A corporate revolution has taken place at Veolia's UK operation. Chief executive, Frédéric Devos, tells Natasha Wiseman some of the thinking behind it
It is more than a cultural shift when a company chief executive can make it a virtue that his corporate HQ does not have a car park. And the head of Veolia Water UK, Ireland & Northern Europe, Frédéric Devos, himself seems to epitomise a revolution that has taken place in the way the company operates.
Taking in the view from the company’s new open plan, eco-friendly offices overlooking Kings Cross in central London, he explains: “It’s full of light and there’s no car park because we want people to take public transportation.” Gesturing to the advantage of the rail connections north and into Europe and the creative hub on the ground floor, which includes a theatre and café bar, he continues: “We have been able to attract the right people thanks to this office; the image this office has attracts young, dynamic openminded people.”
He is committed to recruiting the very best graduates from other industries and says he is achieving this because, in the language of the Google generation, Veolia is “a fun place to work”. However, he says it is not all peace and love, despite significant growth for the company, as 150 people have been pushed out because of “poor potential”.
The 47-year-old has been with Veolia for more than 20 years, moving to the UK in 1996 to work for Three Valleys Water (now Veolia Water Central). In 1998 he joined Veolia Water UK as senior business development executive, before returning to France in 2000 to take up a post with Veolia Water Europe, and, most recently, as executive vice president of Veolia Water (VW) with worldwide responsibilities for industrial markets. Devos took up his current position in September 2007, to oversee the acquisition of the non-regulated business of Thames Water. Reflecting on that time, he acknowledges that Veolia’s UK operation “was not performing very well” and had issues with the regulator on customer service.
Despite owning three regulated UK businesses (Three Valleys, Folkestone & Dover and Tendring Hundred) and its global presence as a technology and outsourcing company, Veolia was not a name operating in the UK market. The non-regulated business was worth just £10M and the company was struggling to grow.
Devos blames that on the lack of a local presence: “You have got to be a local player,” he insists. “If you are not a Scottish man in Scotland, it is very difficult to be credible.”
The Thames acquisition was designed to give Veolia its springboard in the UK, with 700 staff and project references, but it was also at the heart of a change in culture. He describes the deal as a “merger” in terms of the way the businesses were integrated, and is adamant that the difference between regulated and non-regulated business should not dictate company structure.
The contracts may differ, he explained, but that is not the issue; the in-house skills, IT requirements, customer experiences, billing are all the same. The aim was always “to leverage the synergies across both businesses by operating as one company.”
The intransigence of people was the biggest obstacle to Devos’ vision. But he believed that wholesale change was the only way to deliver the efficiencies demanded by the regulator.
He took the decision to leverage the company’s size, identify its best processes and implement those through the whole business:
“The plan was to double the business in five years. Unfortunately,” – he says with an ironic twinkle – “we doubled it in three years.”
The business is now worth £600M and a certain coherence has been born out of a corporate rebranding of the regulated side as VW Central, VW East and VW South East.
Veolia’s non-regulated side has now outstripped the regulated business in the UK. Devos says he welcomes any changes to the rules on competition, saying it is a good way of bringing creativity and innovation into business, as long as it is well-implemented.
“We have built a non-regulated business of £400M, bit less, through competitive tendering. So there is a lot of competition already in the market to build new assets, to deliver efficiencies for regulated companies, to operate customer experience.”
Veolia Water has made safety its top priority. “We aim to become a zero-harm company,” says Devos, his charming and crystal clear French accent delivering a comedic drop of the ‘h’. He warns that clients who cannot deliver on safety will lose their contracts.
“Our target is non-negotiable. I don’t want to have to go to see a family to tell them the bad news. Every accident can be avoided. So we won’t sign a contract with a client that doesn’t take zero-harm as a priority.”
The corporate revolution that Devos has engendered includes a significant investment in IT. The company’s system is highly flexible with employees able to plug their laptops into a “hot desk” and video conference at any Veolia site.
He is an advocate for digital technology and social media for networking across the company, and two virtual Capability Centres (CC) have been developed to drive operational excellence in asset management and customer experience. Devos describes them as “our brain” – virtual communities of people developing and aligning processes and translating them to other areas of the business.
