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When it comes to good governance, few privately controlled businesses can boast about it as much as UK construction and development company Wates Group. In its more than 100 years as a business, Wates has built and renovated some of the finest structures in the UK. But it is equally proud of its robust governance structures, which have helped create one of the most respected businesses in the country. With the company now controlled by the fourth generation, the members of the Wates family are immensely proud of the company’s achievements.

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James and Timothy WatesWates Group

“The pride comes from being a family business with a backbone built out of the communities we’ve served for more than 100 years.”

James Wates, Chairman, Wates Group

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Arthur’s the furniture business, which, under the name E&A Wates, is still in existence today. But the construction business, led by Edward and his three sons, grew the more rapidly of the two, especially between the two world wars. “We really put our footprint down in the 1920s and 1930s,” says James. “That was when there was a massive growth in homeownership, and this is what we built our business on.”

By that time, the business was under the control of Edward’s three sons — Norman, Ronald and Allan. During the Second World War, Wates’ construction expertise was used in government war work, with the company heavily involved in the Mulberry harbors, the famous temporary harbors used during

the Allied invasion of Normandy. After the war, Wates was involved in the rebuilding of many bomb-damaged buildings, and later benefited from the UK house construction boom of the late 1950s and 1960s.

Shareholding within the family has been kept very tight

In the 1970s, the control of the business moved to the third generation, represented by Michael, Paul and Andrew. James believes that one of the benefits for a family business of being in the property sector is the ability to use buildings as assets in succession planning. “It was possible to keep the business running by moving assets, such as buildings, to family members who

3,700 people, with offices around the UK and a presence in the Middle East. Wates is one of the most respected companies in UK construction and has won numerous awards for its corporate culture, philanthropic efforts and commitment to sustainability.

Based in Leatherhead, a town just outside of London, the builder has been involved in many high-profile construction and renovation projects, including work on the Royal Hospital Chelsea and the National Gallery in London. But Wates is proud not only of its well-known projects, but also of the thousands of affordable homes it has built.

The company’s story began when Edward Wates, together with his brother Arthur, set up a furniture business in south London at the end of the 19th century. The success of this business allowed Edward to build a house on a plot of land in south London, which he sold soon after for a profit. “That was the genesis of the Wates Group of today,” says Tim Wates, who sits on the board of directors and is one of Edward’s great-grandsons. “That’s when he saw the potential of housing and construction to make money.”

Some years later, the business was split between two sides of the family. Edward’s side took the construction company and

Every year, Wates Group releases an annual report with the company’s financial numbers communicated transparently upfront. Wates is 100% owned by the Wates family, so it is under no legal obligation to report its financial information to the public. But for Wates, a commitment to good governance lies at the heart of the business.

Corporate governance at its best

“Good governance is an important part of what we do,” says James Wates, Chairman of the Group and a member of the fourth generation running the business. “We have structured governance so deep into our business that you would not see a difference between our company and one that is listed.” James says that this openness has been a big part of the ethos of the company since it was founded in 1897.

Wates’ long-standing emphasis on good governance has clearly paid off, not only in terms of reputation, but also commercially, with the group now having annual revenues of over £1.2b. Wates is involved in a host of construction businesses, including commercial and residential building, property services development and engineering. Altogether, Wates employs about

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Staff from the early days. One of the early estates of the family business.

Wates was the lead building contractor of the building 10 Hammersmith Grove in London. It has eight floors with a contemporary office design and three roof terraces, and was opened in July 2013.

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“We are able to attract this quality of senior management because we have very sound governance.”James Wates

be seen in the philanthropic efforts of the company. Funded by the Wates Family Enterprise Trust, Wates Giving aims to make a real difference to communities throughout the UK by making grants to local initiatives. James and Tim say that this is all part of the package of the family business, which differentiates Wates from many of its competitors.

“We take huge pride in what we do,” says Tim. “That pride comes from being a family business with a backbone built out of the communities we’ve served for more than 100 years.” Given the structures in place at Wates, and the shareholders’ commitment to stewardship, there is every possibility that a member of the family will be saying something similar in 100 years’ time. And that is a real testament to an exceptional business.

weren’t working in the business,” he says. “This means you don’t detrimentally impact the golden goose, because one of the biggest risks for the sustainability of a family business is diversifying shareholders.” This has meant shareholding within the family has been kept very tight — there are currently only three family shareholders in the third generation and five in the fourth.

Non-family members in the management

Another important expression of Wates’ commitment to good governance has been the hiring of highly qualified non-family management; for example, at the chief executive level with the recruitment of Paul Drechsler in 2004, who left in 2014 to become the Chairman of UK shipping company Bibby Line, last year’s winner of EY’s UK Family Business Award of Excellence. Paul was replaced by Andrew Davies, another highly respected manager. “If you want to employ really top-quality management such as Andrew and Paul, everyone has to know the ground rules,” says James. “We are able to attract this quality of senior management because we have very sound governance.”

Just as their predecessors at Wates have been, James and Tim are very aware of their role as stewards for the next generation.

“Our challenge as fourth-generation stewards is to ensure that the transfer to the next generation goes as smoothly as past transitions have,” says Tim. One of the ways in which the shareholders feel that this can be achieved is through the activities of the family office, which was set up by the shareholders 10 years ago. “A big part of the remit of the family office was to help the transition from the third generation to our generation,” says James. “The investment function was less important, but we hope to grow this part of the office to help facilitate transition to the fifth generation.”

The Wates family shareholders believe that the role of the business in society is to help create a lasting legacy, not just for family members, but for everyone involved in the business — the stakeholders. “We are not about to sell the business and make a pile of money, because we think that good business well done is a good thing for the wider economy,” says Tim. That ethos can

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James Wates CBE

Chairman, Wates Group Ltd

Timothy Wates

Chairman of Family Council,

Director of Wates Group Ltd

Company name: Wates Group Ltd.

Generation(s): Fourth

Founded: 1897 in Leatherhead, UK

Industries: Construction,

property services and

property development

Employees (2015): 3,750

Revenue (2015): £1.2b

Two of the group’s construction workers on a building site.

The owners of the Wates Group with their wives.