Fred Crawley talks to Don Brough about his career in motor finance, and the technical side of people management.
Don Brough, CEO of First Response Finance, is a difficult man to categorise. His delivery in interview is relaxed, persuasive and articulate, despite the conversation coming off the cuff between two appointments, and at first he seems like the consummate direct-salesman-turned-manager.
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But a look at his CV, which lists the formidable set of positions that Brough has held during his 26 years in the industry, tells a more complex story one which started with a degree in computer science, and a business analyst position with Lloyds of London, back in 1983.
I always wanted to be in charge of a business, he says reflectively, when asked how his IT background put him on the road to running a sub-prime motor finance outfit. Supporting a business through the IT side can teach you a lot, he qualifies, but it lacks the sense of direct engagement you get through management.
People management
Brough first got a feel for this difference at HFC Bank, where he worked between 1990 and 1998. Having risen through the ranks of HFCs IT division with a series of promotions for his work on telephony, automated systems management, and front-end systems development, he was posed an interesting question.
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By GlobalDataLarry Bangs, who was the CEO of HFC at the time, asked me directly what I wanted to do, and I told him very simply that I wanted to get closely involved in doing the companys business, rather than just supporting it. He made that happen, Brough says.
Making that happen meant putting Brough in charge of more than 400 staff in 70 branches, with a loan portfolio of around £270 million an astonishing opportunity, he says, that was as daunting as it was exciting.
After spending the first 10 years of his career delving into what makes a business tick, he was suddenly putting experience into action, and the challenges of managing a larger human element were an unexpected pleasure: Unlike a computer, he says, a human being wont always follow instructions, however well expressed they are, and finding ways to manage that unpredictability is something I adore.
Time out
After HFC, Brough developed his organisational skills with a spell at unit trust Flemings Save & Prosper, where his team achieved a 60 percent reduction in complaints, and in the role of operations service director at Woolwich plc, where he oversaw an 80 percent increase in calls answered, and an 85 percent reduction in executive complaints.
Then, in 1999, he took two years to undertake charity work, and make two round-the-world trips a chance, as he says, to do all the things he had never got round to doing during sixteen years in finance.
When he returned, it was to another ops director role this time with sub-prime motor finance lender First Response (FR). After two years in the job, a change to the companys senior management presented an opportunity that echoed Bangs offer back at HFC, when FRs parent company, Itochu, offered Brough the role of CEO.
The mandate was tough FR was losing money, and he was charged with implementing a set of new strategies that would bring it back into profitability but the resources he was presented with suited him very well indeed.
It was a much smaller company I had gone from managing nearly 1,000 staff to just 170 but I was much closer to the action. There was simply a much greater personal influence to be had on the values and visions of the business, and the personal relationship I had with the staff really put some integrity into the business, Brough recalls.
But the changes he had to make also drew on his experience of overseeing systems the closure of three centres, a consolidation of lines of business and a tightening of IT infrastructure brought about an 18 percent reduction in costs, while new lending strategies saw an increase in yield to a record 28.7 percent.
We pulled back the level of our advances and shortened terms each month, until our lending was in line with what customers could pay back. Arrears were reduced, profits came back up, and customers returned because they were being treated well, he explains.
Storm preparation
According to Brough, taking the scalpel to FR back in 2004 meant that by the time the recession hit, the company had a lean enough business model to avoid having to make major systemic changes. When asked how business has fared since 2007 as a result, the answer is refreshingly direct.
Were 40 percent on our way to our profit target after a third of a year, and were well up on 2008, and 2007 before that, says Brough. He explains that volumes targets were cut by 17 percent just two months into 2008, allowing the company to become self-funding by March, and setting the scene for a return to 2007s volumes again this year.
Brough predicts that by 2013, up to 35 percent of the UKs adult population will be unable to qualify for prime finance, and sees potential in that figure for cautious expansion. But he is far from advocating a gold rush into the sub-prime market.
Theres a huge opportunity, he says, but only if you know how to avoid the pitfalls. People have to be careful of diving into this market due to the margins, without realising that they come with a high cost in arrears and thats where you need to put the human element into play.
Whereas Brough unashamedly loves being in control of an organisation, hes keen to stress the two ears, one mouth school of customer service, and obviously enjoys listening to his staff as much as he enjoys telling them what to do. With an attitude like that, his CV looks set to keep growing.
