Mr Twenty Per Cent's management style - running Rentokil along army lines, setting clear goals, never talking with a subordinate's subordinate - has won him a huge City fan club. But now, says Andrew Davidson, even some of his greatest enthusiasts fear that the BET acquisition must slow growth.
Sir Clive Thompson, group chief executive of Rentokil Initial, is a man who likes to get his retaliation in first. 'Whatever qualifies you to do that?' he asks, with a rather aggressive smile, when I tell him that I want to probe his psychology. We had barely shaken hands and sat down. 'Nothing at all,' I reply, somewhat taken aback, 'except that it is one of the briefs of these interviews'. He nods and smiles, clearly pleased that we are both now on our toes. Later he tells me that one of the keys to running a successful company is ensuring that the right degree of tension is maintained, keeping people sharp. It is clearly a game he is rather good at.
Thompson has run the Rentokil business that way for 15 years now, building it from a low-profile pest control and wood preservative specialist into one of Britain's largest and most successful service groups. Every year, as he has moved Rentokil into areas like healthcare, security, cleaning services and facilities maintenance, he has stuck to his promise to boost the company's pre-tax profit and earnings per share by 20%, through thick and thin, an astonishing performance which has earned him a Gerry Robinson-sized fan club in the City. Consequently last year, when Rentokil swooped on its ailing service rival BET, the bid was barely contested, despite BET having twice Rentokil's turnover (and half its profit). Eventually BET was gobbled up for £2.1 billion in April, and Thompson rechristened his newly-enlarged company Rentokil Initial. Now, with close to £3 billion in turnover to play with, he has to prove that he can work his managerial magic on a broader canvas.
We meet in his ground-floor office at Rentokil's manor house headquarters outside East Grinstead in West Sussex. The stately home base, rebuilt in Tudorbethan style in the early 1900s, was not Thompson's choice, but that of a Rentokil predecessor. It has changed a bit, he says, from when he first saw it on a grey day in 1982 as he bowled down the drive to be interviewed for the top job at Rentokil. Then, when he walked into the gloomy, oak-panelled hall, he found no one about, just an atmosphere of shabby neglect and a telephone with a note by it, saying, 'Dial this number for Rentokil reception'. That, he says, rather summed up the company then. Now you walk in and the panelling has been stripped to a light colour, two receptionists face the door, and Thompson's office is just behind them on the right.
Inside you find more stripped panelling, books, awards, framed cartoons, an expensive-looking desk and table, and a nice view out over the mansion's mature gardens.
We sit at a side table. Thompson is lean, tall, good-looking, and well-spoken, but appears rather reserved, somewhat formal in manner. Only when he talks do you get a better hint of what he is really like: methodical, disciplined, exact, the sort of man who worries at an answer like a dog gnaws at a bone, constantly coming back to it, making sure he has covered all the right points. And then there are flashes of a rather chilly assertiveness - 'Whatever qualifies you to do that?' - which many have taken for arrogance and aggression.
Rather, say his friends, he is direct and uncomplicated, virtues which he admires in others too. He likes to describe himself as 'conventional in lifestyle and unconventional in business', a private man who doesn't see himself as part of the mainstream management establishment and has resisted an entry in Who's Who for many years. Yet he has been a diligent worker for the CBI, and last year accepted a knighthood in the Queen's Birthday Honours List, an accolade which his associates say he worked hard to get. Half-in, half-out, perhaps. You could easily imagine him as one of those cravated special forces officers who spend all night toasting the Queen before rushing out to do abominable things to the enemy with frightening precision.
Thompson says he is not an entrepreneur, simply a successful corporate manager, who got into the right company at the right time with the right vision. People forget, he says, that he had worked at Shell, Boots and Cadbury Schweppes before he came to Rentokil, and that he already knew how to run a large-scale operation. He came, he says, because he wanted to run his own public company and at Cadbury, he had too many talented men (Neville Bain, Michael Gifford, Dominic Cadbury) in front of him.
So he looked for a company which he could build on and, because he is the sort of man who likes to think things out, he already had a view as to what growth areas to aim at.
'I believe that people with growing living standards basically want those activities which they find less interesting to be done by others,' he says. 'These types of industries have been the great growth industries of the last 10 years and will be for the next 20 years.' And then he simply brought his methodical nous for markets and his talent for systems to bear on the framework that was already there when he took over: a well-regarded but low-profile service company with good employees and terrible managers.
