Belfast-born Stephen Martin takes over as IoD director general on 1 February. In an exclusive interview, Director talks to him about helping businesses through Brexit, the role of good governance and why he went undercover in his own company
Eight years ago, a new series on Channel 4, Undercover Boss, featured the then 42-year-old Stephen Martin – “a rising star of the construction industry” – assuming a new identity and going undercover in his business, the Scunthorpe-based Clugston Construction. Halfway through the programme Martin is seen sitting exhausted in his tiny digs, musing over his day in disguise. One of his unsuspecting co-workers had been chatting to him about the recession they were living through, and reflected: “In other recessions Woolworths didn’t go bust.” “These are unprecedented times,” Martin replied.
Fast forward to 2016 and Stephen Martin, now Clugston’s outgoing boss, is sitting in the restaurant at 116 Pall Mall reflecting on the similarities an uncertain Britain faces as he prepares to take over from Simon Walker as IoD director general. It was the result of the referendum that swayed his decision to resign as Clugston chief executive after 10 years and move his wife and two young children 177 miles down the A1.
“This is not business as usual. It’s not just the UK that is going to change, [Brexit] is going to have global ramifications. What an exciting and challenging time to be involved in an organisation like the IoD! I have been a member for 16 years, a fellow for five years and had engaged with the East Midlands region, but I’d never considered running a professional members’ organisation. I knew it was an interesting role but it was the referendum result that really clinched it. This is a critical time for the IoD to show leadership and direction and give guidance, support and help, to get our voice heard with government and lobby hard on behalf of business as the negotiations take place.”
Martin was born in Belfast and his early life was “a struggle and challenge”. His father died when he was 13 in an accident at work and he became the main breadwinner for his mum and two younger sisters, working at weekends and evenings to bring some money into the household. His inspiration to move beyond making ends meet came in the shape of a successful uncle who had qualified as a quantity surveyor and worked up to commercial director of a large construction company.
“He had a fantastic job – a company car, a great role, everybody respected him and he did terrific work. If I wanted to be like him, I realised I had to get qualifications, so that spurred me to do my O and A-levels and
get a place at university. I couldn’t afford to be away from home so I got a grant for university and, because we didn’t have any income in the family, worked at Woolworths after school and on building sites during the summer. That gave me early first-hand experience on how people have different motives, outlooks and objectives. It also taught me that if you wanted to get money you had to work hard.”
Martin’s first job was as a quantity surveyor which he did until “I wanted to try something different”. He answered an ad for a commercial manager for an electronics security and telecommunications firm. “I knew nothing about it but I thought how difficult can it be?” He was the least qualified applicant but got the job. “They gave it to me because I was so enthusiastic, but I learnt about negotiating for a salary as they wanted to pay me less than stated due to my lack of experience. I stood firm – I needed to bring the money in.”
That business was acquired by US company Westinghouse and Martin was promoted to total quality management (TQM) coordinator – “I had to get a book on TQM because I didn’t know what it was,” he laughs – before being put in charge of a new ERP system.
“That was great fun and great experience. We had a fantastic MD there who created an open, all-inclusive culture which opened my eyes. I had been used to command-and-control hierarchy but that changed my whole outlook on business because I realised you could work for a company, enjoy it, be challenged and learn as you went along. It was fantastic.”
As well as traditional learning (Martin is a Leadership Trust graduate and has an MBA), he cites different roles in his career as crucial milestones in his business education. “I love learning and I need to learn all the time, it keeps me engaged and focused and happy.” As a young man he was fascinated by the discipline of the army. “I thought, ‘How are all the armies around the world that focused? They will march in step, they will go out and die for whatever they are told. How the hell do you instil that in people?’ So I joined the TA just to get a glimpse of it.”
His role as commercial director at Kvaerner Metals meant a lot of international travel. “Kvaerner sent me on a ‘culture change’ programme which I put into practice straight away – it could be one week in Brazil, the next in India, the next Nigeria. I had to change mindsets all the time. I learnt about negotiating tactics and different cultures and working under time pressures.”
A stint at Amey Rail (“great lessons about culture change and transition”), was followed by Martin’s first CEO role at Barhale, where he surprised employees by joining them on a training course. “From my previous experience, directors often say, ‘We’re sending the staff on training,’ but don’t go themselves. They’re the ones that need it! I thought I had to set an example. It was intense but all the people from the company could see I was doing it. It helped me relate to the staff and they could interact with me as a person, not as chief exec. I got a lot out of it.”
Martin’s tenure at Barhale was successful, meaning the headhunter hotline rang often. “I got offered some terrific jobs and in the end I chose the most challenging for me: Clugston Construction is one of Britain’s largest private companies with over 600 employees and the role combined areas I hadn’t done before [logistics, property development and investment] with ones I knew [construction and engineering].” Martin’s decade at the helm has seen Clugston feature in the Sunday Times Top Track 250 and Profit Track 100. “It’s been a great 10 years. We’ve had fantastic profitability, all the metrics are good and I’ve learnt a lot.”
