Dear Iain
One is, one supposes, the non-Executive Chairperson of rather a large enterprise (“World-class and punching above its weight internationally” is a favourite line from our wretched PR people).
The shareholders last had a major shake-up of the Board in 1997, and after a fairly steady run of good growth figures, we’re now rather hitting the buffers.
Last year the Board recommended that the Chief Executive be replaced by the Finance Director (or “CFO” as one’s other-half tells one one must refer to that position). The old Chief Executive was past it, no longer charming the shareholders, apparently. He had made some unfortunate decisions in the International Division. Strategic trans-Atlantic alliances weren’t yielding satisfactory dividends, or so one was told.
Well, one doesn’t like to contradict one’s Board. Chairpersons who do that can come unstuck, rather (although thankfully that hasn’t happened since 1936 in our case). Initially, all seemed well. Shareholders were delighted, one was informed, with the new chap, and despite all sorts of short-term crises (which had been sorted out without too much difficulty) the general opinion was very favourable.
One can’t quite put one’s finger on when the rot set in, but it’s now pretty clear that promoting the Finance man has been a catastrophic blunder. The Board are quietly seething at his dreadful inter-personal skills (which they unaccountably forgot to mention when seeking one’s approval for the appointment in the first place). The dividend is looking rather doubtful and the shareholders are selling, sending down the share price at a quite alarming rate.
The new CFO seems to understand that the books he has inherited are a trifle adrift, but can’t really come up with any solutions that don’t make his predecessor look either incompetent or crooked. There’s a good deal of blaming of “credit crunches” (which sound like some sort of slimming biscuit, but aren’t, one gathers) and “the international financial situation” (where one thought one was punching weights, or something, but not so, one is gravely informed).
Everyone seems agreed that yet another Chief Executive is needed (goodness, the expense of all that, again!), but no-one is prepared to tell the current incumbent that more time with the family is on the cards. And of course, having seen his performance, no other organisation will take him off one’s hands with a better offer.
One suspects he knows the game is up, but his staff are spending a good deal of time pointing out the fine print of his contract and the difficulties in making him quit if he doesn’t feel like it. Thank goodness the contract has a fixed term, but one isn’t sure one could stand waiting for June 2010 to come around.
The role of non-Executive Chairperson is always delicate, particularly in a family firm such as ours. One had hoped to see out one’s term without this sort of grief, and it’s so long since one took over that there are few precedents of any real use.
Frankly, an entirely new Board is probably the best solution, but quite how to engineer that quickly is unclear.
Meanwhile, there seems to something of a row developing with the International Director, and the Chief Legal Officer seems to have gone to ground, rather unhelpfully. And the Chief Executive himself is pretending to be on holiday somewhere, leaving the Head of Personnel “minding the store” (such a vulgar phrase!) in his absence.
Oh dear. It’s all so disagreeable. And one was just about to pack for Scotland.
What would you or your readers advise?
Yours sincerely
Mrs W., SL4
Friday, August 01, 2008
Ask Uncle Iain: Episode 94
Some time ago I ran an Agony column (which, quite frankly, didn't work). I wonder if I can ask my readers to give their sage advice to Mrs W from Slough, who has just sent me this heartfelt epistle...
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43 comments:
I believe the non-executive Chair still has the power to sack the Board and convene a General Meeting for the shareholders to appoint a new one? I know conventionally Mrs W would wait for the Chief Exec to ask her to do that, but if he can't make up his mind...
I recognise this company. It's on a par with ambulance chasers; readers will receive telephone calls from the Chief Executive pleading with them to understand him and give his business money in exchange for lordships. He's foreign, never been voted into office and is fond of eating bogeys. My advice? Leave well alone, he will go off to his study with a bottle of spirits and a loaded revolver. Mind you, he's likely to miss his brain, it's not very big!!
Dear Mrs W,
Would CEO be the sort who would wear what is known as a "lounge suit" to formal state events? Is he, by any chance, the sort of cove who sends his ties to Hawes and Curtis for renovation, only to find that the esteemed cutters have difficulty in unsticking the said ties from their sewing machines, due to some viscous substance that has permeated the said tie?
If the above is the case, then I think I know who we are talking about - but rest assured, Ma'am, discretion is the word.
I am afraid that I was going to suggest, (please forgive the language) that the only thing for it is to set the chap up in an unseemly algolagnic tableau, along with several young girls and a dozen Ping Pong Balls for good measure, and have the whole thing committed to digital media by the news of the world.
