A visiting executive recently counted the number of cranes visible from the top of Deloitte UK’s HQ on the fringes of the City of London. The total came to 39.
You could not ask for much more concrete evidence of how the UK’s financial services sector has bounced back since the 2008 global crisis, and – as a couple of those cranes were working on a nearby office building being constructed for Deloitte – the continuing success of the world’s largest professional services group. And no one is better placed to reflect on both the growth of the group and the challenges it faces today than David Cruickshank.
The chairmanCruickshank was Deloitte’s UK Chairman until being made Global Chairman of Deloitte Touche Tohmatsu Limited (Deloitte Global) in June this year. However, the man who joined the firm in 1979 is not moving far.
“I’ve persuaded everybody that London is in the middle of the world from a time zone point of view, so it’s a good place to be,” he says. “I have an office in New York, but if I look in my diary over the next two or three months, I have one trip to the US and three or four trips to Asia, so it makes a lot of sense to base myself here.”
It is not hard to see why Deloitte’s partners elected Cruickshank to the top job. Not only is he steeped in the firm’s culture – he joined as a graduate trainee in the Edinburgh office where Touche Ross co-founder George Touche also started out – but in his role as a chartered accountant and tax expert he advised, and still advises, a number of FTSE 100 companies, as well as many of Deloitte’s biggest public sector clients.
The global analystCruickshank begins his four-year term as Deloitte Global’s Chairman at a time when the world has never seemed smaller. “Gone are the days when clients used to buy from us in one jurisdiction, but not others,” he says. “Now they’re looking for us to do things all over the world, to the same standard and with the same style of delivery.”
Deloitte opened an office in Mongolia more than three years ago, but Cruickshank reckons the focus during his term will be on consistency of delivery rather than entering new markets.
“I think we now have offices just about everywhere clients want us to have them,” he says. “Because the world’s getting smaller, however, what happens in Mexico or Mongolia can influence views of quality globally, so the challenge in the years to come is the same as the opportunity, which is to try to make sure that we keep the quality bar as high as possible.”
The respected adviserAs a hugely respected figure within global finance, Cruickshank is often called on to advise about industry issues. In addition to being appointed to the International Integrated Reporting Council (IIRC) this summer, he is also a member of the World Economic Forum’s Chairman’s Group.
No firm that operates on a global basis can afford to ignore the threat to the UK’s membership of the European Union (EU) posed by the Government’s promise to stage a binding referendum on the issue by the end of 2017. Many predict it will be held a year early.
Cruickshank is well placed to discuss business sentiment on this topic, as Deloitte has conducted a quarterly survey of big-company chief financial officers (CFOs) since 2007. Its latest
poll shows that 74% of CFOs are in favour of the UK staying in Europe, with just 2% arguing that the country would be better off out.
“UK businesses tend to see huge advantages from being in Europe, with open access to markets and the free movement of labour,” says Cruickshank. “But there will always be some leading businesses that don’t agree, and I think there will be a big debate over the next year and a half.
“Others will say they want to see reform. There are some rules and regulations that certain industries would like to see changed, and those will hopefully be part of the negotiations over the next 18 months or so.”
Of course, the fate of these negotiations will greatly depend on the extent to which the UK’s European partners are keen to prevent a Brexit. “If I talk to our partners around Europe, particularly those in northern Europe – Germany, Scandinavia, the Netherlands, and so on – they are very worried about the prospect of the UK exiting the EU because, although we have our ups and downs as an economy, we are one of the largest economies in Europe.
“People don’t talk about this, but we are a huge net contributor to the EU’s overall funds,” Cruickshank adds. “The European institutions still need to get to grips with how to handle the less wealthy parts of the EU because, if you go way back to the late 70s, it was assumed that there would be big wealth transfers from the more prosperous parts of the Union to less prosperous parts, and to an extent that happened. But what the last few years have shown is that there is a limit to just how far the countries in northern Europe are prepared to allow those wealth transfers to increase.”
The reporting forecasterOver the next few years, Cruickshank will also have a ringside seat at the debate over
integrated reporting as a member of the IIRC. Following the scandals that emerged from the credit crunch, there has never been a greater demand from shareholders and the general public alike for more rounded reporting of annual results.
“I think the big thing that’s changed since the global financial crisis is the desire by all stakeholders to understand how results are produced,” he says. “What goes on under the covers of an organisation, what its values are – they want to see organisations report on that in a way that’s transparent. They are no longer interested only in shareholder value creation, earnings-per-share growth and free-cash-flow generation; they want to know how it was achieved. Everybody now realises that businesses that do good have more sustainable business models than those that don’t.”
The increasing level of detail contained in these new-look reports will inevitably put a strain on the financial directors who have to produce them, and the non-executive directors – among others – who are expected to endorse them. In this regard, Deloitte UK, for instance, is ahead of the game.
In order to help clients cope with the plethora of new rules introduced in the wake of the bursting of the dotcom bubble in the early 2000s, Deloitte UK set up the Deloitte Academy to offer workshops and seminars on regulatory changes, with access to a dedicated member’s website where they can find additional guidance and resources.
“It won’t be that popular with your readership,” he concedes, “but I think an era of more rules and more regulation is here to stay at an increased level for as far as I can see into the future.”
The philanthropistCruickshank’s focus on the future does not end there. Under his chairmanship, Deloitte UK has helped the
Education and Employers Taskforce take the number of executive volunteers signed up to give talks in schools to 30,000. A ‘matchmaking’ software package – designed by Deloitte’s technology team – sets up hundreds of thousands of school visits each year.
He pays particular tribute to Bank of America Merrill Lynch, which has supported the marketing and development of an associated programme called Inspiring Women. The programme aims to broaden young girls’ horizons and awareness of the many types of careers available to them in financial services.
Meanwhile, the 30% Club, set up by Helena Morrissey, CEO of Newton Investment Management, with Cruickshank as a founder member of the Chairman Group, has made great strides in increasing the representation of women on the boards of FTSE 100 companies over the last five years. At the time this feature was published online, the constantly updated totaliser on the 30% Club’s website showed the proportion of board-level women had reached 26%.
The family man and arts loverIt is now 36 years since Cruickshank graduated from Edinburgh University with a degree in business and economics, and joined Deloitte’s office in the Scottish capital. Although he headed to London for good three years later – “the best decision I ever made” – he has also made some decisions he regrets, including turning down a number of opportunities.
He is more than content with his home life, however. Cruickshank is married with two grown-up daughters, and is a lover of the arts, particularly theatre and music. Golf is his preferred sport, but pressure of work has taken its toll on his game. When he won a boys’ golf tournament at the age of 15, his handicap was at a level that matched his age. But he points out mournfully that, while his handicap now is officially 17, he thinks it is effectively closer to 22 or 23.
As Cruickshank embarks on his first year as Deloitte Global’s jet-setting Chairman, we can assume that his handiness with a sand wedge from the bunker will get rustier still. But all the signs are that golf’s loss will be the clients’ gain.
The original version of this article was published in the September 2015 print edition of the Review.