It’s a varied and impressive career and one that will stand Martin in good stead as he takes on the role of representing the UK’s business leaders for the next five years. He wasn’t, however, surprised by the referendum result. “I called it for Brexit. I expected the result. I genuinely believe this is because I was based in the north of England and am not London-focused. I could see the different views of the different places, different workforces.
“Remainers thought it was obvious [to stay] but it wasn’t. There were a lot of people who have lost jobs, lost houses, taken jobs they don’t like and are unhappy with all the bad stories about big business in the press.” The challenge of leading UK plc through Brexit and restoring the reputation of UK business is one he is looking forward to. “What we need to do is promote the stories about the great things business does: the wealth creation, the economy and the good for wider society. The IoD can have a leading voice in that debate and in supporting government to negotiate a Brexit deal which is in the interest of business.
“I think the main worry for business is that we adopt an isolationist approach to not just Europe but the world. We want to avoid that and we want to show we are open for business, that people can come to this country and if they are hard working they can be welcomed with open arms. We also want to demonstrate to the outside world that this is a great place to invest and that we are desperately keen to work with people. We need to make sure there are no barriers to free trade – there is a lot up in the air and a lot to play for.
“Rather than closing doors, Brexit could open our eyes to the rest of the world; we may have previously ignored trading partners because we haven’t needed to go there. There are massive opportunities around the world – Africa is a fantastic example as it’s one of the fastest-growing economies on the planet: the growing middle class, the investment in technology. I’ve seen first hand how enthusiastic people are there so there are massive opportunities. Directors can be frightened of the geo-political situation in these countries but they often haven’t taken the time and effort to travel there and see the situation for themselves.”
Having been at the coalface of business for the past 30 years, what advice would he now give to fellow business leaders as they enter what is bound to be an uncertain two years at the very least? “What we have got now is short-term uncertainty which could be a year, two years, even longer,” he says. “But most business-planning cycles are longer than that so firms must look long term and continue to invest in R&D, people and growth, because if you don’t Brexit could be a bigger issue than it need be in many senses. Directors must do what’s right for their business. If that means opening offices overseas, if it means growing different markets, then exploring them… trial things with consultants and temporary staff and see what happens.”
Martin’s warmth, enthusiasm and optimism shine through. He, like his IoD predecessor, values honesty and transparency and was delighted to discover recently that his school motto was ‘Truth shall set you free’ – “Isn’t that fantastic!” he says. He talks fast and clearly, is refreshingly jargon free and believes in straight-talking. He tells a story about going to his first board meeting in a new company. He aired his views at the meeting and was given short shrift. “The chairman’s response was, ‘That’s just typical of you’. I said ‘That’s what I think, do you not want us to have an open debate and discussion?’ He didn’t want that. People afterwards told me I was brave but I see no point in being in a meeting and not saying it how it is.”
Doing the right thing
Now Martin is stepping into a new role in which he expects to be just as forthright, but also open to others’ ideas. “Running an organisation with so many smart people as members will, I’m sure, have its challenges, but that’s one of the reasons I want the job, because I am going to learn from all these people as well. Yes, I am the figurehead and the spokesperson but I can keep learning.”
Martin is keen to involve people from all levels of the institute, citing Malcolm Gladwell’s The Tipping Point as influential. “I realised early on in my career that the people who have got the titles aren’t necessarily the ones who make the decisions. When I go into an organisation I quickly identify the people who make things happen – Gladwell’s mavens and connectors. I also look for people who are passionate and keen because those are the people who can introduce change.”
Martin takes over as director general at a point when the IoD is at its most influential and outspoken on corporate governance – and in a year rocked by business scandals, notably Sports Direct and BHS. On the IoD’s wider role in this area, he says: “I am delighted to continue Simon [Walker]’s great work in speaking out against corruption in business – governance is something that I feel very strongly about from both a personal point of view and also from my own experience running a large private company.”
And he welcomes the new consultation on measures to improve corporate governance, outlined by business and energy secretary Greg Clark. Key points include more worker and customer voices in the boardroom, reform of executive pay and governance of private companies. “I am really pleased to see this green paper, especially having just run one of the UK’s largest private companies. I have always adhered to good governance – it’s basically good management, good leadership, good direction.”
He is keen to stress, though, that corporate governance must be fundamental to all sizes of business. “You can be a success in business short term by making lots of money and having great profit, but long term you will be remembered for your governance failure far more – look at Philip Green.
“The IoD should be at the forefront of this discussion and I am looking forward to talking to the prime minister and the business secretary to ensure the UK can continue to be at the forefront of good governance in the world. It’s a fantastic opportunity for our membership’s voice to be heard by government – about concerns over corporate governance, particularly over bonus culture and rewards for failure. The IoD has been preaching good governance for a long time and we are empowered by our Royal Charter to encourage good corporate governance anywhere in the world.”
