31 Mar 2014 12:32pm

Scott Barnes: "We had big, hairy, audacious goals"

Grant Thornton CEO Scott Barnes is determined to rid his firm of its mid-tier label. He tells Helen Roxburgh how he’s made the company one of a kind

Scott Barnes is not a man who likes the term “mid-tier”. Indeed, he is taking issue with the phrase, so frequently applied by the press and the profession to firms directly below the Big Four. Not for us, says the chief executive of Grant Thornton. He wants his firm to be seen in a “category of one”.

It is tempting to lump Grant Thornton, BDO and Baker Tilly into a closely-fought war of revenues, particularly given recent consolidation in the market. After merging with PKF, BDO is predicting revenues in the region of £400m, while Baker Tilly, having bought RSM Tenon out of administration last year, is forecasting revenues “in excess of £300m”.

If you look at our performance – I think I’m right in saying this – we’re the only firm whose profitability is higher now than it was in 2008

These would have been enough to close the gap with Grant Thornton if the UK’s fifth-biggest accountancy firm had stayed static with the turnover it was recording a year or two ago – but now that it is set to achieve £500m in revenues this year, there is still a substantial differential.

For the CEO of one of the largest firms in the country – mid-tier or not – Barnes is a down-to-earth man. After offering and pouring coffees, he spends 10 minutes easily chatting about the weekend’s football results – he is a lifelong Huddersfield Town fan. When commiserations have been exchanged and we turn to the recent industry mergers, he is equally philosophical.

“I can see why they both did it, because there was a big gap opening up,” he says. “And unless those businesses looked at doing something, that gap was going to get bigger and bigger. If you can’t grow organically you have to do some M&A if you want to grow.

“So I can see why they did it, and best of luck to them. I think one of those could work, and I see one of them being very, very challenging.”

Part of the reason he feels that comparing his firm with the other “mid-tier” firms is unfair is GT’s organic growth.

“If you look at our performance, and I think I’m right in saying this, we’re the only firm whose profitability is higher now than it was in 2008,” he says.


“We’ve been trying very hard since I came into this job to create a category of one. Which does perhaps sound a bit ambitious, but where we’ve got to, there’s quite a gap in terms of capability and size between us and the firms below us.”

Balancing approachability with ambition is something Barnes prides himself on. After reading history at Oxford, he decided to go into accountancy because he wanted to do something that “left all my options open”.

After qualifying with Arthur Andersen, he soon moved to Grant Thornton’s insolvency practice in Yorkshire, and was asked to set up the insolvency office in Leeds at the age of just 28. After becoming a partner, he and his family relocated to London as part of the firm’s strategy to build up its insolvency practice in the south of England.

“A number of people from Leeds and Manchester moved down to London at the time,” he says. “My family was young then, and only one of my children was at school so that wasn’t a massive wrench – except they developed southern accents very quickly instead of Yorkshire accents, of course.

“I was excited about the move, expecting the work to be bigger and more complex, and it was. We had a huge imbalance at the time as a firm, with more partners in the north of England than we had in London. So it was an obvious decision management took at the time to move some people down to London.”

By 1995, Barnes had been promoted to national head of the firm’s restructuring and reorganisation division, and in 2001 to managing partner for specialist financial services. After a three-year stint leading the international organisation advisory practice, he put his hat in the ring for the top job in the UK.

Now halfway through his second and final term as CEO (GT governance rules only allow two terms in the top role), he is clearly proud of the place the firm occupies.

When he first took the helm, Grant Thornton had recently struck a merger deal with RSM Robson Rhodes, bringing the 80-partner strong firm under the GT banner. Barnes’s first four years, therefore, focused on consolidating the two firms, a redundancy programme and some “partner shake out” where the two firms overlapped, not to mention surviving the financial crisis.

In 2012, when re-elected as chief executive, he decided to shift focus to look forward, and GT launched its Ambition 2015 programme, setting ambitious targets of £500m revenues by next year.

“There were two distinct phases; being totally clear about our priorities and focusing on profitability in my first term, and then the second term was about growing and getting everyone really excited about working for an ambitious organisation,” he says.

“We had big, hairy, audacious goals. People said, ‘I can’t believe they’ve set a target of £500m’. I can remember talking to one particular organisation that said we’d never get there,” he continues.

“But I’ve always done this in any job I’ve had – set an audacious goal – because I think it’s great for the people in the organisation. Nobody wants to work for an organisation that aims to stay flat for three years. And we’ve always managed to meet the targets I’ve set.”

However one ranks it, GT occupies an interesting place in the market. “Most of the time when we’re pitching, we’re pitching against the Big Four, not the other firms,” says Barnes, who dismisses the suggestion that a Big Five is what they are hoping for.

“We do butt up against the Big Four quite a lot, but we’d like to be seen as the quite different player outside the Big Four.”

Rotation debate

The recent Competition Commission study and debate over audit rotation is key to these perceptions of the “mid-tier versus Big Four”.

