TALL, blond and very posh, John Griffith-Jones strides into the boardroom in his shirtsleeves. “Are you expecting me?” he grins.
I am.
“Jolly good,” he says, plonking his papers down on the table before wandering off for a coffee from the sideboard. Griffith-Jones, 52, who next month steps up to become boss of the accountancy giant KPMG (“senior partner” in the parlance), settles himself in and then studies me through glacially blue eyes. “Right.”
Right. Griffith-Jones is, by reputation, a man who likes to get things done. A former major in the Territorial Army, he spent a key chunk of his career at KPMG developing its corporate-finance arm, and still carries a whiff of banker’s decisiveness about him. Skinny and thin-shouldered, with skeletal features and sun-freckled cranium, he looks severe and rather vulnerable simultaneously.
That mix could come in handy in his new role. Running the British end of KPMG, one of the Big Four global accounting groups, is traditionally one of the best-paid jobs in the City. It is also, these days, something of a hot seat.
Governments, regulators and corporate customers want to see more competition among the Big Four — KPMG, Price Waterhouse Coopers (PWC), Deloitte, and Ernst & Young. They also want a tighter clamp on what services they sell outside the traditional auditing of accounts. More regulation could be on the cards.
Yet, conversely, nobody wants to do anything that could undermine the groups’ viability and turn the Big Four into a Big Three. Since the collapse of Enron and the break-up of its auditor Arthur Andersen, governments have backed off from making the Big Four fully liable for all errors. Who would have thought accountancy could be so fraught? So, sitting high up in KPMG’s base off London’s Fleet Street, Griffith-Jones has plenty to occupy his well- ordered mind. And he argues that, while society must regulate as it sees fit, it meddles with what works at its peril.
“The City is a complicated engine built by someone long since dead, and nobody really knows how it fits together anymore, but it still works, and is vital for the GDP of the country, and the accounting profession is an important cog. Having accurate accounts for people to buy and sell shares is essential, and if you pull that cog out or put an extra tooth in it, well...”
And then he develops an eloquent argument that shows how any prescriptive clamp on how audits are done, or to prevent the big groups selling any non-audit services, would cut the flow of talent into the firms, which provide an essential training ground for the future finance directors and bosses of the FTSE 100. Fifteen years down the line, British business would fall apart.
Well, maybe, but you have to give Griffith-Jones points for persuasiveness. The son of a High Court judge and an old Etonian to boot, he can be articulate and diffident in turn. “I don’t think I was ever as good an auditor as my colleagues,” he sighs at one point. “I’m too creative.”
Creative accounting? “Oh for goodness sake, don’t put that together,” he laughs.
At KPMG, which has been the fastest-growing of the Big Four in recent years, he will be a change in style from Mike Rake, the previous senior partner. Rake, chunky and aggressive, oversaw considerable change and stays on as international chairman. He earned £3m last year and keeps polo ponies.
Griffith-Jones, on the other hand, prefers dinghy sailing and is expected to show a more cautious hand on the tiller. His colleagues, however, remember that in the downturn of business after Enron, it was Griffith-Jones who devised and implemented the redundancy programme behind a sweeping reorganisation. Whatever happens, it could be brutal. And please don’t ask him about pay.
“Actually, I don’t know how much I will earn,” he says sharply. “It’s up to my colleagues — we divvy up the profits at the end of the year.”
Such are the intricacies of heading a partnership. Griffith-Jones, who was Rake’s No 2, was elected to the top slot with a ballot, prepared by the board, in which his was the only name on the paper.
“Yes, almost East German, isn’t it?” he laughs. But, he adds, the prospect of any losers getting cheesed off enough to leave is not attractive to the firm’s 560 partners. Those shared-out profits might get dented.
And that makes leading KPMG in Britain a tricky balancing act. The firm is traditionally close to government, and recently won the Bank of England’s business from rival PWC.
But the worldwide operation runs as a series of national firms federated into a global group, and any boss has to liaise with the senior partners in other countries, and clarify priorities with a global office that oversees a co-ordinated approach to multinational clients. (The international chairmanship is shared in turn between the bigger countries.) Then you identify common areas to expand into and persuade your partners that it’s worth following your lead. Giving orders doesn’t work.
“John must take the partners with him,” says one of Griffith-Jones’s colleagues. “But if he moves them too far out of their comfort zone, he will find himself isolated.”
And that’s before he even deals with government and regulators. The Financial Reporting Council, which regulates governance, is now investigating audit choice. It is holding an open meeting later this month to discuss its findings so far.
Are the Big Four running an oligopoly? Griffith-Jones blinks. “I assure you the pitches for business are the most competitive thing you have seen. There is no evidence of oligopical pricing — you get that when there are two competitors, not four.”
But many multinationals often have no choice at all, finding some of the Big Four conflicted out because of others they work for. “Perhaps for the very largest ones,” nods Griffith-Jones. “But not for most.”
Should the government intervene to create a fifth global competitor? “The thing that would be most worrying would be if four went down to three, so I wouldn’t risk anything.”
