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    Succession planning: The MU case

    Accountability Governance Leadership
    I popped into the ICSA conference at Olympia in London for a couple of hours this week, on a very kind invitation extended by CEO Simon Osborne (thank you Simon). The programme was filled with some interesting speakers. It would have been great to attend for the full day, but a teaching commitment at University of Winchester Business School during the morning put paid to that.
    Anyway, to the conference. The two presentations following the mid-afternoon break were very interesting stories of failure. One concerned the Co-operative Bank and the other Manchester United. You don't often hear such stories at conferences, so when they are told it pays to listen, because lessons often abound. And so it was on Thursday afternoon. 
    Neil Gibb, of consulting firm SLP, talked about the appointment of David Moyes to succeed Sir Alec Ferguson. Gibb suggested that the appointment of Moyes was an abject failure. The outgoing Manager—a man not devoid of ego—anointed a successor, Moyes. Moyes was like Ferguson in many ways, except that he did not have a track record of success. Notwithstanding this, Ferguson's power (and aura?) prevailed and Moyes was appointed. Moyes coached and managed as he had done at Everton, and MU slid down the league tables. The resultant damage to the company has been conservatively estimated at £50.4m.
    What went wrong? Gibb suggested the succession process was a failure of culture, in that culture trumps most things. That those that employed Moyes did not do their homework adequately. Moyes did not have the 'swagger' that characterised over the Ferguson era. The players probably did not respect him either. With hindsight, the outcome was probably a foregone conclusion. However, something that I found more interesting was that Gibb did not mention the board. Clearly, power rested with Sir Alec Ferguson. It should have rested with the board. After all, the board 'owned' the important task of employing a new manager, or it should have. 
    The case demonstrates the hard (financial) and soft (brand and reputation) damage that can readily occur with a 'bad' appointment. While the board can take suggestions, and culture is crucial as Gibb stressed, the board should never forfeit control over succession plans and recruitment process. However, in the Manchester United case it seems to have done so. Moyes was the face of the failure. He got the blame when the board was culpable. Thanks to Neil Gibb for telling the story, and for Simon Osborne for inviting me to hear it. 
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    Apprentice directors: an on-ramp to a successful career?

    Accountability Governance Performance
    The 'profession' of company director seems to be beset with an interesting challenge: how can or should young directors be introduced to boardrooms? In the eyes of the law, all directors are created equal. Young directors need to be competent and effective from the very minute they are appointed. Yet an important element of directing—experience and judgement—can only come from time spent in the boardroom. Do you see the Catch–22?
    I have been exploring this challenge with directors in London, Leeds and Oxford this week. The prevailing view is that the profession has a problem. Many senior directors are reluctant to retire (the stated motivations are interesting in themselves, but that's another muse), and they don't seem to be interested in blooding new directors. Solid answers were few and far between. However, one option that did emerge was the notion of an 'apprentice director': one who is exposed to the full workings of boards and board practice, but without the demands of holding a formal appointment. The people I spoke with thought that apprentice director schemes may well have merit, but only if certain parameters are adhered to:
    • Apprentices are of an age, whereby they hold sufficient 'life' and 'business' experience to make sage decisions. The general consensus was that those less than 40 years old were unlikely to be suitable (although there will be the odd exception).
    • Apprentices need to be members of a directors' institute and have completed a recognised professional development programme. The courses offered by the Institute of Directors, Australian Institute of Company Directors and the Institute of Directors in New Zealand were all mentioned.
    • That that board requests a legal opinion, to ensure that an apprentice is not caught by the 'deemed director' interpretation that those on so-called advisory boards are exposed to.
    • That terms of apprenticeship are established and documented, including a fixed term (twelve months was the most common suggestion).
    • That the apprentice is paired with an experienced company director to act in a mentor capacity.
    The notion of an apprentice scheme has considerable merit in my view. In-country directors institutes are ideally placed to take up the challenge of creating a scheme and of actively promoting its uptake amongst the boards of privately-held and publicly-listed companies. They should also consider 'accrediting' graduates (who would have to sit and pass an assessment), to provide a level of confidence to those recruiting directors. 
    If you have a view on this, as a director of a board that has considered or apprenticed a director, or as someone with an alternative suggestion to solving the inexperience problem, please share it here.
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    How to keep strategy alive in the boardroom