Over 15 years, through organic growth and acquisition he has expanded Rentokil into a blue-chip multinational operating in over 40 countries worldwide. His focus has been on bog-standard, blue-collar services, sold to middle managers at corporate clients, who are prepared to pay a bit more because they trust the Rentokil brand.
A lot of the services the company provides are basic: removing sanitary towels or disposing of used needles, for example. Rentokil does 'scummy businesses' really well, summed up one analyst last year (he later apologised for the remark). Thompson prefers to describe the services as either 'distress purchases', where the buyer is concerned about the downside, or 'cosmetic services', like tropical plants (UK turnover: £10 million), which are inessential but help enhance an ambience. You can't help noting, as he says it, that he has a particularly huge and well-polished yukka by his own window.
Many now rate Thompson as one of the best all-round managers in Britain. 'He's been very clever,' says Peter Jansen, chief executive of Caradon, on whose board Thompson sat for 10 years.
'He got out of those parts of the business which weren't going to grow, in particular those vulnerable to competition from what I call momma-and-poppa outfits, little specialist companies that don't last very long but nibble at your margins, and he stuck to areas where he had a formula the customer preferred. That's what's unusual about Clive: he is a really broad strategic thinker but he's also meticulous in implementing his plans. Most businessmen are good at one or the other, not both.'
There are other factors too: Thompson's ability to train, motivate and supervise a predominantly blue-collar workforce, and his talent for making managers work towards clear goals, including the legendary 20% annual profit growth. Does everyone have to produce it? 'No,' says Thompson, 'managers in groups with better opportunities have to produce 30%-40%, others in weaker areas only have to produce 10% or 15%.' He pauses for effect, before continuing, 'but those who do, feel that it is inadequate ...'
You bet they do, but hasn't the emphasis on 20%, and Thompson's extraordinary record in hitting the target for so long, become something of a millstone? He won't admit it, but adds tellingly, 'I think I would sleep better if I didn't have it, but I don't necessarily think it is in the interests of my shareholders that I sleep better'. Those shareholders include Rentokil's Danish owner, the holding company Sophus Berendsen, which has seen its stake in the group reduced from 52% to 36% by the BET acquisition. Despite rumours to the contrary, the Danes appear to have backed Thompson to the hilt. Another senior businessman says Thompson's ability to deal with an overseas owner (which he inherited) has also been crucial to his success: 'That capacity doesn't always come easily to people of his temperament. It can be a very sensitive thing to do.'
Thompson demands the same strengths from all his managers: straightforwardness, numeracy, clarity of thought and ambition - all his own qualities, of course. He won't tolerate any backbiting or internal politics within the company, and hates excuses and sloppy work. If that makes him sound tough and autocratic, he is, say colleagues, but if you fit in, it is a very good life. He likes his golf and sport, and doesn't want anyone at Rentokil Initial working 20-hour days, seven days a week. And yes, says Thompson, before I can even make the point, for his 150,000 employees, it is a bit like being in the Army.
'This is a martial organisation,' he says. 'The branch managers run individual activities in small areas. They report to area managers who report to general managers who report to managing directors of the country who report to regional managing directors who report to me.' The lines of command are clearly mapped out: he never deals with a subordinate's subordinate, and has only ever met one major client in his time at Rentokil (the boss of McDonald's Japan who wanted to meet him before giving Rentokil the cleaning contract for 200 outlets). 'If you are going to have a large amount of people marching in the same direction,' Rentokil's finance director Christopher Heath explains,'you have to have that kind of respect for the organisation and the line of command.'
Thompson says that he has been fascinated by business since he was boy. His father was a Bristol-based industrialist, chairman of a chemical manufacturing subsidiary of RTZ, with a passion for the stock market which he passed on to his son. Thompson, the eldest boy out of four children, went to Clifton College and then on to Birmingham University, where he read chemistry, inspired by Harold Wilson's vision of a technocratic future. One year into the course, Thompson realised that he would never be a good chemist and started thinking about a job in business instead.
Was he ambitious then? 'No,' he says, 'until I left university I think I was probably rather unambitious in terms of career. I was ambitious in terms of wanting to win but winning to me was about winning on the sports field or at cards.' It was only after he joined Shell, as a marketing trainee, that his ambition was tweaked by his peers. 'There were nine trainees in all and they were extremely competitive, watching to see who made it first to minor promotions. I thought it looked rather a good game, and a game worth winning. For years afterward, we would meet up and compare how we were doing, even after most of us had left. That all changed my view on being successful.'
