Chris O'Shea

CEO, Centrica

13 February 2024

Chris O'Shea


Accountability and Setting Targets

Chris O'Shea

Tell us about your personal journey

I studied accountancy at school, so I was doomed probably to become an accountant from an early age. For two reasons. One, I was quite good with numbers - that came quite easily. And the second one, was that my parents were self-employed, but their business got into difficulty when I was ten or 11 years old and we had to move from Fife, where I was brought up for the first ten years of my life, to Glasgow, which is only 60 miles, but it seemed at the time to be the end of the world. And there was a lot of instability and the one beacon of stability was a family friend who was also the family accountant. Now, I didn't realise at the time but I think that had quite a big impact on me. And so when I went to my high school in Hamilton just outside Glasgow, numbers came easily. I clearly had this thing in my mind and they offered an O Grade, which is the equivalent of a GCSE in accountancy. So I found that quite straightforward, the equivalent of an A-level, and then went to university to study accountancy. I didn't know that you could study something else and become an accountant. So I wanted to be a professional. I applied to do law. I was invited to Oxford for interview. It was a complete disaster. I was unceremoniously rejected and so I decided I wanted to take my main offer and my subsidiary offer in one subject. So I accepted places in Glasgow and Heriot-Watt in accountancy. So I did that.

So I was newly married and I applied for a job with Ernst Young in Aberdeen, which is 150 miles away from Glasgow. So again, a bit of a further journey from Fife to Glasgow. And I was invited for interview and it was to do with tax. So I got the train to Aberdeen, I read up on Tax and Oil companies. I assumed oil companies would be involved as it was Aberdeen and the person that interviewed me was an old taxation expert, so he was quite impressed at this and they offered me the job at the interview, which I accepted.

And when I came out of the interview I suddenly thought, got newly married, got a new baby, and we've just agreed to move to the city. We don't know anybody. So that seemed a little bit impulsive. But Stacey, my wife, and I had discussed it beforehand, and agreed if I was offered the job, we were both willing to move. And then I went in this team [on secondment] at Shell and I really enjoyed that. And Shell offered me a job and I stayed. I worked with them in Aberdeen, I moved to London. And then I went to the US to work in the tax department in Houston. When I was there, I did an MBA. Shell were very kind and sponsored me to do an MBA, and the reason I wanted to do that is I looked at Shell at that point had recruited a CFO from the outside for the first time. And my very basic thinking was they're going to be bringing people in with other qualifications, so I’ll try that.

Is your Pathway a traditional route at Centrica?

Centrica has had four Chief Executives in its history. It's been a separate company since 1997. The first, Roy had been the CFO of British Gas, then Sam Laidlaw. Sam succeeded Roy. Sam is a lawyer by training but had really been in business development and had Profit and Loss experience and accountability in the Oil & Gas business. He'd [also] been the CEO of another company. And then Ian Conn came in. Ian was an engineer by training. So I think there's no one route to being CEO. I think there are advantages and disadvantages of different routes. So the advantage of becoming a CFO before becoming the CEO is you understand how the corporate works. You understand how all of the investor relations, all of the funding, etc works. But what you may not have is, is the experience of running a profit and loss account, of feeling that day-to-day responsibility for delivering profits. So there are some benefits if you go from being a CFO, but there are some downsides as well. I think that the question of the route to being the CEO can be somewhat dependent upon the support structure you can put around it. So I think that it's probably more difficult and rarer to become the CEO from being a functional leader other than the CFO. Now there are some examples. You take Leena at Chanel; she was the group HR director for Unilever. There are some ex-lawyers, Andy Ransome, is the CEO of Rentokil. Andy was a lawyer by training. So there are some examples of it, but there are far more examples of being CFO. And there's also an awful lot of examples from being a P&L leader, but you need to have the right match with the right support structure with the Chief People Officer with the Chief Financial Officer.

What makes people good leaders?

