At MBS, this time of year is one of great reflection as one financial year gives way to the next. Throughout the year, we are dedicated to the best interests of our clients, but the two days when we close the office at the end of the financial year, to look back and to look forward, are sacrosanct. These days help us to be the very best we can be, in order to serve our clients and candidates. In 2021, our annual offsite was adapted and held over Zoom. A picnic basket was delivered to each colleague’s home, and we tried to make the day as meaningful as best we could.
Earlier this week, I watched a video of that offsite. Colleagues spoke about the difficulty of not seeing their loved ones; not seeing colleagues at the office; the loneliness of working from home; not seeing their parents for months on end; the anxiety that their children were experiencing; not being able to visit a parent who was ill and in hospital. Just as I finished watching the video, a BBC newsflash came up on my screen with the breaking news that the Prime Minister and Chancellor had received fines for attending lockdown parties in Downing Street.
We generally try to avoid discussing politics in our weekly columns, and I’m sure most readers will already have a view about this news. But the episode has given us much food for thought at MBS – and there are lessons that can be learnt and applied in a corporate setting.
1. Focus on bench strength, prioritise succession planning
News of lockdown breaches in the heart of government – as well as rumours, leaks and investigations – have rumbled on for several months now, and over that time an argument has advanced from several quarters that it would be wrong to replace the Prime Minister as there are no viable candidates to succeed him in the Conservative party. Whatever one’s view on if there should be a change at the top, if this really is the case then it demonstrates a serious failure of leadership. For businesses, this should serve as a reminder of the importance of bench strength and succession planning.
In the short term, it’s critical that those sitting below the chief executive are prepared – with the knowledge and the authority – to lead a business should its leaders find themselves unable. The pandemic taught us to expect the unexpected: as we discussed with John Nolan in April 2020, if both the PM and health secretary can catch Covid at the same time, there’s no reason that the same thing couldn’t happen to a company’s core leaders.
Moreover, having a reliable operational team is not only critical during ‘worst-case’ scenarios. During major business changes, such as an IPO or merger, a company’s CEO and CFO are often unavailable to make decisions day-to-day. It is essential to have sufficient strength and depth in the management team to continue business-as-usual – especially during a transaction, when dents in performance could undermine confidence in the business.
It is essential to have sufficient strength and depth in the management team to continue business-as-usual – especially during a transaction, when dents in performance could undermine confidence in the business.
This week’s news also highlights the need for robust succession planning in the long term. Without formal frameworks of succession for the CEO and other mission-critical roles, businesses run dozens of risks – including obstructing business continuity and agitating investors.
All too often, identifying and training future leaders is a reactive scramble to minimise damage after an incumbent unexpectedly exits or is unable to lead. In fact, in 2019, a study found that more than 90% of global family businesses did not have a formal succession plan in place (anyone who has seen the HBO series Succession will know that this rarely ends well).
By contrast, winning businesses will have in place long-term frameworks of succession that align with future priorities. The best succession plans begin the day the CEO starts; are designed around leadership structures; are integrated into talent management, and are sensitive to all leaders, not just the preferred candidates. When Steve Jobs gave the reins to Tim Cook at Apple, it was the product of years of mentoring and an example of carefully considered and expertly executed succession planning. Archie Norman and Allan Leighton at Asda are another textbook case on how to create succession. More CEOs grew out of that leadership team than any other: Richard Baker, Judith McKenna, Angela Spindler, Andy Clarke, Roger Burnley, Andy Bond, Andy Hornby, Justin King, Mike Coupe and Steven Cain.
2. Moral leadership matters
Another key learning from the week’s events is the importance of moral leadership. In our consumer-facing sectors, business leaders are increasingly expected to have a moral compass, to speak out against injustice and to be driven by creating value for their communities, not just their shareholders. These sorts of purpose-driven leaders have been seen to build brands which are favoured by customers and workplaces which attract and retain the best talent.
These sorts of purpose-driven leaders have been seen to build brands which are favoured by customers and workplaces which attract and retain the best talent.
Those at the top must drive this approach. But it is also the role of the supporting management team to provide moral guidance to the CEO – acting as a sounding board and challenging on unethical behaviours where necessary.
3. The role of the Board
One major difference between political and corporate structures is the existence of the non-executive Board. In business, a good Board will not only ensure that a robust succession plan is in place, but that the pool of potential leaders is diverse and equipped to face the challenges of tomorrow. Beyond succession, the Board has a critical role to play in steering the executive through moral considerations – and this serves as a reminder for all of us to build our Boards with this in mind.
The key to a Chair and CEO legacy is succession. It is unfortunate that some of the greatest leaders focus on results and not on what they are leaving behind. For that, we only have to look to Manchester United, who will end the season without a place in the Champion’s League, no silverware and yet another new manager – as the greatest boss of all time, Sir Alex Ferguson, watches from the stands basking in his glory of still being irreplaceable.