Tesco shows how to fill the top roles
Tesco Plc (LON:TSCO) has had only three chief executives in 50 years – all promoted from within. Compared with the public squabbles at the top of its rivals, the supermarket group is a lesson in succession planning.
By giving nine months notice that Philip Clarke will succeed Sir Terry Leahy the company avoids shocking the stockmarket and avoids leaving a void while headhunters desperately seek a successor with the press speculating on every possible – and impossible - candidate.
Clarke started with Tesco as a part-timer in 1974 and has spent his whole career there, working his way round the group, including heading the supply chain, the international operations and its IT. For a company whose success depends on running like a smooth machine – where management is as much science as flair – that ticks all the boxes.
And in case having worked for only one company is seen as a negative that limits the new chief’s vision, Tesco has lent him out as a non-executive to Whitbread in recent years to gain insight into how other boardrooms work.
Compare that the perpetual infighting at Marks & Spencer where who succeeds Sir Stuart Rose has dominated the investors’ agenda in recent years. Marks had to go outside to find a new chief executive, poaching the boss of rival Morrison which itself had to go outside for a successor. And in both cases, internal candidates left after failing to be promoted. And having filled Rose’s CEO shoes, Marks is still looking for someone to succeed him as chairman and will probably go outside the company again.
Tesco, meanwhile, has operated a nursery of potential new chief executives. When there looks like being a gap on the shelf, it restocks it from the storeroom. And to ensure the disappointed candidates do not walk out, Clarke’s appointment was accompanied by news of three promotions and a statement that five others will continue in their roles – suggesting they have been squared.
Since Tesco-lifer Ian MacLaurin succeeded Leslie Porter (who, admittedly got the top job by marrying founder Jack Cohen’s daughter) and mentored Leahy to follow him, Tesco’s management ladder has been as efficient as its trading operations. Clarke – a Liverpudlian, like Leahy - has a lot to live up to but his company is a model in modern management.
June 22nd, 2010 at 10:58 am
A production line of highly capable top level executives that are groomed for the job and then promoted from within is the dream of any large corporation, in order to avoid the problems that many organisations (including Marks and Spencer) have suffered. Tesco can only benefit from being able to ensure continuity in this way.