He left Shell because he thought it would take decades for him to get to a decision-making position. 'I told them they were like the old Everton football club: they used to buy all the best players and then not have room for them in the first team.' He joined Boots, working for its pharmaceutical division in Africa. That, he says, was 'marketing in the raw'. Not wanting to be an expat, he returned to Britain and was recruited by Jeyes, where he ended up running its most successful subsidiary, aerosol packing, at the tender age of 29. Then Jeyes was bought by Cadbury Schweppes.
They were interesting times. Only recently merged, Cadbury Schweppes was, he says, effectively split in terms of corporate culture. The Cadbury managers were long-term players, brilliant strategists, while the Schweppes people were wheeler-dealers, more entrepreneurial. He sided with the Cadbury men, a move which probably helped knock off some of his rough edges. He was, he cheerily admits, a very aggressive manager in his youth. 'I was running organisations in my late 20s and early 30s where I was the youngest person for four or five layers down. You don't get to those positions by being conventional. You get to senior positions in your late 30s by being conventional.' Just what he means by unconventional, he doesn't say, but by 35, he was a Cadbury Schweppes main board director. By his late 30s, convinced it would take too long to get to the top at Cadbury, he was firmly installed at Rentokil. He knew rapidly that he had made the right decision, and even turned down an attractive offer to head up the Sketchley group which came in just three weeks after he had started - a fact which, he says, he has never told anyone before.
Now, after 15 years of patiently building up Rentokil the slow way, he has changed tack again, trebling its size overnight by taking on BET.
It is a move which has worried some of his fans in the City, who believe the years of unrelenting growth must come to a stop now as Thompson struggles to integrate BET's ailing businesses. There are bits that just don't fit with Rentokil - plant hire, conference centres and resort management, for example. And the BET margins, at 7%, are a long way below Rentokil's 20%-plus. Already there has been a twitchy reaction to Rentokil's declaration that it might not sell as much as others thought it should. One analyst described Thompson's claim of 70% overlap between the two groups as pure sophistry and, of late, the press has become slightly critical. Some have even accused Thompson of building a conglomerate, a dreaded criticism in these days when focus is such a highly praised attribute.
So, is he? He sighs. 'One of the things I have found with the press is that they write things which they believe and then, if you don't do what they wrote, they get upset and say you said it. There is an immediate overlap between Rentokil and BET. Where we have the same activities in the same localities is probably 40%, and then there is a further 30% which is complementary: BET had electronic security, we had man-guarding; they have textile services, we have hygiene disposal businesses. The remaining 30%, including its plant services and leisure arms, does not overlap.
We said we would review those, and we are reviewing some of the periphery businesses in Rentokil as well.' If the performance can be improved, he will keep the businesses, he says, and he will only sell if he can get the right price.
So is he building a conglomerate? 'No,' he says, 'we are an industrial commercial service company. All our businesses are run in the same way: they have the same trading accounts, the same requirements of management, to the extent that you can transfer management from pest control to tropical plants to security to healthcare; all are capable of being run by the same people. The only thing that is different is that they have different technology.
We can transfer management from any country to any division anywhere.
If we can do that, we are no more a conglomerate, I would argue, than Unilever, which sees itself as a consumer product company. So tell me, what's the relationship between toiletries and margarine?' Is he a Unilever fan? Well, he says, he admires Unilever's 'corporate ethos' but actually he sees himself as more of a Procter & Gamble enthusiast. 'I think it is sharper commercially. Sharpness is very important.'
As he found out recently when he ran into a well-publicised wrangle with John Clark, the American chief executive heading up BET at the time of the Rentokil takeover. Thompson, in typical no-nonsense style, had decided even before the bid was over to dismiss all the BET senior executives and disband its head office. He found that Clark had a three-year rolling contract, a £1 million-a-year salary and an American's determination to be paid off in full. Thompson, who earns close to £900,000 a year himself, refused.
Clark took Rentokil to court and won. Thompson has now appealed, and the case will be heard next year. It has all been a lot of fun for others to watch, especially as Thompson is not a man used to losing his battles.