Unfortunately, I fear this would merely enhance his reputation and render the Screws liable to a hefty damages payment. Accordingly, I suggest you consult your other half, who I belief is Greek by extraction, and see if he cannot have the man bumped off and make it look like an accident.
"Orf with his head"
Propose a vote of No Confidence in them all. Look for another job or consider early retirement.
What you have to realise is that at your helm you have a man of great courage, getting on with the job, making those big decisions which everyone involved with that company wants him to make.
His problems are created by the global market, which is in a downturn, and he should be given far greater support and understanding.
As regards the International Director- he sounds quite childish, obviously the type who has bum fluff posing as a moustache! We all know that Type. Well read - probably straight from university - probably leaning, as students do, to the left. Check his CV and family connections for possible bolshevik connections. He is a trouble maker and needs to be given a lesson in life.
Promote him! Give him a job he cannot do! Force him to leave. He sounds an utter shit!
You could consider asking David Boothroyd to join the board. It does appear your Board is missing a Brown Nose! He is that man!
I hope you find this advice worthwhile.
Dear Ma'am
One suspects that one is in a stronger position to rescue the situation than one thinks. From what one says, it would appear that the old CFO was appointed Chief Executive without the tacit approval of the shareholders, so it is no wonder they are now selling. Especially if - as one has heard - he is a grumpy old sod who spends much of his time tossing the mobile phone (a trick one suspects he learned in one's holiday destination).
As Non-Executive Chairperson of this enterprise, one no doubt has regular meetings, weekly perhaps, with the CEO (not an occasion that one would look forward to, one feels). It may be that one might suggest to the CEO at one of these meetings that he should ask the shareholders as soon as possible whether they really want him and his board to continue to run the show.
Reading between one's lines, is sounds as if one's board has been spending too much money - if one may use that term - on headline-grabbing projects, as well as feathering its own nest, without noticing that one's competitors are doing things rather better.
One suggests that one should act quickly, because the nightmare scenario is that one's previous CEO and his ghastly wife might attempt a heroic return, doing their awful impression of Royalty. And one wouldn't want that, would one?
Full of sympathy, but would prefer the role of non exec director/chairperson was an elected role. Seems to me that the structure of the company is somewhat arcane, with the shareholders only being allowed to have a meaningful vote on the performance of the board every five years. It would help in future that all board Directors did at least sport something on their CV other school, university, running a department of state !
Off with their heads!
Activist shareholders may well get involved, probably from some dubious foreign sovereign wealth fund, and start to agitate for change. Most likely they will seek to cause a rumpus at the AGM (due I believe after the summer break) and request that the CEO is replaced. The problem is that the rest of the board are all 'yes men', and so there's no obvious successor to the incumbent. The current CFO is also not up to his job; neither are many of the other execs. Frankly, I'd be surprised if there wasn't legal action against their serial incompetence and dodgy off-balance-sheet accounting. I think the board needs to steel itself for managing the firm's long and slow disintegration, while shareholders should sell the stock (hedge funds should consider shorting), while going Long the alternative play in the sector: Cameron Plc.
Dear Mrs W
Sometimes one just has to bite the bullet and take serious executive action.
(Taking care of course not to bite the bullet in the way your Romanov cousins did.)
The first step would be to invite your CEO to spend a couple of days with you in your Scottish holiday cottage. Perhaps one's husband could help by explaining, with his usual admirable clarity of expression, the sole course of action that one should be contemplating.
With best wishes
Charles James Stuart
Dear Mrs W, I seem to recall you have within your organisation the means to arrange for the discrete disposal of troublesome individuals. Might I suggest you do the same with this CEO. Yours etc...
Dear Madam Chairman,
You do have a slight problem as the text of the company's Memorandum and Articles which might indicate your precise powers in this situation was unaccountably lost somewhere between 1688 and 1714 and is thus described as "unwritten". You are thus meant to operate by precedent, but the good thing about that is that if the situation is unprecedented it is your prerogative to make a new precedent up.
Contrary to some recent ignorant commentary, there is a precedent for two new Chief Executives without a shareholders' meeting. This happened in 1940 when that nice fat gentleman from Blenheim who drank too much took over from that overoptimistic thin one from the Midlands. However, this was only in the context of an entirely reconstructed Board including previously opposing shareholders; and was under threat of a hostile bid.