Many of the firms outside the top four already work with some of the largest companies in the UK, if not in audit then in various other advisory capacities. “My own view is that the mood music in the market has got ahead of the regulation,” says Barnes.

“We don’t even have any regulation really yet, and I know we’ve got the FRC tendering guidance, but it feels like the mere fact that these things are being talked about has created a mood in the market where people want to do something. Look at the FTSE 100 in the last few months. Quite a few businesses have gone out to tender. So clearly all the talk about new regulation has had an impact, and the regulation hasn’t even happened yet.”

Although the firm already has one FTSE100 audit client, Sports Direct, audit for the rest of the biggest companies in the UK is dominated by the Big Four. But this doesn’t seem to concern Barnes, who points out that GT has done work for around 40% of the FTSE100 in some capacity or another, and as more tendering happens, new opportunities will open up.

This fits with the strategy the firm has built around advisory, where demand has soared. “Our strategy for the last few years is that we have a strong presence in advisory and have been able to sell services into the FTSE100.

“We’ve invested a lot in public sector audit and in financial services, and we’ve been very focused in terms of areas we want to invest in.”

Following strategy

Examples of this focus include GT’s acquisitions of the UK financial services advisory arm of global consulting firm Navigant in July last year, and specialist firm LECG Business Consulting (formerly Smart Consulting) in April 2011. And since we spoke,GT has announced it has bought Local Futures Group, a UK analytics firm.

I want to go out with the partners saying, ‘I wish he could have stayed on a bit longer’, rather than ‘I wish he’d gone earlier’. That’s one of my personal ambitions

It seems a sensible strategy – the firm’s most recent figures published in October last year show a 21% increase in revenues from advisory services and increasing demand for advisory is mirrored by other firms. Barnes hints that a few more deals are on the cards, particularly in the area of big data or analytics.

“We’ll continue to invest, and if something interesting comes up we’ll have a look at it. But whatever we do will have to fit squarely with our strategy rather than just because, ‘oh, we need another £50m of revenue’, because I don’t think in the end that works. I think that’s a bit of an old game really, that bulking up game.”

Barnes will leave GT having steered it through a restructuring process, a merger, and one of the worst financial crises of recent years. What next, after a career spanning over 30 years with the same firm? He’s unwilling to talk about it too much, save to say that it is right he should go after two terms.

“I think seven or eight years nowadays is the right length of time. I’ve never done a job for more than six or seven years anyway, but I’m a big believer in succession and stewardship, and I don’t think you should do a job for too long.

“I want to go out with the partners saying, ‘I wish he could have stayed on a bit longer’, rather than ‘I wish he’d gone earlier’. That’s one of my personal ambitions.”

Looking forward

In the future he says he wants to look at “something around leadership and education”. Barnes is already involved with an education charity, and works mentoring CEOs in international member firms, which he says he finds “very rewarding”.

His interest clearly lies in the sort of work that provides educational opportunities, with the importance of education drilled into him from a young age by his parents.

“I’m pretty grounded,” he says. “My background is such that I don’t exist up in the clouds, I’m very much down on the ground.

“To me being a miner or a manual worker is much more stressful than doing the jobs we do. When I consider, in terms of my background, what my parents did, and when I think about them keeping the family together and working hard to provide education for their kids, I think that was a much more stressful job than I have. So I always have that in the back of my mind.”

He laughs when asked what the lowest point of his career was, finally opting for the difficult period when he first took up the reins as CEO at Grant Thornton.

For career highlight however, he finds it hard to restrict himself to one moment, picking in quick succession his re-election as CEO, how well the firm has done in the last six years, and a recent survey that rated Grant Thornton as one of the best companies to work for in the UK.

“That is the best affirmation of your leadership, when the firm is in a strong position,” he says. “Making investments, seeing them pay off. Getting affirmation from your partners – getting elected for the second term must mean they think I was doing OK.”

Perhaps one of the most telling aspects about Barnes’s approach to leadership is when he lets slip that his phone line goes straight through to him personally, without being filtered through a PA.

“Sometimes people just hang up with surprise when they call and I answer it myself,” he says with a big shout of laughter.

“But don’t tell everybody that or they’ll all be phoning me.”


Career highlights

2012: Re-elected for a second term as CEO
2008: First elected as CEO
2007: First global head of advisory
2001: Appointed managing partner for specialist financial services
1995: Promoted to UK head of recovery and reorganisation
1994: Became head of London and South East recovery and reorganisation
1991: Moved to London
1987: Promoted to partner
1984: Joined Grant Thornton to set up the insolvency practice in Leeds
1981: Qualified with Arthur Andersen

Helen Roxburgh


Related articles

Grant Thornton buys KPMG Brazil arm 

Grant Thornton restructures advisory leadership 

Scott Barnes reappointed as Grant Thornton CEO 

Grant Thornton posts 13% revenue boost 

Grant Thornton tops graduate poll