    Accountability Governance Performance Strategy
    A couple of weeks ago I had the privilege and pleasure of working with 20 company directors on the strategy day of the Institute of Directors' Company Directors Course. Several delegates had a particular interest in how to keep strategy 'alive' in the boardroom. In their experience, boards start with good intentions but they quickly return to what they know best, monitoring and controlling. They agreed that boards are responsible for company performance (which means boards need to make decisions about the future of the business), so boards need to take strategy seriously. But many don't, which suggests that an important questions remains unanswered. How can boards keep the important matter of strategy alive?
    I put the question to the group and we had a great discussion. After about 20 minutes of to-ing and fro-ing, the group seemed to settle on four main suggestions, as follows:
    • To tip the agenda on its head. Rather than discuss action items, the risk register and performance reports (typically the chief executive's report and the financial report) first, the group thought strategic items should be discussed first, particularly if some major items were expected to need considerable time and careful attention.
    • To ensure that reports were aligned directly with strategy. If the company was working to (say) four strategic priorities, then the chief executive's report should have a business performance overview followed by four sections, to demonstrate progress against each strategic imperative. The reports should also comment on the results actually being achieved vis-a-vis expected results.
    • To ensure that a major element of strategy (one of the strategic priorities, for example) was tabled at every second meeting (to allow space for annual reporting, budget cycles and other compliance oriented matters that also need attention at other meetings). The purpose of the agenda item is to debate progress, explore environmental and contextual matters pertaining to the strategic priority.
    • To create space for new information—particularly emerging trends and competitor news—and then to check whether the extant priorities were still valid and appropriate, or whether adjustments might be required.
    These are great suggestions, and they are consistent with my research and experience. They appear to have 'reach' as well, from smaller companies just starting out with boards, right up to publicly-list enterprises. What was most heartening though was the reality check that came at the end of the discussion: many of the delegates agreed that the 'urgent' can and often does get in the way of the 'important'. Consequently, business-as-usual (monitoring and compliance items) can supplant strategy. A strong and vibrant relationship between the chairman and chief executive was thought to be vital, to ensure that the agenda was appropriate; that the reporting was at the right level; and, that the chief executive had the resources to execute on that which they were expected to deliver upon. Notwithstanding such efforts, individual directors need to make a commitment—to themselves and each other—to keep the conversation focussed on strategy, for the sake of the future performance on the company.
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    HSBC's big call: an external chairman

    Accountability Governance Leadership Performance
    Reports emerged today that the next chairman of troubled banker HSBC will be an outsider. If this is what "completely overhauled" means, then HSBC might have just made an inspired decision. However, it is not a slam-dunk. The decision is the first of many that will be required to get the organisation back on the rails and to re-establish much-needed credibility in the marketplace. 
    Another word of caution: an external chairman is no guarantee of success. Boards needs to be led well, and a high-performance culture and an effective strategy are also crucial elements. But to make the move away from appointing a chairman from amongst the executive team is a very big step in the right direction.
    Well done for taking an important step HSBC.
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    HSBC: Should the directors and executives be "banished from the City"?

    Accountability Societal Wellbeing
    In issuing an apology letter and statement that HSBC has been completely overhauled, Stuart Gulliver, chief executive, has put a stake in the ground. He wants to move on. Some may argue that more needs to be done because accountability and consequence are important foils to anarchy and chaos. However, the sentiment underpinning Gulliver's message is an important foundation of civil society: that sooner or later communities need to respond to scandals, make adjustments, and then consign them to history.
    With this in mind, should the directors and executives of HSBC be "banished from the City"?
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    More on the HSBC debacle: What does "completely overhauled" actually mean?

    Accountability Leadership Performance
    The debacle that has become known as #HSBCleaks continues to simmer. Stuart Gulliver, chief executive, went public today with a full-page letter in several Sunday papers. The letter offers an apology for the debacle, and it seeks to provide some assurances to both customers and the general public. 
    Statements that the bank has "completely overhauled" and "fundamentally changed" its operation sound good, albeit historical. But what of the executives and directors who were not monitoring business operations properly? Are they still happily drawing benefits without further consequence? Does accountability stop short of the executive suite and the boardroom? That Lord Green is the only head to have rolled so far raises more questions than it answers, including what "completely overhauled" actually means.
    HSBC and the wider business community must learn from this scandal.