There are about 25 people in all and the CEO says the two teams are there to make sure Veolia operates using the best practice. They anticipate what the future will be in those fields of operation, he explains, and feed into Veolia’s worldwide operation through Paris.
With a compulsory metering order in place at Veolia Water South East, the region now has 85% dumb meter coverage and is being used to trial radio fixed-network technology, and clip-on devices are being fitted to meters already in the ground.
Devos sees major advantages in synergising metering with network management and with the right software, moving towards a predictive system. He is clearly excited about new services that could be made available to customers.
“When the meters are connected real-time to radio fixed networks, you will be able to see your consumption,” says Devos, reflecting on how his own “mini-Versailles”, created with a garden sprinkler system in his Paris garden, cost him dear one summer.
“Tomorrow water companies will be able offer rising block tariffs, social tariffs, all kinds of tariffs, and you’ll be able to model the impact of the tariff on your bill.”
Veolia has already implemented rising block tariffs at VW South East and is monitoring the impact. Along with a get-tough policy on its “won’t pay” customers – one that ends at the courtroom – the company believes it has quite a robust social tariff for people with disabilities and larger or poorer families, and Devos says its bad debt recovery is quite stable.
A £2.5M independent charity trust fund has also been set up and is being used to help the Citizens Advice Bureau train or appoint staff to be well-informed about water charges.
Expertise from telecoms and broadband has been brought into Veolia, and Devos consults his younger employees on how they see technology impacting on their future. While acknowledging that some older people may still want to pay bills in traditional ways, he says, “The young generation, most of our customers, want to have safe water from the tap, but they don’t want to have to deal with people in a call centre, why should they?”
Veolia is the first UK water company to introduce smart phone billing. Since March, VW Central customers have been able to read their meter and pay their bill on their iPhone or BlackBerry, and some 50,000 have downloaded the application to do so.
Devos believes customers draw comparisons with comparative contact services in energy, broadband and mobile phones, rather than other water utilities. The company plans to engage much more closely with customers on social networking interfaces like Facebook and Twitter.
Three years ago, Veolia told the regulator it would reduce customer complaints by 80% by automating all its customer experience processes. On examining its system, it found that there was no communication between the field operation and the call centre. This has now been addressed and customers no longer need to make repeat calls about the same problem.
“We have put customer at centre of everything we have done. We have halved the number of written complaints,” boasts Devos.
At the global level, Veolia has a broad portfolio of technologies and I ask where Devos thinks innovation and change will occur.
“A lot of technologies are already there,” he explains, “and they just need to find their way into the water industry. I think on the sludge side we can do a lot more on biomass, waste-to-energy and producing energy from the sludge of our wastewater operations, and I think most wastewater treatment works will become energy positive in the near future. The technology is already there, we just need to source it and implement it efficiently. It is quite tricky to operate.”
He continues: “On the wastewater side we are developing bioplastics from wastewater treatment operations, so we are working with our R&D centres to turn the wastewater into plastics, biofuel, energy. Think of waste as a product and when tomorrow the oil price is at $150 a barrel for a long time, it will make sense for all of us to think not ‘waste’ but ‘product’.”
Turning to the company’s business strategy, he says: “We are very confident about the future. It is exciting. We were very small three years ago, we are a bit bigger now and going forwards.”
While other companies talk about boom bust in the regulatory cycle causing flux in recruitment, Devos takes a different view. He says it is not an issue at Veolia Water UK given the scale of growth: “The five-year cycle is old fashioned because technological improvement is continuous.”
“UK turnover in water is £10B, so it is a £10B market. We will certainly be a bit bigger next year and the year after,” he promises. “We are responsible for half of the capital delivery of Scottish Water, we are also responsible for the capital delivery programme of Southern Water and the metering programme of Thames Water. ”
He also points to involvement on the customer experience side with Welsh Water and delivering efficiency services for Business Stream in Scotland.
“We used to be a water company and we are now a water service supplier. Our business is safety and as a consequence operational excellence and customer experience has to be implemented. We put the customer at heart of what we do.”
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