A people person

Good people are the key to a successful business as far as Richard Harpin, chief executive of home emergency and warranty services provider Homeserve, is concerned. He includes this as one of his four principles of business, along with being the best at what you do, being innovative and having fun.

Mr Harpin takes recruitment extremely seriously, so much so that he has headhunted a headhunter to acquire quality people who can help Homeserve achieve its main objective of becoming the brand recognised as 'the AA' for the home emergency sector.

"The biggest challenge is continuing to recruit more good people into the business and so we now have our own headhunter who is directly employed.

His sole job is to recruit senior management into the business," he says.

As an illustration of this, Mr Harpin explains that the company recruited a high-calibre individual to head up its amalgamated appliance warranty and retail warranty division after the two businesses were brought together three months ago.

"The whole warranty division is now run by Edwards Fitzmaurice, who joined us from Dixon stores group where he was managing director of the Mastercare business, responsible for the whole of Dixon's warranty operations."

Mr Harpin sees training as the key to keeping staff and ensuring standards remain high. "We believe in training," he says. "All repairers have to go through one of our three skills training centres and we rate every one of our engineers in terms of their skills level."

And when you look at the company's expansion to date, this mantra seems to have stood him in good stead. Established in 1993 as part of Staffordshire Water, with £100 000 investment to provide home assistance and warranty cover, the company de-merged in 2004 and listed on the stock exchange, entering the FTSE 250 with a market capitalisation of £400m.

Since then, share prices have risen steadily from £5.60 to £9.60, as of 15 June, helped by the company's acquisition of fire and restoration specialist Chem Dry earlier this year.

It has also seen a 31% increase in policy numbers in the last year, reaching 3.9 million policies on home assistance worth £100m in sales.

In addition, Homeserve has signed warranty deals this year with Rangemaster, part of Aga Foodservice Group, as well as the UK's second largest boiler manufacturer, and sits on panels for Royal Bank of Scotland, Zurich, and Royal and Sun Alliance for home assistance. However, one major objective it has yet to achieve is to work with a major white goods manufacturer on warranties.

On the home assistance side of the business, there are also ambitious plans. "Our model is unique because it is local," claims Mr Harpin. "We have national pricing and national coverage but we have 37 local depots from which the emergency services business is run and we can now offer a complete repair service."

Awareness boost

"Our objective is to grow awareness of the Homeserve name in the business community to help attract new business partners and become 'the AA' for home emergencies. If there was one national high-quality supplier that could do all of that, it would be of great benefit to insurers and that is where we are planning to get to," he says.

Acquisitions will play a central role in achieving these aims, although the company has no plans to go directly to consumers: "We are looking for acquisitions, especially small acquisitions under £20m, in areas where we are already operating. This is not to extend the model but provide additional 'in-fill' to supplement organic growth in terms of additional repairers, emergency repair business and home assistance businesses."

The firm also operates in Europe, Australia and the US and plans to roll out its model worldwide by opening in one new country per year, as well as in one additional country in mainland Europe by the end of this year.

Mr Harpin says he first of all plans to tackle the challenges faced in the UK market. One issue is that it can take 90 to 120 days to carry out an average job of about £1200 because it involves two and a half contractors per claim.

He says there are too many customer calls coming into insurers saying: 'What's going on - the job's been left half done'; and that the solution is not to send call centres to India but to get the job done quicker.

The best way to do this, he believes, is to use one main provider.

What of the critics who argue that smaller contractors are being pushed out of the market by acquisitive companies like Homeserve? Mr Harpin responds by saying his business is trying to help these individuals. "Inevitably, one of the issues in the market is that small builders are not geared up to offer the quality of customer service that major household insurers and their domestic customers want," he says. "Our national network consists of 270 small local builders where we have managed to achieve reduced lead times and develop a more consistent service."

This means household insurers need only deal with one operation, which is, he claims, much more cost-effective than trying to deal with a large number of small jobbing builders themselves.

And this brings Mr Harpin back to quality people: "The biggest challenge we face is that we are only as good as our worst subcontractor and his worst tradesman on that tradesman's worst day," he concludes. "That is how we get judged. We are constantly monitoring service and are now performing more than one million repairs a year, which means having the right staff is key."

See Damage Management spotlight, pp17-18.