He wants his firm to sell more non-audit services to non-audit clients, but not stray too far from its key accounting skills. And he is cagey about size for size’s sake. After a sparkling 2004-5 with almost £1.3 billion in revenue (£357m from audit), KPMG had hoped to overtake Deloitte to clinch the No 2 slot behind PWC. Right now, though, Griffith-Jones hedges his bets: “We may or may not — we are right on their heels.”
Nor is he concerned about overtaking PWC (£1.8 billion revenue). “We could overtake Deloitte tomorrow by merging with other companies, but why do that? Clients are not interested in who is one, two or three, and regulators don’t want us hoovering up any more small competitors.”
His ambition instead is simply to make KPMG the best, and a force for good. His challenge, as it was Rake’s, is to differentiate the group from its rivals. For most of us, the Big Four are pretty similar.
“Well,” he shrugs, “audit is audit, but it’s a bit like buying a Ford from two dealers: the experience can be quite different.”
He cites niceness, energy, co-operativeness and intellect as key KPMG distinctions. Its rivals tick those boxes too, of course, and you get the sense that all the Big Four are watching each other so closely that real innovation is hard to find.
What separates Griffith-Jones, say others, is that he is quick to make decisions, and very good at implementation. “The thing about John is that he is seriously bright, but unlike many intellectuals he is very pragmatic,” says Steve Hollis, head of markets at KPMG. “And he doesn’t like things staying the same. He is always driving for change.”
Griffith-Jones ascribes some of that style to his army experience. “Leadership is not about badges or rank, it’s about persuading people to do things they don’t necessarily want to do but afterwards realise is for their own good,” he says.
Griffith-Jones toyed with the idea of an army career before university but after a trial commission, decided it wasn’t for him. “I am too creative. It requires iron discipline and is somewhat unthinking.” He weekended in the TA instead.
He fell into Peat Marwick (later KPMG) because he was numerate, and accountancy was one of the few professions hiring in the slump of 1974. He has stayed there ever since.
And that was despite considerable pressure from his father earlier on to become a lawyer. He resisted, as did his brother and sister. “My father pushed too hard and we shot off in different directions.”
His brother is now vicar and master of the Temple church. His sister works for Pepsi. His father, incidentally, was the prosecuting barrister in the Lady Chatterley’s Lover trial in the early 1960s who asked if the jury would be happy at their wives and servants reading such a book. That might put anyone off the law.
So, working his way up KPMG, Griffith-Jones had more than most to prove. He says he simply enjoyed the teamwork and independence. “You have to make your own way in life here.” He worked closely on Lonrho and Stena shipping, and before becoming a partner was nearly tempted to jump out of KPMG into the management buyout of Phicom, which later became Life Sciences. No regrets at staying? “None at all.”
And as for the idea that Griffith-Jones is terribly upper-crust — yes, he sends his son to Eton — he’s happy to debunk that a bit. He tells me the story of how his father paid for the family roots to be researched, believing the Griffith-Joneses to be descended from Welsh royalty. “The trail went cold with a bastard pub-keeper in Swansea,” grins Griffith-Jones. And that, he adds, is the gene that probably accounts for his numeracy. “Two halves of ale, that’ll be three and six.”
And he creases up laughing.
Vital statistics
Born: May 11, 1954
Marital status: married, with two children
School: Eton
University: Trinity Hall, Cambridge
First job: articled clerk at Peat Marwick
Salary package: undisclosed — his predecessor was paid £2.4m, including bonus
Homes: Chelsea, Chelmsford and Norfolk
Car: green VW Polo
Favourite book: Stalin, by Simon Sebag Montefiore
Music: The Veil of the Temple, by Sir John Taverner
Film: Four Weddings and a Funeral
Last holiday: Galapagos
John Griffith-Jones's working day
THE alarm rings by the bed of KPMG’s senior partner at 6.45am. If he’s at his home in Essex, John Griffith-Jones drives his R-reg Polo to the station, takes a train to Liverpool Street, and a bus to his office near Fleet Street. He is at his desk by 8.30am.
“Most days I will be seeing clients, talking to an influencer — whether that’s a minister, regulator or a journalist — and having meetings internally, talking about what we should do next around the business. What are the competition doing, what’s the image like, how can we build the brand?” He lunches with contacts at the Savoy Grill, and often attends functions in the evenings.
“My brain starts packing up at around 7pm, but there’s something I could go to every night.” He also travels abroad to attend the international board of KPMG.
Downtime
AT WEEKENDS John Griffith-Jones likes to sail small dinghies. “I took against it as a child but I like it now. We have a boat on the Blackwater. Nothing grand — I worked out that size is a great determinant of cost.”
He also enjoys designing and building. “We moved to my mother-in-law’s house outside Chelmsford and I developed a bit of an interest in architecture. We rebuilt an extension and I got Quinlan Terry to do some drawings. The project wasn’t big enough for him but he did design me a very neat staircase that I am very proud of.”
“And, of course, KPMG is negotiating to move into a new building at Canary Wharf. I have already sent a frisson through the negotiating team by asking whether I could meet the architect,” says Griffith-Jones. “If I had another life, being an architect would be fascinating.”
