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The importance of being seen - Linda Bell at Virgin Trains. By Matt Henkes

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27th Mar 2007
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Linda Bell

Linda Bell, finance director at Virgin Trains, speaks to Matt Henkes about the importance of visibility among employees, dealing with the government and the Enron effect.

Bell talks with the confident air of someone who knows she is good at her job. The company's head of campaigns says she is the first FD that would be recognised outside of her department. "In the past we had FDs that were not approachable," he claims. "Front line staff aren't afraid to approach Linda and give feedback. This is a major step forward for us."

Bell confirms that interaction with people in the company is very important to her. "I would like to think I'm fairly focused and normally finance people forget about the people side of things, whereas I tend to be relatively focused on that," she says. "This is a people's business. Everyone thinks trains are the most important thing, but they’re not, it's the people. So the whole exec, including myself, spends a large amount of time interacting with our business, our people at all levels."

Having a good overview of all elements of the company is important to Bell but she warns that achieving a balance is important. "FDs can be so caught in the details that they can’t see the wood for the trees," she says. "Then sometimes you meet some who are so strategic and sitting at 50,000 feet that they wouldn’t know if something went wrong in the business unless it hit them in the face."

FD Profile

Linda Bell held senior executive positions in the USA with Stagecoach Group and British American Tobacco prior to joining Virgin Trains in 2004. She has also served in financial positions in the gas and furniture industries.

She claims that the changing nature of the FD role has made her job much more interesting. "Nowadays compared to ten or twelve years ago, the actual accounting side is so much easier because the systems are so much more powerful," she says. "The role of the FD has turned into a very much supporting role. I guess it’s made it much more interesting for your average accountant, rather than a lot of manual processing. That's a thing of the past. In my entire career I can honestly say I’ve never processed a single journal entry."

"Once you've got the hygiene factors of finance down, you’re turning reporting round quickly and you know it's accurate, the key for a finance team is to support the business," she adds.

Better housekeeping

Bell was appointed to the rail operator in 2004. She admits that at this time the company's finance department was underperforming. "I think that I probably brought some good financial housekeeping and control which was definitely lacking," she says. "It had become a little lax. I think that I’ve probably introduced some discipline in terms of how and when we spend our money."

The previous nature of the firm's funding arrangement with the Department for Transport (DfT) meant that "a little bit of other people’s money syndrome had crept into the culture".

"In truth, it's always someone else's money, not the DFT's, but the shareholders," she says. "One of my key priorities when I got here was to tighten up the financial controls and really sort out the reporting. We were taking a very long time to turn out management reports. We do it in three days now, which has really sped up the finance team."

Yield management

When it comes to pricing, Virgin Trains is seen as the train company which has used yield management, whereby companies anticipate and react to consumer behaviour in order to maximise revenue, to its ultimate potential. Bell sings its praises. "Yield management allows us to manage our passenger base as best we can, and to manage the peak and the off peak," she says. "It is a very complex thing, and there are different levels of sophistication. We believe we got off to a very quick start with this. It has become more and more sophisticated as we creep forward. Clearly travel in peak times can become quite difficult, and one of our aims is to spread that load a little bit. Yield management is one of the means we can use to do this."

The system has its critics however including the Commons Transport Select Committee which last year accused railway operators of "taking the system far further than is required purely for the purposes of using capacity effectively". But Bell denies the process has pushed up walk-up fares. "Walk-up business is very strong," she says. "We use yield management to sell empty seats." On media criticism, she adds: "There are always headlines about some of our fares but I think if you were to look at the analysis, the number of people that actually pay these premium fares is very small."

DfT negotiations: 'We won better'

When Bell joined the firm it was embroiled in negotiations with the DfT over the terms of its new west coast franchise. She says she was fortunate that both sides were becoming frustrated by the time she entered the fray. "They were in mid proceedings when I arrived, then we agreed to have a rest for a while because everyone was getting a bit fed up with it."

The company's new Pendolino train fleet had just been introduced, and Virgin's revenue forecasts had been something of a sticking point in the talks. "We had some interesting debates with the DfT about the revenue projection," says Bell.

The break in negotiations was timely. With the new trains in operation, accurate measures of revenue levels could now be taken. "The timing was really good actually," says Bell. "It also gave me time to get up to speed with the business before going headlong into the negotiations."

“During the period where we weren’t in negotiation, we put a lot of effort into repairing our reputation with the DfT around our ability to forecast. There had been some laxness in our forecasting which is not there now," she adds. "We're actually very good now. When we tell them what our numbers are going to look like, that's what they look like."

While she admits that this improvement is partly down to her influence, Bell insists that she hasn't done it on her own. "I worked very closely with Tony Collins [VT CEO], and one of our key priorities was to regain that credibility with the DfT. The success of this really helped the negotiation last year," she says. "We knew each other better and there was an element of trust which hadn’t been there previously."

Company Profile

Virgin Trains comprises the Virgin West Coast and CrossCountry franchises. It operates 398 trains every day, carries around 31.4 million passengers every year, and has an annual turnover of £579m.

In December, Virgin walked away from the negotiations with a landmark deal and a heavily subsidised franchise. "It's one that we're very happy with, and the DfT are very happy with," she says. "I always think it’s good to come away from negotiations like that, feeling like you've won. We just think we've won better."

Post-Enron

Bell's successful career has included stints in executive financial roles in the US, notably as chief financial officer of Stagecoach’s bus operations, and in the gas and furniture industries.

She says the Enron scandal shook the American finance world to its core. "I was in the states during that Enron era, in Houston where I lived. I would say the reaction was a bit of a knee-jerk. In some respects a sledge hammer to crack a nut. The new regulations that were introduced put a huge burden onto your average finance department and were probably unnecessary in nine out of ten cases. But Enron had such a huge impact so something had to be done."

Does she think the American and UK FD roles differ as a result? "To be honest, not hugely," she says. "Obviously there are cultural issues, but any self respecting FD has corporate governance at the front of their mind. As an FD, you have to have a pretty high level of integrity and always have one eye on corporate governance."

Bell believes that the key to being a successful modern FD is to know when and when not to delve into the detail. "I think a have an ability to be pretty strategic but also spot a flaw in the detail without having to be immersed in it day in day out," she adds. "That's something that comes with age I suppose and working in different environments."

What glass ceiling?

Bell says despite working mainly in male dominated businesses, she has never felt that being a woman has held her back in any way. Bell doesn't rule out the possibility of becoming a CEO, but insists that this is not what drives her. "I've been really lucky always being presented with interesting challenges," she says.

"My biggest fear in life is that I end up in a role with no big challenges. I don't mind how those challenges come, as long as there is challenge. I don’t have my sights set on anything apart from something that interests me and challenges me."

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