When Quintain Estates & Development was acquired by American private equity firm Lone Star for £700 million (or 131p a share) last year, it was viewed as vindication for the divestment and London-focused strategy pursued by chief executive Max James. After all, it was only four years before that the owner of Wembley Arena had almost collapsed under the weight of its debts.
It had abandoned its dividend pay-out, slashed headcount and floundered until its shares slumped to just 3.9p. James arrived as executive director just months before the previous chief executive quit, leading to his promotion in May 2012.
But away from the spotlight, former director of communications Cressida Curtis can also feel vindicated because, as James was publicly pursuing his ‘dispose, de-leverage and deliver’ strategy, she was working behind the scenes to find out how Quintain’s key stakeholders really perceived the business and its future.
Such was the success of this approach that last year Quintain’s board members had specific targets related to these perceptions built into their remuneration structures.
‘For the first time, we had criteria that the executive directors could access,’ explains Curtis. ‘For three executives – our chief executive, finance director and investment director – 15 per cent of their bonuses were linked to the results.
‘It is a tricky thing to find a metric that people can recognise. It is the same problem that PR has had for a long time: how do you demonstrate value? Everybody understands the value of reputation, but how do you measure it? Most people have a gut feel about it, and assume that the share price reflects that. But I believed that we could look at our main stakeholders and take a targeted approach.’
Curtis employed external companies to conduct perception studies among Quintain’s three primary stakeholder groups – investors, employees and government (local, regional and central) – as well as key journalists.
‘We asked one key question bespoke to each group, and set out to track the results,’ she explained. Performance targets were set for each group. ‘We had different targets for each stakeholder audience,’ she explains. ‘The bonus was dependent on hitting those targets.’
The targets were equally represented, implying that each was worth 3.75 per cent of an executive’s bonus.
‘This was the first indication I have ever had that reputation was on the boardroom agenda,’ says Curtis. ‘But there was a timing issue for us. It was such a shame that this was brought in last summer, just before we got taken over. I would have loved to see how it played out over time.’
The process kicked off with Quintain’s investors. While Quintain had previously conducted regular, but sometimes informal, interviews with investors, Curtis decided to shake things up. The survey would now take place every six months, and the external company conducting the one-to-one interviews changed the way in which investors could answer.
While previously they might have been allowed to say ‘yes’, ‘no’ or ‘maybe’, this time they were asked to answer with a score of between one and ten, with ten being deemed exceptional. The ‘killer’ question was: How effective is the management in the current environment?
‘By being quite specific, it allowed us to chart progress; we could ascertain if the management was perceived as getting better, or whether we had a real problem,’ explains Curtis.
Beforehand ‘the chairman might have one view and the chief executive might have another’, she adds.
‘We had a new management team, a new strategy and a steep hill in terms of getting to the crust. We needed a clear view of what the landscape was and what the issues were. So few people really make sure that they are listening to this feedback and now we had an independent view to present to the board.
‘Using a third party also meant we had a clearer view of investors’ true feelings. Nobody felt bound by politeness or existing relationships.’
The investor perception study covered half Quintain’s share register, offering a real insight into how shareholders viewed the company’s management and performance at that time. Its publication coincided with the appointment of James as chief executive.
‘The report actually shaped our entire management focus for the [then upcoming] interim results,’ recalls Curtis. ‘We checked everything we were going to say against the perception study’s findings, and addressed them head on. We put on record our position, and said we were very happy to talk to investors about any issues.’
Curtis next turned to Quintain’s employees. The company had conducted surveys of its 100 or so staff for around eight years at that time, including polling them at a time of major disruption when redundancies had occurred. The company also previously embarked on a major campaign to show it would listen to issues raised in the employee survey.
‘We did do a campaign around the company You said this, we said this,’ she explains. ‘It was very powerful. We had a 97 per cent response rate.’ Employees had previously been asked questions about their role and whether they enjoyed working at Quintain. The new survey added one question.
‘We used the key performance indicator How likely are you to recommend Quintain as an employee to a friend?’ explains Curtis. ‘The results were very interesting. There was a clear picture.’
She adds: ‘Asking How engaged do you feel? is meaningless to 90 per cent of people, but if you recommend the company you work for to your friends, then you are really putting your personal reputation on the line.’
The company set itself a target, defining a score of 85 per cent as ‘outstanding’. ‘It was a stretching target at the beginning,’ she adds. ‘We had to really think about what it would take to make our people recommend us.’
She followed a similar process when it came to surveying Quintain’s government stakeholders. About 40 individual decision makers, deemed to be key, were surveyed by an external organisation.
‘In government, partnership is everything so we wanted to see if we were a trusted partner,’ says Curtis. Those surveyed were asked the question Do you believe Quintain is a good partner to work with? and asked to score their answer between one and ten.
‘The questions covered very specific issues as well,’ she adds. ‘We talked about overcoming issues and how to ensure both sides’ objectives are met, which is particularly important in the area of regeneration [which is the focus of our business].’
As a property investment company listed on the FTSE 250 index at the time, Curtis was aware that Quintain was not a high street name that would regularly appear on the financial pages of the British broadsheets.
But she also recognised that Quintain’s name was familiar to journalists because of its high profile investment in a retail and residential development around Wembley Stadium. However, only a handful of journalists potentially had the power to influence the views of other key stakeholders.
The perception study she undertook with these key journalists therefore was less about ‘do you know who Quintain is?’ and more about ‘how do you think its management is performing?’.
‘Journalists can sway opinions so their views are very important,’ explains Curtis. ‘We established whether they really understood the company, and the management story and whether they felt they were making the right decisions. It was very important that we had a clear view of all audiences.’
Each perception study provided a different piece of the puzzle. The investor studies were conducted every six months, while the interviews with government bodies took place on a quarterly basis.
The employee survey, which had been running for some years previously, continued on an annual basis, as did the journalists’ survey.
After working to establish benchmark trends in each analysis and convert results into a percentage format, the studies soon began to indicate trends, issues or unexpected insights. Quintain set itself a target for each stakeholder group.
The process is both time consuming and costly, and, as Curtis points out, is only valuable to a company if they use the insights that emerge. Support from the top is essential. It helped that Curtis had a new chief executive who was keen to reframe the business, and thus willing to listen to the views from outside (and in).
‘It is a health check,’ she says. ‘It is about lifting the lid.’
Such a process prevents any management team from becoming complacent, relying too much on an internal team of advisers for their opinion on performance, but can also accelerate progress by pinpointing the issues of concern.
‘It can be a cost-effective exercise,’ says Curtis. ‘We did the investor perception study and it really helped us to understand the issues. It provided us with a deep insight into what investors really wanted.
‘We were able to provide some near-term fixes and to prioritise, which then we fed into our half-year results. It was incredibly helpful, and almost acted as a crib sheet.’
The sale of Quintain to private equity holders means it now has less need to talk to the media and no longer has any institutional shareholders.
‘In any business key stakeholders are going to evolve,’ say Curtis. ‘Investors have fallen away for Quintain, but our plans to move into the private rented sector brings us into the consumer world [and creates the need for a new metric].
‘Part of the job of a communications executive is to keep on top of these new audiences. You have also got to be very targeted about these things: there is no point in doing a mass survey.’
Curtis has left the business following Quintain’s delisting from the London Stock Exchange, which inevitably followed its private equity acquisition. She is in no doubt that the perception studies shaped the successful outcome of its sale.
‘When we started our investor perception study, our share price was at 30p. We sold the business at 131p per share,’ she explains. ‘It made us sit down and face up to the issues being raised.’