penetrate them in that way. Didn't have a great long list, perhaps only about six or ten major P L C's. Formed in teams, this task it was then to er across the practice areas whose task it was to get into those clients, get to know them, get to know their industry, get to know the people and find ways in which we could actually penetrate them and er open doors and that was going to take a long time and it is taking a long time. Er the second initiative was to form industry groups, er textiles, retail, er automotive erm chemicals and plastics, none of those industry groups will be surprising to you since those are all the predominant industry groups in the region but again forming groups, three, four, five people again across practice areas to get to know about that particular industry group so that they can focus on er er companies that are operating in that group er put on seminars er and have small workshops, they would attract those sort of people, those sort of businesses in and in that way penetrate the er companies. That's starting to take er effect and is actually beginning to er, to pay off. It will only be small at the outset for example one might get the opportunity to go in and on or might get the opportunity to go and advise on P R P or something and it's not suddenly going to result in an invitation er to.... Er on the public sector side this was quite specific, the child's and the public sector er group er were also going to develop an internal audit product for the public sector but they a huge market in fact and we saw er great opportunities for us to develop that side of the er the business and coming very much under the wing quality public er public company clients, very large clients, great potention for us.... Next objective,... all well and good focusing on the and the and the people like that but let's er also er make sure that we don't forget er not focus on the middle market. The the details of companies in the north west, there are a huge number of medium sized P L C's, once you've chopped off the the top ten, and it's headed by believe it or not and it's registered office happens to be up there at. Once you've chopped off the top ten, there are mass mi middle, medium sized P L C's, the nine million to fifty million turnover er company and they're looked after by some by major firms, some more often than not by the second tier firms, so we can see very much and we can penetrate those er that middle market situation, then [clears throat] these are the companies in the future that will er will probably be the big P L C's and also these it will be easier to get into these organisations er with the services that we have to look through to offer. To that end, again we will probably be stronger in that area but t to that end we formed a group of partners who were going to specifically target er that that market place er we drew from the triple A practice and tax practice and M C S. Looking at the products and the reviews to get into that first those those clients. Er we set up on a regional basis er er Robert talked to you a couple of months ago about the initiatives that he's taking from our and that again is a very much of a cross practice initiative er which is drawing on all the skills that we've got within the with within the office penetrate the middle market sector and we are going to er specifically use er our grounds expertise and er computer audit expertise as a product which we saw would be attractive to these er these sort of companies. One of erm questions which I was asked to address on this occasion was er in connection with the obtaining of new work was why erm don't we er give financial incentives to er if they are successful in bringing in new work. Erm I don't have any problem with er with giving people financial incentive, I do have a problem with the concept of er giving people a finesty or a commission or something like that if we're successful in obtaining in obtaining new work, that is not an fashion view, that is not how a professional office of a professional organisation works. If anybody is successful in bringing in new work into the office, clearly that reflects in their achievements and their objectives, merely that reflects in their assessment so far as er their managers and are concerned and clearly that will will be reflected in their pay, so that will be the way that er we would normally tackle and that would be the way I I was prepared to tackle it.... Coming now from, down to more specific ways of winning new work, due diligence was an initiative which we wanted to er tackle but not only in this office across the country and across the northern region.... We have a tremendous skill base at doing good due diligence work when all said and done due diligence work is really just a focussed audit approach and if we've good auditors, we should jolly well and good er new diligence er provides and we to react to new diligence opportunities rather than seek out new diligence opportunities. Partners and staff are well known in the City,w providers of due diligence work with the major capitalists, with the bankers er with with the merchant bankers and so on and of course our plans for providing us with due diligence work. was going out of this area to the providers of er of capital, for opportunities within this area we can go to London for example be many bankers there who will be being approached by companies within the northern region, north west region asking them for money to support them in their [clears throat] in their ventures. Er so that was a market place that we really weren't tapping from this region, they have been tapping into London. There was great scope we saw for matching marketing, the due diligence product outside er Manchester area er that has been particularly successful we are going to have, well all of you are probably aware of of a significant increase in the in the of due dili due diligence work er very encouraging that er most of it I think I'm right in saying has come, certainly the bigger ones have come from out with the region er and have been introduced to us from bankers er in London, er initially we've had er a lot of support from our er colleagues in London who've effected the introductions in the first place, precisely how the partnership virtually work. Er as a result of the success we've now got to go back and revisit it, I mean Ian you know has been leading in from from this office er and that it's the person contact which counts for so much. So we've now got to go back and revisit it, he's full up er, we've got to look at his client, client load er and we've got to find other ways in which we can actually service the due diligence work, still using him very much as the marketing focus to er the initiative and continue the the growth. Diligence, next one specific er to the [clears throat] er to the tax practice was the need to sort to establish er a a pensions er capability A B C capability, er Leeds office has had an A B C capability for er I think it's erm six or seven years, something in that order. The number of people involved in the sort of work there was er something like twelve to twelve and fifteen people er added up er responsible for A B C. So it didn't make any sense to us to think well if Leeds have got a million pound practice there, why have we got nothing here. It's the same sort of cities commercial centre er let's explore the opportunities, there must be a market place out there er and market place across the north of England must be vast when you think about all the pension funds that are connected to the er to the public companies. Er so we
[speaker002:] [cough].
