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Sydney Lenssen Consultants must remain their own bosses


Big private partnerships of consulting engineers have almost gone. Not so long ago - 20 years - they dominated the profession. Accounts were never disclosed. Partners' earnings were secret; some were very wealthy, often by quirk rather than engineering.

Today sees three modes of operation: private companies often involving trusts; a few companies listed on the stock exchange; and private limited companies owned by a few directors or American conglomerates. Their characteristics are crucial to employees and their style.

Last week David Lloyd retired after three years chairing Halcrow. Staff numbers have grown by 50% and global coverage is better in discipline and by geographic spread. After graduating I toiled and water-coloured on the drawing board next to him. He went on to better things.

His farewell stressed the continuing importance of 'independence', and for Halcrow read Arup, Mott MacDonald and few others of the remaining big consultants. Why this mantra?

The prime justification for independence is survival. Approaches from potential purchasers occur regularly. In recent years American, Dutch and venture capital firms have been seeking to buy consultancies, seemingly prepared to pay far more than anyone expects.

That doesn't surprise Lloyd. 'Most predators don't understand the business. They want to get into Britain or overseas work. They study accounts. They see substantial assets and modest profit. It looks ripe for asset stripping.'

About 90% of Halcrow's ownership is in a protective trust, and not for sale. 'What they don't recognise is that consulting expertise is sold on very narrow margins. Gone are the days when we charged three times salary and more. Now we tailor quality services and efficiency to satisfy the client and make him come back, and survive on twice salary and less. That's the simplest explanation of why you don't get millionaire owners, and why employees can't afford to buy in.'

Arup chairman Duncan Michael first articulates the other side of independence. 'As chairman or director you don't need to spend your time looking over your shoulder when making decisions. You can concentrate on what's best for the firm, for the staff, for continuity.' They have no outside shareholders or City analysts to worry about.

Arup is owned by several charitable trusts and Michael sees his prime duty as safeguarding independence. 'I think almost everyone in the firm values it highly. Perhaps it's a self-selecting process: those who like it stay.'

Mott MacDonald has a new chairman in Timothy Thirlwall, although he's been managing director for eight years. Half the equity of the firm is trust-owned, the remaining shares held by 420 directors and staff. His business philosophy is simply stated: 'Chairman and directors are custodians of the business, and their duty is to pass it on in better shape.'

At Mott MacDonald directors are appointed as best for the job in the view of their peers. The chairman is appointed by consensus. 'Optimum length of appointment is four to five years so that they can make a difference. Ten years is too long, because it's healthy to have change,' says Thirlwall. 'You've also got to arrange it so that younger staff can buy large chunks of equity reasonably cheaply. That's part of ensuring responsible provision for the future.'

All are well paid. Last filed annual reports show highest paid directors taking home £150,000 to £300,000 a year plus special pensions. So they are not valued on a par with football stars or City slickers. For the 'all-consuming' hours, the miles they travel, and the glad-handing in- house and outside, I would feel relieved to hear 'time's up!'

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