To meet your ends I therefore suggest allowing the clamour for the Chief Executive to crescendo and then when he visits you in Scotland later this month as is customary, have a quiet chat with his wife. He will then take the hint and stand down at which point (but, crucially, only at that point) you can let it be known that you will only accept a proposal for a new Chief Executive without calling a shareholders' meeting if, like the man from Blenheim, the new Chief Executive is supported by the dissident shareholders.
As such support is unlikely to be forthcoming, I'd recommend you clear your diary to be in London on Friday 10 October in order to receive a visit from a charming young man from Oxfordshire. You will find you will get on very well with him as he went to the same school as some of your grandchidren, probably has mutual friends, and may even understand dogs and horses. This plan will also greatly enhance your reputation for a sense of humour as it will have involved you calling an EGM (Elizabeth General Meeting) for the Day of Atonement (9 October). That is usually a Jewish observance but it is unclear on this occasion whether the miscreant lad from North London or the Scottish Presbyterian will have more cause to note it. Your English shareholders, however, will be much relieved by this proposed turn of events.
My fee for this management consultancy advice should be paid to my personal account in the Cayman Isles in the usual manner; but it may be set off against my prospective Inheritance Tax saving that should result.
Brilliant.
the company seems to have been run so badly that personally, i'd be tempted to close the whole company down. that should get rid of him! :)
Dear Mrs W
As a shareholder I sympathise entirely with your predicament. I do not think, however, direct action on your part is the best option. I feel more subtle measures are called for. According to various company PR people your CEO is suffering from what might be described as mental imbalances. I suggest that you do as much as possible to exacerbate these. The next Chairman apparent and your spouse have a good record in this area.
This should be combined with discreet encouragement of other board members might to takeover the CEO role.
If these two strategies are taken in tandem, it might encourage the CEO to call an emergency general meeting in order to ensure that none of the current board can succeed him.
The gas oven
I hope the current board will receive a considerably reduced payoff. It is not acceptable that they simply transfer to lucrative positions in the HR department in Belgium, whose increasingly malign influence Mrs W appears to have ignored.
Sadly I am not optimistic that a complete restructuring of the board will resolve matters since the proposed replacement team have committed themselves to continue implementing much of the current programme.
I too have shares in this company. But I suspect the CEO will be harder to remove than we might hope as I hear he has stapled his hand to his desk.
Dear Mrs W,
The circumstances that you describe are not without
precedent.
An extremely large Banking conglomerate I was
associated with in the early 1980's and 90's had a not
dissimilar problem.
The CEO had taken over the reins at our under performing bank. She set about slashing dead wood,
ending restrictive practices and generally barreling
through the entire institution. We all thought she would have to go. Bossy, rude, inconsiderate and
domineering.
She produced unbelievable campaigns such as "This
Hospital is merging with another 50 miles away.Please
ensure you have collected all your belongings."
And " for your convenience, this coal mine is now closed."
Well, we thought she would have to go when suddenly a hostile takeover appeared by a foreign firm, Banco del Argitos.
Our CEO was magnificent. She routed them, had everyone onside, got the team working together, made
strong connections with USA, saw off the European competition and even made strong inroads into the
former USSR.
The finance, legal, marketing, distribution, security departments etc were all functioning at levels never dreamed of before.
she was still as batty as a hen house, but no one wants to end success.
It wasn't until her more harebrained anti-customer schemes and a mishandling of personnel some 7 years later that it was felt that she must go.
Therefore I offer you the same advice that we took back then.
1] A very junior executive is invited to contradict one of the CEO's key policies at a board meeting. The exec is shot down of course, but a lukewarm response of support by the board will not go unnoticed.
2]A senior, revered, and formerly utterly loyal and faithful member of the board must publish a letter to the shareholders saying he/she intends to step down as the foresee nothing but ruin.
3] Ensure the financial press have plenty of stories of takeovers, and division and resignations.
4] eventually persuade the chief to see all the board one by one.
They will offer their support but also predict a gloomy and doomed future.
5] he will go and the pleasant but ineffectual FD can take over until a more permanent person can be found in 10-15 years time.
Dear Mrs W,
Please don't rush into appointing another CEO. Let the present one serve out his time while you search carefully.
