Why is it that public companies and indeed many other large organisations find it impossible to grow their own senior management, preferring to parachute in outsiders? What makes it even more bizarre is when the amazing new brain, hired for an eye-watering rewards package as chairman or chief executive, comes from a sector or industry that has no conceivable connection to that of their new position.
There is a curious assumption that the appointment will bring new perspectives – that it will almost of itself cause the company shares to rise into the firmament. There is a sort of unspoken belief among people at a certain exalted level that they can smoothly transfer between completely different sectors and sprinkle the angel dust of their wisdom, whatever the purpose of the company.
Nobody ever seems to consider the disincentive such appointments must provide to those who have worked their socks off in the company, but who now must assume that they are just not good enough, and will not now run the outfit they know so well. Maybe they will just move on.
"If you can’t understand what is actually generating the figures presented to you, how can you influence events, without a lengthy period of learning?"
One should not be that surprised when the strategy fails to produce whatever had been anticipated. These denizens of Davos might believe that their elevated status enables them to manage anything, but when they have to begin their new appointment by trying to understand what everybody actually does, it is clear that a period of learning may be very necessary before important executive decisions can be made.
One does not “hit the ground running” if a complete change of industry requires a completely new language or culture to be learned and that will take time to give the appearance you know what you are talking about. One might be schooled at the finest of business academies, nurtured in management consultancies and the marbled halls of accountancy giants, but if you can’t understand what is actually generating the figures presented to you, how can you influence events, without a lengthy period of learning?
Cynics have described what has sometimes been termed the “magic roundabout” of these appointments: huge initial optimism, the first year smoothing hurt internal feelings, while trying to understand the business; its nuances and cycles, followed by a couple of years of bold decision-making, demonstrating leadership by winnowing the workforce and reacting to unfavourable but external circumstances, perhaps returning to core competencies or branching out into adventures through acquisition.
Then when prospects look unpromising, deftly, with the aid of contacts, and the best head-hunters in the business, they move on to more fertile fields, leaving somebody else in the circle to note that opportunity knocks.
Those who occupied the truly stratospheric levels of rewards have been joined by people in far less exciting and non-risk-taking businesses and institutions.
Those astride the horses in this carousel enjoy an amazing lifestyle, with a scale of rewards that represent huge multiples of those enjoyed by the humble employees in their temporary homes. At a certain level, they all serve cheerfully in the emoluments committees of each other’s firms, scratching each other’s backs (with proper independence), to ensure that everything reflects international scales (the highest) and nobody gets left behind.
The performance of the respective companies often appears to be quite irrelevant in this wonderful world, largely divorced from the economic realities faced by lesser mortals.
One should not be too egalitarian and bitter about these widening inequalities we read about; this tiny population, it is reported, pay for their privileges in a high proportion of the taxes gleaned by their respective exchequers.
And one might note that the circumference of the magic circle does grow. Those who occupied the truly stratospheric levels of rewards – merchant princes, captains of huge industries, “tech bros,” hedge fund managers and their like – have been joined by people in far less exciting and non-risk-taking businesses and institutions. People who run public utilities, health trusts, university vice-chancellors, and even charitable organisations are now numbered among these elites.
Maybe they are, to use the words of that beguiling fragrance advertisement, “worth it,” although you sometimes have your doubts. Does that rising tide float all boats and the huge wealth of a few trickle down to the many?
It is beyond my pay grade, but you have to wonder whether gross inequality stirs up aspiration (as some would like to suggest) or resentment, which, of itself, scarcely boosts productivity, or the share price.