To lose one member of the C-suite may be a misfortune but to lose two looks like carelessness. Yet ITV has done it, simultaneously losing both chairman and chief executive. It should be a reminder to other companies of the importance of succession planning.
Michael Grade has been both chairman and chief executive of the television company (contrary to corporate governance guidelines) so a hasty departure would have left both boardroom seats empty. But that isn’t the cause of ITV’s problems: Grade was planning an orderly exit, seeking a new chief executive while remaining in the chair.
Yet the search for a CEO, played out in public, failed to land the top choice of Tony Ball and it turned out ITV was simultaneously seeking a new chairman. And having compromised on his £42m pay demand Ball balked at the proposed choice for the chair, refusing to work with former Reed Elsevier chief Sir Crispin Davis. It is not for the CEO to choose his chairman of course, but the outcome is a company simultaneously seeking to fill both its top roles.
And ITV is not alone in making a mess of its succession planning. BP recently found a new chairman after a 17-month search that followed the departure of chief executive Sir John Browne. While Browne’s exit was hasty he was scheduled to leave within months anyway, even though the chairman planned to leave too.
UKFI, the government agency owning £50bn of shares in banks, is less than a year old but is already on its third chairman and is now seeking a second chief executive. That’s a rapidly revolving door at a company where continuity is surely key.
ITV’s rival, Channel 4, is currently seeking both a chief executive and chairman too, as is Marks & Spencer, another company that controversially combined the chief executive and chairman roles. Sir Stuart Rose has agreed to stand down as chief executive by mid-2010 and vacate the M&S chair a year later.
It is clear many companies have no Plan A, nevermind a Plan B. Only when a top director leaves or is forced out does the nominations committee start considering a replacement. Instead of grooming non-executives to become future chairmen, boards frequently have to bring in an outsider who is either catapulted straight into the chair or is given a brief apprenticeship as deputy chairman to become familiar with the company.
Marks & Spencer is admitting its own problems in asking for the new corporate governance code to give greater guidance on succession planning. Other companies won’t even realise they have a problem until they have a post to fill.
ITV is a lesson on how not to fill the top board seats. And after a past debacle in which shareholders refused to accept Michael Green as chairman in 2003, the company really should have learnt that appointments cannot be left to chance. Non-executives should always have a potential shortlist of candidates in case a vacancy unexpectedly arises.
(Pic: Paul Keleher cc2.0)
