Denmark has fostered some of the world’s leading business services companies.

Paradoxically, guests who check in to hotels in Copenhagen may not get the impression that Denmark is a service nation. Only two of the city’s 150 hotels have doormen and bellboys to welcome guests at the door and bring their luggage to their rooms.

But appearances deceive: the roots of some of the world’s largest blue-collar service companies can be traced to Denmark.

Both Securitas of Sweden, the world’s largest security company by revenue and Group 4 Securicor, the world’s biggest by employee numbers, have the same roots as ISS, the world’s largest facility services company. All three groups originate from a company called De Forenede Vagtselskaber A/S (The United Guarding Companies) founded in Copenhagen in 1901. Another leading service company, ISTA Energy Service A.G. of Germany, which is the global leader in energy and water consumption metering, can also be traced back to Denmark and ISS through its acquisition of ISS Clorius in 1994.

Britain’s Rentokil Initial, the “rat catcher” – because of its world leadership in pest control and other business services – also has its origins in Denmark. Rentokil was founded under the name Ratin in London at the start of the last century by Adam Elsass, a Danish entrepreneur. Adam Elsass’s holding company in Denmark, Sophus Berendsen, became a European leader in the business of textile rental. In 2002, Sophus Berendsen was sold to the British Davies Service Group PLC, yet another large service group with Danish ancestry.

The world’s largest food service company, British based Compass Group, is another leading service group that has some important Danish genes. They stem from the Copenhagen based SAS Service Partner, which Compass acquired in 1993.

Falck was established in Copenhagen in 1906 as a rescue and safety Company. Between 1990 and 2005, Falck was a virtual incubator for security companies that now make up more than half of Group 4 Securicor.

Another aspect of Danish initiatives in the world of services can also be traced back to ISS. The acclaimed international management guru Claus Møller was group marketing manager in ISS before he founded TMI-Time Manager International in 1974. TMI developed a training programme called “Putting People First” which has since benefited hundreds of thousands of front line staff from many workplaces including Scandinavian Airlines System, British Airways, British Telecom and the European Commission.

The landscape of the global service industry could have looked quite different today if two Danish initiatives had not failed. Securitas of Sweden, at one stage, held talks with ISS about acquiring ISS Securitas, Denmark’s leading Security Company. However, the parties could not agree on price and in 1993, ISS Securitas was sold to Falck.

The acquisition of ISS Securitas enabled Falck to move on and merge with Philip Sørensen’s Group 4, acquire Wakenhut in the US and merge with Securicor to become the number two player in the international security industry after Securitas of Sweden.

Several attempts to change the landscape of the service industry by merging Sophus Berendsen and ISS have taken place over the years. The last attempt was in May 1998 when the CEOs of the two companies met to discuss the issue. At the time Sophus Berendsen was the majority shareholder of Rentokil – a fact that germinated our vision to create a very large international service group combining the three companies under a Danish holding company. However, no deal was reached and Sophus Berendsen soon afterwards disposed of its Rentokil interests. The next move came from ISS which acquired a 15 per cent stake in Sophus Berendsen early in 2002 with the view towards negotiating an agreed merger. But this too, came to nothing as a few months later Sophus Berendsen shareholders accepted a DKK 5.1 billion takeover bid from the UKbased Davies Service Group.

How come then that Denmark is or has been the home of several of the world leaders in the service industry?
      The answer has to do with the way Danish society works and the way in which business is conducted.

One aspect that is very difficult for many foreign businessmen to understand is that industry and unions work together in Denmark. Business bosses and union bosses have a common objective when it comes to the workforce. This shared philosophy is quite simple: if you pay people well, you attract well-trained and motivated staff that can produce quality services at competitive costs. This in turn enables you to attract and retain your customers.
      One of the results of this is that Danish cleaners are the best paid in the world and among the very few cleaners who have been elevated from unskilled to semi-skilled employees via Denmark’s highly developed national network of vocational training centres.

By paying decent wages and providing good training opportunities, the leading Danish services companies have metamorphosed “Mrs. Mop” into a valued service operator.

The benefits cut both ways: security guards and kitchen staff no longer feel bottom of the employee hierarchy – they can have a career.
      And for companies, the payoff from higher employee satisfaction translates into lower staff turnover.
      In conclusion, the simple version of the secret of the service companies with Danish DNA is this: these companies have become world leaders because of and not in spite of high Danish wages and co-operation with the unions.

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