Even his friends think he misjudged Clark. 'I think Clive is actually rather puritanical about this,' chuckles one. 'He genuinely believes managers get away with too much nowadays and that Clark's kind of contract is no longer acceptable.'
Any hard feelings? 'None at all,' says Thompson smoothly, spreading his hands out in front of him. 'In retrospect, I think we should have paid him more.' He shrugs. 'I have some admiration for the way he took us to court and won. He won game, set and match in every respect.' But was his own decision not to pay what Clark wanted a moral judgment? No, he says, although he thinks people should remember that Clark also made around £3 million on his BET shares. Was it personal, then? He looks surprised by the question. 'No,' he says, 'there are very few issues where personal emotional views come into play here. I do try to be fairly clinical.'
So is he a vain man? I ask this because many find it difficult to work out what drives him, and even his friends say that he is a hard man to properly get to know. There are certain contradictions going on: he loves his large, green Bentley, gives £1,000 a year to the Conservative Party, lives in a big house outside Sevenoaks in Kent, runs a world-respected company, yet shudders at the thought that anyone should think he is 'conventional' in business. And despite his entreaties that he really is a private man - he won't, for instance, tell me if his two sons work for Rentokil Initial (they don't) - he seems rather hurt when I ask if he thinks he has a low profile, and points out that, actually, he has just been on the Today programme on BBC's Radio 4.
The vanity question perplexes him. 'I'm not quite sure what you mean,' he says before answering in characteristically honest style. 'I suspect like most people who have set out to achieve success, there must be some element of vanity, mustn't there? Most people embark on a career in order to provide themselves with a living, and those who are reasonably successful find themselves in a position where money can't be the motivation any longer and they ask themselves: what the hell am I working for? Some resolve it and others never resolve it.'
Has he? He sits and thinks for a long time. Some believed Thompson might have come close to quitting a couple of years ago. He had taken the company about as far as it could go in its current guise, and seemed keen for a fresh challenge. In the end, Rentokil bought BET, and Thompson found himself a whole new mountain to climb. Thompson won't confirm the rumour. He says he works because he loves the company he has built, and he enjoys mixing with the people in it: 'action-oriented, uncomplicated people'. It's like a club, he says, and that surely must be as good a reason as any to keep coming in, mustn't it?
I suppose so. Later, as I am pondering the point, he rings me on his car phone. He has just remembered that he called me 'Alan' at the beginning of the interview. He is mortified.
'I really am very sorry,' he says. 'You know, I do pride myself on my inter-personal skills.' Me too, I say, which is why I hadn't corrected him. I didn't want to make him feel uncomfortable, even if he was trying to keep me on my toes.
We agree it didn't matter at all. But on reflection, others might think the call was rather telling. Thompson, the great organiser, is not a man who likes to leave loose ends.
1943 - Born Bristol, 4 April Educated Clifton College and Birmingham University
1964 - Marketing trainee, Shell
1968 - General manager, Boots East Africa
1971 - General manager, Jeyes Group
1978 - Director, Cadbury Schweppes
1982 - Chief executive, Rentokil
1990 - Chairman, CBI South East region
1996 - Knighted in the Queen's Birthday Honours List
Sir Clive Thompson is also a director of J Sainsbury, BAT Industries and Farepak plcs.
WHAT PEOPLE SAY
'Clive has all the attributes of a strong leader. He was probably seen as slightly less consultative than others at Cadbury. He had a view as to where he wanted his business to go and he was appropriately ruthless in pursuing it.'
Neville Bain, chief executive of Coats Viyella, and a former colleague at Cadbury Schweppes
'Clive is a deep strategic thinker. He knows what in his business will provide long-term value and what won't, and he has shown enormous courage in following that through.'
Peter Jansen, chief executive of Caradon plc
'Clive is very purposeful and determined, and combines that with a certain charm and good communication skills. And to achieve what he has, you need to have pretty hard lead in your pencil too.'
Sir Michael Angus, chairman of Boots, and former president of the CBI
'Clive is not the sort of chief executive who leaves drafting meetings to the advisers.'
A Rentokil adviser during the BET bid 'I think Clive is surprised that a lot of analysts still don't understand what makes Rentokil tick. They don't comprehend how he has been able to manage a blue-collar workforce so successfully.'
Mike Murphy, analyst SG Warburg, Rentokil's broker.