I think it's situational. I think it depends on the stage of the company, the stage of the economy and also on the individual. I think that the benefit of experiences is incredible. So having seen adversity I think is really important. So I think that you find people that may not have experienced adversity may well then struggle if they're in a role that all of a sudden things start to go wrong. [At Centrica] we had to take quite radical steps. You know, we sold businesses; we laid-off 5,000 people, 4,000 managers. We took six layers out the organisation. We had to conduct some really quite radical surgery. We had to reconnect with our colleagues. But I'd seen adversity in different roles. It is deeply unpleasant to have to lose colleagues. It's, you know, that wasn't the worst thing that had happened in my life. So I think that having a variety of experience is important, but it can be in one function. It's just, you know, different in different situations. I think the different situations you experience are very important.

Do CEO appointments change depending on the economy?

I think that, we've got an economic downturn at the moment, whether it's a proper recession, who knows? But having people that are financially literate and financially savvy I think is quite important. Boards are sometimes very risk averse. And I think boards in the UK are becoming more and more risk averse. And some of that's being driven by some of the governance rules that we've got. And therefore, if you're looking for somebody and if you think you've got financial crisis coming, maybe the easiest person to appoint is your Chief Financial Officer. But what you've got to look at, and I think what the best boards do is they look at the qualities of the individual. They look at their abilities. So you don't need to be a CFO or an accountant to be financially literate. But what you do need to be is interested, and you need to be aware, and you need to understand how to finance a company. If finance is going to be a problem. You got to understand how to finance it. If you're in a growth phase in a company, you may find fewer CFOs are appointed – as CFOs don't have a reputation for growing businesses. They have a reputation for pruning businesses, for controlling costs, for controlling capital allocation. So you probably find more creative, innovative people. But I would argue you can have creative, innovative people that are CFOs. You just have to look at the attributes rather than the job title.

Can you tell us about your Pathway to CEO?

So we moved to just outside Reading with BG Group and I spent about seven years there. Seven years doing three jobs, one as the deputy controller and then two regional CFO jobs, and I learned a lot. And it was a quite a different experience, quite a different environment because Shell was a very large company. It was going through a huge crisis at the time I left and BG Group was this company that was growing substantially. So it was really interesting to get the different perspectives actually of businesses in different stages of the lifecycle.

From that I went to a company called Vesuvius to be the CFO, a FTSE250 business I then went to work for 3 years there. Smiths Group, I was the CFO there. I didn't spend as long as I would like, left after two years. There was a governance issue that I didn't feel very comfortable with, so I thought the best thing to do was to resign. Then I had a very weird experience. I had 16 months off between leaving Smiths Group and joining Centrica which was a bit of an emotional roller coaster because if you realise you still want to work but you don't know where the next job's coming from.

So I was very lucky to be offered the job with Centrica and I joined Centrica in 2018. We announced the CEO was leaving and then I think about eight months later, the chairman stepped down due to ill health. We appointed a new chairman and he asked if I would do the job as CEO. The search had been going on for quite some time. So I said: “The only thing I ask is don't ask me to do on an interim basis. If you want to appoint someone else, I'll support them and stay with them., I'll give you at least a year if it doesn't work out.” And he called different board members and he got back to me and said: “I'd like you to do it on an interim basis, but I promise you it won't be for long.” So, I mean, I like the chairman, so I agreed to do that. He was as good as his word because four weeks later he called me back and said: “We’ve completed the search. Would you like to do it on a permanent basis?” And I was I was really honoured to be asked.

Can you tell us about these role models?

So we have arguably our two biggest roles from a people perspective in Centrica have female managing directors, female [divisional] CEOs.  So our services business which has 65% of our workforce, so the best part of 13,000 people. The managing director there, Jana Siber, was an external recruit. She came in just around two years ago and she'd been the managing director for Aviva in North West Europe. She’d worked in senior positions for Avis and Bain, the consulting group. And interestingly, is a trained midwife. Jana’s first job was as a midwife in the Czech Republic. So our biggest people leadership role has a female CEO. British Gas Energy, which is the UK's largest energy retailer, the managing director there is Catherine O’Kelly. So Catherine joined us 14 years ago from Booz Allen Hamilton consultancy. Did the number of jobs. She was chief of staff to the CEO. She ran the smart meter program. She became the managing director for our business in Ireland. And, and I think two and a half years ago, she became the managing director for British Gas Energy. So two of our very big business units are run by women. And it's really important that our colleagues can see that they have role models. Now, the reason that Yana and Catherine are in these roles is because they are absolutely fantastic at the jobs and the best people for the role. They're not there to be role models. It just so happens that they are role models.