“The IoD has got to play a role with its guidance and professional development,” he says. “There will always be corporate scandals, and all that is bad in business, so what we must do as ethical business leaders – and an organisation with a Royal Charter – is promote good practice. How do you do that? Training, encouragement, support, examples and advice.”
He cites governance as key to attracting and retaining young talent too – one of UK plc’s current anxieties: “Businesses will not attract millennials if they don’t have the right corporate governance and ethics. That is vitally important, far more than it was 10, 20, 30 years ago.”
He starts on 1 February and will hit the ground running. “I am looking forward to meeting as many of our members, fellows, regional chairs and ambassadors as possible,” he says. “I want to engage with members, listen to their ideas and ensure we have as much impact as possible on the important business issues. I want to speak out for all those great business leaders who are doing a fantastic job without seeking overt recognition. My first engagement is in Northern Ireland, meeting business leaders and speaking at the IoD NI’s annual dinner on 9 February. I have a full-on diary from day one! I can’t wait to get started.”
Undercover Boss: What it taught me
“Everybody advised me not to do the programme – including the Clugston board – but I insisted. I knew it was a once-in-a-lifetime chance for me to go underground with the whole business and see what people really think. I went in blind – it was the first series so nothing had been aired – and it was mid-recession so a lot of companies refused. The first series was meant to have eight episodes, but ended after two.
The amount of pre-planning by Channel 4 was immense. They had people scanning the sites for interesting stories, finding out what the issues were (I didn’t know any of this at the time) and trying to get to the level of workforce who wouldn’t know me. We had to swear site managers to secrecy. People were told it was a documentary on office workers trying manual jobs.
The show was pivotal in how I changed the company. Before I did it employees wouldn’t talk to me – afterwards they came to tell me things and could make changes. I thought I’d been communicating but the show proved I wasn’t. Like a lot of managers I didn’t recognise it but there was a simple fix. I introduced:
• Skip-level meetings – regular meeting with your boss’s boss to get information through
• Brown-bag lunches at my desk where the workforce came to my office, no agenda, just time to chat
• Onsite meetings with all levels of the workforce, with minutes posted on the noticeboard
The three main people featured in the show are still with Clugston: one of them, Dick Sutton, is in his seventies and gets up at 4am every day to mentor our young people onsite. He doesn’t want to give up working and, in the show, was worried he’d leave without passing on his knowledge. I learnt from that. What’s important is not age but commitment and passion, so when you find those people you welcome them with open arms. In fact, two of Clugston’s most recent recruits were over 60.”
Watch Stephen Martin’s Undercover Boss here channel4.com/programmes/undercover-boss/on-demand/46788-002
New IoD director general Stephen Martin CV
1966 Born, Belfast. Older sister, Jennifer, dies from cancer at the age of two and mother, Aileen, suffers extensive third-degree burns after her nightgown catches fire when Stephen is six weeks old.
1976 Father, Fred, a breadman by day and watchmaker by night, moves the family to Blackpool to escape the Troubles.
1979 Fred dies in an accident at work. Aileen relocates the family back to Belfast.
1988 Graduates from Ulster University with a BSc in Quantity Surveying
1988 Property Services Agency Part of multi-disciplinary design team with responsibility for pre and post-contract services on Ministry of Defence projects
1988 Joins Territorial Army, named champion recruit
1992 Westinghouse Security Systems Joins as a quantity surveyor, promoted to the main board position of commercial director
1994 Marries Lisa
1996 Made chair of the Lincolnshire branch of the Chartered Institute of Building
1998 Kvaerner Metals Becomes procurement, estimating and quality control manager
2000 Amey Rail Headhunted to assist in development and delivery of a profitable growth strategy
2001 Becomes a member of the IoD and the Chartered Institute of Arbitrators
2002 Becomes a fellow of the Chartered Institute of Building and Royal Institution of Chartered Surveyors
2003 Transition director to transfer the Great Western area maintenance contract to Network Rail
2003 MBA, London Business School
2004 Barhale Construction Chief executive
2006 Clugston Group Group chief executive
2008 Made companion of the Chartered Management Institute
2011 Made fellow of the IoD
2014 Daughter Annaliese born, followed by son George two years later
2015 Joins Hull University Business School international advisory board
Awards Business Person of the Year, Northern Lincolnshire Business Awards (2010); IoD Director of the Year UK, Highly Commended (2010, 2013); Property Entrepreneur of the Year, Yorkshire Property Industry Awards (2013); IoD East Mids Director of the Year (2013)
Stephen Martin slideshow (click to enlarge)
For more on the IoD Northern Ireland Annual Dinner visit iod.com/events-community/regions/northern-ireland