Heir dos and don’ts

When a company loses a charismatic and successful leader the task of finding a successor is far from simple. Do you groom someone from the inside or bring in new blood? David Benady looks at how some of the country’s best-known brands are attempting to avoid a bad heir day

Top-level reshuffles last week at Marks & Spencer and Waitrose underscore how significant and intriguing the issue of succession management has become for many of the UK’s leading businesses.

It is hard to imagine Virgin Group without Sir Richard Branson, WPP sans Sir Martin Sorrell or National Lottery operator Camelot minus Dianne Thompson. Their names are inextricably linked to the successes of the companies they head.

Some well-known brands have seen their success dissipate following the departure of the bosses that have built them into behemoths. The shine has come off Vodafone since the departure of the man who built up the company, Sir Christopher Gent. He was replaced in 2003 by the company’s former head of US and Asia operations Arun Sarin and there have been major ructions as the logic of many of Gent’s acquisitions has unravelled. Things turned sour for Orange after founding boss Hans Snook left in 2001. And Dixons Stores Group has had its share of problems since founder and boss Sir Stanley Kalms took a back seat five years ago.

Cynics may suggest that some founding leaders bale out when they know the going is about to get tough or are perhaps politely tapped on the shoulder by a shareholder’s representative and given the message that retirement beckons.

But as Grant Duncan, former Publicis chairman and now a partner at recruitment consultants Grace Blue, says/ “The more high profile the chief, the tougher it is for succession because of the long shadow cast by that person. It boils down to how much the individual is associated with the culture of the brand as opposed to just delivering shareholder value.”

At M&S, chief executive Stuart Rose is intimately associated with the chain’s re-invigorated performance over the past three years.

When he joined the high street retailer in 2004 with the task of fighting off an aggressive bid from Philip Green, Rose pledged to stay as chief executive for five years. Some find it inconceivable that he will depart in just two years’ time given the strong performance of his team in reviving the chain.

Rose’s thorny task
Worryingly though, it is hard to imagine how M&S might fare once Rose stands down. Memories of the retailer’s six painful years before he joined – and the succession of five chief executives it hired – should be carved into his consciousness. Rose and his team’s good work could be easily undone without a worthy successor in place. With this in mind, Rose last week hired two new senior directors and parted company with another as he continued the task of preparing the chain for his eventual departure.

In comes Waitrose MD Steven Esom to head food and De Vere Hotels chief executive Carl Leaver as international director. Esom is himself a refugee from a frustrated ambition to run Waitrose’s parent company John Lewis following chairman Sir Stuart Hampson departure’s last month after 14 years in the top role; the job went to Charlie Mayfield instead. Esom’s role is being filled by former Waitrose marketer Mark Price.

At the same time, it was revealed that M&S retail director Anthony Thompson, a former Gap boss and once touted as a successor to Rose, was leaving the company.

An M&S spokeswoman says. “The changes are about ensuring there is a team in place to drive the chain through its next stage of growth and to ensure that at some point in the future there is a range of talented people the board could look at for a possible successor to Stuart Rose.”

Retail analyst Nick Bubb at researcher Pali International, doubts Rose will leave within the next couple of years but says he is feeling “a bit of pressure” to get possible heirs in place. “Esom will think he’s a strong candidate for the job given the increasing importance of food. You couldn’t rule it out, but I’d be surprised. I don’t see him in the same league,” he says. He’s also doubtful that Kate Bostock, director of womenswear, lingerie and girlswear would get the top role.

Bubb is surprised that marketing director Steven Sharp is not mentioned more as a successor. “He’s just seen as a wacky marketing guy without the retail skills,” he says. He also identifies finance director Ian Dyson, previously of Rank, as a possible future leader.

While Rose’s name will forever be linked to rescuing M&S from oblivion, there is probably no other business leader quite like Branson when it comes to personal association with the fortunes of a brand.

Branson and beyond
At 56, Branson still has plenty more mileage on the clock, though he does insist on putting himself in harm’s way with dangerous escapades such as ballooning and space flights. This week he is dog sledding to the North Pole, so can’t comment. But Virgin corporate communications chief Will Whitehorn says: “There has always been and will remain a plan in place for the event of an accident, but longer term I think Richard is hopeful that his children Holly and Sam will be interested in being involved in the businesses.”

Some wonder whether Branson really is irreplaceable. What a stunt it would be to get in another buccanneering entrepreneur to head the company such as charismatic Yo! Sushi founder Simon Woodroffe.

Meanwhile, in the background at Virgin Group lurk financial wizard Stephen Murphy and strategy chief Gordon MacCallum. Neither are famed for their exuberant personalities maybe, but then Branson is rather shy and his stuttering media utterances are often said to be part of his appeal.

In the marketing services field, Sir Martin Sorrell’s name is synonymous with WPP and observers wonder what sort of company it would be without him. Some point to WPP’s acquisition of a stake in ad agency CHI, claiming the agency’s boss Johnny Hornby is a natural successor to Sorrell. Otherwise, many believe there is no obvious heir apparent, although Eric Salama, chairman and chief executive of market research division Kantar, is thought to be in the frame.

One source says: “It is difficult to put a name to the successor, there are probably a dozen people internally among those running individual businesses. Half of those would be well placed to be considered.”

The media is an area in which moguls tend to survive into ripe old age. Rupert Murdoch is 76 and still firmly in charge of his media empire. He has, however, groomed his off-spring for an eventual takeover. Viacom chairman and founder Sumner Redstone is 84 this month and is still going strong. Grey Advertising boss Ed Meyer led the company well into his 70s.

The success of a boss can only really be assessed once they leave. If the company goes into decline, it will be clear the chief either lost his grip in the last years or failed to find a suitable successor to carry on the good work.

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