We then have at the next levels down, we have a number of people in very senior roles. The head of an engineering workforce, Elena Karpathatkis, she joined us earlier this year. She came from BT.  She leads our field service force of 8,000 engineers, the vast majority of whom are male. And that's probably a role where people in the past would maybe have struggled. It's been a very male dominated environment, men in vans out with tools, fixing boilers. We're taking steps to address that.We've got more than 10% female representation there, but the progress is slow. We are really trying hard to attract more women into STEM roles, but women only make up 30% or just under 30% of STEM roles. And they are very hard to recruit for that, but we are committed to making change there.

There are a number of other women across the organisation, Linsey McGarrigle, who leads our customer service operation in services; Lou Billingham, who leads customer services in energy. What that means is that people that are working on the front line can look and see: “Actually, I can achieve that”. What we're also doing, is we're investing in the development of our people because I genuinely believe that we have people on the phones and in vans today that could be the chief executive of Centrica. What we need to do is to give them the opportunity to develop and to provide them with support so that they can develop into these roles. But it's very important that they look and see: “Actually, I could do that. I'm like Catherine. I'm like Jana, I’m like Lou, I’m like Linsey, I'm like Elena”, that's super important.

What does the pipeline of senior women look like at Centrica?

I feel very strongly that in order to address inequalities that we have at senior levels in corporate UK, and actually in other countries as well, is you need to have a proper pipeline. So you cannot simply have role models. If you don't have the entry level talent coming in, then you've got a problem. But if you've only got the entry level talent and you don't have the role models then people may not feel they have role models to which in positions that they can aspire to. So what we're trying to do in Centrica is to make sure very simply is I don't accept all male shortlists. It's just not possible. I never had quotas for roles, but I wouldn't accept an all-male shortlist and sometimes headhunters needed a bit of persuasion. What we've tried to do at Centrica is to make sure that we monitor and we hold ourselves accountable. In the last 12 months, 29% of senior hires have been female and 41% of internal promotions have been female. We have an aim to have around 50% of our workforce being female by 2030. And that has to be across all levels of the workforce. So clearly 29% of hires and 41% of internal promotions is better than it was, but it's not yet as good as it needs to be. In our workforce now we've got 33% female representation, which is up 5% in the last 12 to 24 months. So we're moving in the right direction. But the discussions that we've had with the leadership team is if we continue at the same pace, we're not going to make a target in 2030.

So we've got to continually challenge ourselves. To ask why we're not getting the results we’re looking for, diagnose the problem, take action and then continue, whereby you're always monitoring and adjusting as you go through to figure out what works and what doesn't work.

Why has Centrica joined 25x25

When I went to university, more than half of my class was female. When I trained as a chartered accountant, more than half of my class was female. And now I look around and there's less and fewer than ten of the FTSE100 CEOs are female. August this year we had ten female CEOs in the FTSE100. 50% of the population is female.

And I just don't understand what it is that we're doing wrong that means that we have this massive skew towards able-bodied white males in senior positions. And so I'm very keen for us to be part of any organisation, any movement that can help us right what is quite clearly a wrong. And I think that what 25x25 is looking to do is completely align with what we're looking to do in Centrica.  We have stated targets for representation in the organisation. We need to look like our customer base. Why should a customer shop with us if we don't look like our customers? And so I thought we should join so that we could learn, so that we could benefit from the experience of others. But also maybe so we could contribute a bit as well, because you achieve a lot more by working with others than you do by working on your own.