[speaker001:] set out our stock, set out our stall er to er er get a capability here erm, we've already er got er er er we've started a process a and we're going to start recruiting actual area capability in the not too distant future. Er that's going to take some time er to start penetrating again er companies that er will provide us with the er with the work opportunities. That's quite specific to the tax bracket but the source of work in Leeds has been very much from er corporate finance and from the insolvency practice, whilst that is er obviously a way forward for us in the initial stages. We also see great opportunity get into pension funds to help people manage their pension funds and set up pension funds er for clients and and other targets.... Then we move on from the getting of work, the erm doing of work to ensuring that the operations are not in going back to our quality, that the actual profit that we are producing and delivering is er of the top top quality. When you have erm we we've decided that it was important that, I mean it seems very fashionable, that we measure client satisfaction. All of us go and take our cars in to be serviced and what have you and nearly always get a sh piece of paper comes back and please will you tick them box on a Richter scale of nought to ten er and they are all the time trying to improve er customer satisfaction. Er this is alright we've done it informally in the past, you know I've talked to many clients some of which I handle some of which I don't and always the question is er are we giving erm a service that we can improve on, if you look dealing with er are there any points you'd like to raise with me, all these sort of questions but it's all very unstructured er and sometimes it's er er results in us having an action plan emerging, sometimes not. Erm so we decided that it was important to try and find some more formalised way of testing what er the market satisfaction was and the service we are providing. That's proved to be quite difficult because the firm as a whole is trying it out but it for example with M C S it can be related to a particular task, to a particular erm assignment, so it's assignment related. They can settle down more easily in those circumstances but the questionnaire is saying, please will you fill in the answer the following questions and let us have it back. Where they repairing client, where there is hopefully an extremely good relationship, we felt that that was a bit dangerous to be sending out a form to the Chief Executive of saying what er do you think of the service. Might not like the [LAUGHTER] answers [] perhaps that why we are a little nervous about this. Er and so we are looking at ways in which we can actually erm develop this and the firm as a whole is doing that as well and er we are to a certain extent that initiative. We've also er recently been talking to erm a lecturer of the University who is doing a project, a research project, and would like to er offer his services to us in in that er in that project, so we at the early stages but nonetheless I think it is er very important that we do er test the market place and find out what both think of us, so that we with a prime and only objective of improving a service
[speaker002:] [cough].
[speaker001:] so we mustn't feel hurt, I'd probably feel hurt we mustn't be er adversely react if we don't like the answers that we get. Watch this space.... To improve the quality of our work, these are erm, when I say though the current position is the technical quality is variable, these this assessment comes from internal reviews which are carried out and we have annual quality control reviews in all parts of the of the practice and the answers that have been come back coming back from those quality control reviews have and they're pretty strict reviews it seems, strictly in accordance with the book, strictly in accordance with all the reg rules and regulations and, so if one has deviated from those and it's hardly surprising how very high standards B S five seven five O would have, be quite easy to obtain in most of our practice areas, so it's hardly surprising that there will be occasions when we don't actually er come up with ten out of ten on a on an assignment. There's no excuse for that and if we're er having as one of our major platforms of our business initiative's quality, then er the quality must be right one hundred per cent all the time er so I was somewhat bothered that we were an an disappointed I suppose that we didn't get high ratings in the quality control reviews which were carried out, so to that end we were make make sure the next time we came round with a better score er so er we are looking at what's called hot reviews which is looking at er an audit for example before it's finalised by somebody completely independent of the job carrying out a technical review of the way in which tha that audit has been conducted er we are looking at it after the jobs been finished and probably in the slack season in the summer get people to actually review as if they were doing a dry quality control review of the job er prior to us getting an external review er carried out. Go through those reviews, go through those files to see whether or not they, if the job's been conducted properly. Er I think also helps a lot in this process er and that's that's particularly er relevant of the audit practice almost starting to be reduced into the tax practice as well. So people have been forced to look at the way in which they are doing the work in er conjunction with er the manual for whatever other book of rules they have I wished they'd do they carry out their work. So that figure's also er er it's helped a lot. Erm the other part of course of quality control is making sure that partners and staff er to speak on quality er er it is ess essential that we attend the necessary courses to keep us up to date, it is essential er that the er that we get our C P units, it is essential that staff are not withdrawn from er training courses er when there's a pressing client there er so that we should er ensure that everybody gets the necessary training to achieve this objective.... That moves neatly on to making sure that we... have the right people to do the job. Erm plans for the succession er and development of senior people and some of the plans this is going back to July er were in place then, most of the plans are in place now erm has probably most of you know are retiring in in October er their jobs have now all been allocated and are in the process of being transferred to the partners. Er that will er be achieved certainly after the end of er this season. Er we want to er develop a training programme for part of selling skills training programme for partners and senior senior managers, senior er members of staff. Partners have already er had that training er during the er during the summer months er it was carried out by er an outside consultant and most of us subjected ourselves to the se selling course, I think most of us derived some benefit from it. We also learnt quite a lot as to how we should do it next time, so when we now to it for senior managers erm come April May time er and hopefully that er training will be improved on the benefit going through. That is obviously something which we've just got to keep topping up but it was recognised by the fathers that will there was we needed to be helped [clears throat] to train to to sell and so we needed that training er to get us get us going so to speak, there were no natural salesmen amongst departments. Erm we also wanted to implement a plan er and this is an ongoing er situation of admitting er young blood to the partnership over a period of of erm five years or so, again that's a rolling programme
[speaker002:] [cough]
[speaker001:] but the age profile of the partnership in this office is a bit on the aged side er and it should be er younger, it would certainly be healthier if it was a bit younger.... specific points in the development of people, whilst that we recognise that the partners in practice was going to go into a quiet spell er something but we would run the risk if that happened on losing the expertise, the skill base that we've got there and the undoubted qualities of the people within, we had to find a way in which we could use that skill base and other practice er of the practice and in fact that's been quite successfully achieved in in recent months er with due diligence work for example er with legal support work is another example, when people in the insolvency practice have been very active on special science weeks ago tree. That was good, that's been very very good...