Concrete giant adds people development to mix

Ray O’Rourke is a man who knows his times and dates. March 27 2008, at 4.32am, will see the opening of Terminal 5 at London’s Heathrow airport; July 27 2012 at 4.30pm will see the opening of London’s Olympic Games by the Queen. “That’s a date which certainly won’t move,” smiles Mr O’Rourke wryly, sitting in his roomy corner office at Laing O’Rourke, the construction company, in Dartford, east of London.

Key player in both those mega-projects is Laing O’Rourke, which was established in October 2001 when O’Rourke, the privately-owned specialist concrete contractor, bought John Laing’s contracting business for £1. Though Mr O’Rourke, chairman and chief executive of Laing O’Rourke, comes across as a low-key yet affable Irishman, he is undoubtedly the shrewd brains behind a significant business expansion.

At the time of the Laing purchase the O’Rourke construction business had a turnover of £240m; these days the turnover for the combined company is approaching £4bn, making it the largest privately-owned construction company in the UK.

Behind the meteoric growth is another date: September 2000. It was then that Mr O’Rourke, then aged 53, enrolled on the senior executive programme at London Business School.

He recalls that he had never really planned to go on a management development programme at all; instead he had intended to send a couple of senior managers to an advanced management programme at Harvard Business School.

However, he was persuaded by one of his non-executive directors to consider London Business School and to take the programme himself. He was, he says, hoist with his own petard. “It is my philosophy, and has always been my style, to lead from the front.” So enrol he did.

It was clearly a memorable experience. “The people who were teaching us were extraordinary, by and large,” he says. He lists professors such as the late Sumantra Ghoshal, Rob Goffee, Henri Servaes and Costas Markides as being particularly influential.

So much so, in fact, that he later recruited the four of them to give a potted version of the course to 40 or 50 senior executives back at Laing O’Rourke, along with Wolfgang Grulke, fellow of the centre for management development at LBS and a former IBM executive.

“It was so inspirational that you could not but be excited,” he says of Mr Grulke’s lectures. “He was saying it is great to think big and be emotionally excited by taking on challenging enterprises.”

It was against this backdrop that the Laing acquisition took place. Prof Servaes’ teaching on value creation meant that Mr O’Rourke had fewer reservations about taking on debt. “We looked at the risks – and opportunities,” he says.

Mr O’Rourke points back to other lessons he learnt at LBS. Prof Markides taught that the only way for a company to sustain itself is to continuously innovate, he says. Just last week the company announced a huge investment at the former Steetley colliery in Derbyshire for facilities to manufacture the parts needed in the construction industry.

The company has taken a lesson from the automotive industry on the production process – using robotics, for example, in manufacturing. “Although incremental improvements are OK, you do need a step change,” says the boss. Although the company has done bits of this kind of work before, this facility, he says, represents “joined up thinking”.

But perhaps the most significant developments have been in how the people in the company are managed. “We weren’t doing enough about the human capital side…..What I learnt (at LBS) was that we were doing about 70 per cent right, though we did not articulate that or communicate it as well as we should.”

Back in 2001, when O’Rourke bought Laing, the former did not have a personnel department. Today, just five and a half years later, there is a personal development plan in place for each of the 23,000 employees. There is a director of education and a director of people development, and the company’s links with a range of business schools is strong and growing.

While many bosses pay lip service to the idea of people development, for Mr O’Rourke it comes back to a personal mission. “Our job is to challenge the poor image of construction,” he says. “We are the only industry in the world that carries the social infrastructure.”

Construction can be an exciting job, but many qualified engineers are being lured to the City of London to work on number-crunching projects, he says. Putting development programmes in place is one way he hopes to change the view of potential employees. Whipping up enthusiasm for the job is not something Mr O’Rourke needs. “My reason for going to work every day is to play with the team,” he says.

There are already two in-house programmes running for high potential managers. The “Young Guns” programme is for those between 25 and 28 who are seen as future leaders. The two-year programme is run for a dozen participants at a time and is beginning its fifth iteration. A second programme, Leaders of Tomorrow, is being run with Imperial College, with 35 participants.

But Mr O’Rourke has bigger plans. As well as working with LBS and Imperial in the UK, the company has also had input from AGSM in Australia and MIT in the US, as well as many less well-known business schools and universities in the UK and Ireland. He is considering whether the company can work with a business school such as AGSM to deliver an MBA for managers, taught in several different countries.

The picture he paints is appealing. Young managers can work in Ireland, perhaps, and then in the UK. They can be sent out to Australia, where the company has some 2,000 employees, and then work in the Middle East or India. And alongside their work they can study for a portable degree.

The company is also working closely with business academics such as MIT professor Richard de Neufville and David Gann, head of the innovation and entrepreneurship group at Tanaka Business School, who has recently been named as group innovation executive at the company.

However, the idea of customised executive education is not something that appeals to Mr O’Rourke – any more than the idea of using management consultants. “I firmly believe there is something wrong if you have to go outside to do the strategy piece,” he says.

Mr O’Rourke’s candour about the value of the management education is refreshing. But as he himself says: “There was no point in going there (LBS) if I wasn’t going to learn anything.”