You know when relationships fail, it's unwise to rush into another one on the rebound, so to speak. Chances are you'll choose the same type of person over and over again. This could cause untold damage.
So cast around for another CEO. And this time, search very carefully, using selection methods appropriate to your PLC's constitution.
Ask shareholders what they think. Ask the current CEO to reapply for his old job - tell him you're undergoing restructuring.
Ask shareholders to interview all potential candidates in the boardroom. A hall could be hired, actually for this event as everyone with a stake in your organisation's well-being should have a say.
Then choose a CEO based upon shareholders recommendations. Preferably, someone younger, easier on the eye, better spoken, with a good vision for the company's future and better educated than the incumbent. Someone who has worked in say, PR, and can elucidate better with shareholders and other stakeholders about your organisation's products.
Good luck.
If in doubt, then sideways promotion is always the action of choice. I feel sure there's a vacancy in the European division of your company to do with the organisation of referenda into which this rather obnoxious individual would slip neatly.
I would also avoid appointing the CFO as there is a high chance of them failing to invest properly in the organisation, to undermine the Marketing Department and give counter-productive targets to Sales. Wound up in 5 years is the most predictable outcome.
My advice would be to find out which divisions are making the most money or have the best brands and then to split them off from the lesser performing parts of the business. The CFO could then run the failing division, cutting costs and losses from the "dogs" and let the division with the "stars" and "cash cows" be run by someone with the dynamism to exploit the product line.
Dear Mrs W,
Could I suggest that one gives ones Int Director a good smack and send him to bed without tea.One knows from ones own experience of over promoted sixth formers that a short sharp shock now is better than a Glasgow kiss later.
One wishes one well with ones ventures.
Yours
U I
Dear Mrs W.
Have you got any grandchildren of military age who have been trained in close combat?
If so, why don't you ask them to take the CEO round the back of the bike sheds at Company Headquarters and give him a good seeing-to (Not in the biblical sense, I hasten to add)?
Tha answer is obvious. Get Yvette Cooper in to run things.
No, really, stop laughing, that's what they're saying over at Labour Home...
Ah, satire. There's nothing like it.
And this is nothing like it.
Nice one Iain!
One could always ask one's first Lord of the Treasury to become one's first Lord of the Admiralty and then post him to the Arabian Sea and request that he repeat his opinions concerning a nearby state (four letters, first letter I, last letter N). This will enable one to know how good their anti-ship missiles really are.
In France we had a tried and tested method of dispensing with senior figures who have outlived their usefulness - we assassinate them in the bath.
However, I believe the gentleman you refer to has a grubby and crumpled appearance and does not appear to bathe too often - so you may have a long wait.
Sorry I can't be of more use.
Charlotte Corday
Dear Mrs W,
Forgive me Ma'am, on the first reading I believed your letter to have been penned by a Ms H. My apologies for confusing your person with that of a mere niece of a Countess.
However, I was struck by what seems, for reasons best known to himself, to be the lack of preparation by the new CEO for the post when he was CFO. This despite his obvious ambition. I was further struck by the figurative concatenation of Ms H (an error by any standard) and some prepartion could at least alleviate the distress caused by the new CEO.
I am given to understand that a commercial physic called Preparation H is often of great benefit when one is discomfited by unwanted intrusions such as your new CEO. Be aware, however, that "H" used incorrectly can itself be a major irritant.
In cases where a treatment such as Preparation H fails to remove unwanted CEO then surgery may be required.
Perhaps you know of someone who would be prepared to put the CEO to "the knife" should all else fail. It may be that an unscrupulous scion of a self-declared Boshevik may be found.
I remain Your Humble and Obedient Servant,
Sniper Esq
Dear Mrs W
No, no advice i'm afraid - we're all screwed ma'am.
DtP
This is tricky. Am trying to get hold of Richard Mottram to see how he assesses the latest situation.
Having been involved in restructuring of companies for many years, this case would appear no different from many I have seen, buoyed forward during the 90’s as the economy surged, whether well managed or not. The problem for many was that governing boards falsely assumed that management was to blame when growth faltered and then slid inevitably backwards. Changing otherwise good management on false assumption, rather than realizing true market conditions has the effect of destabilizing relationships at the top causing a wave of demotivation throughout. Knee-jerk reactions are rarely the right ones to make. Within my experience, the most ambitious but worst managers are CFOs’ or Accountants. They are normally logical in approach, but fail to recognise opportunities and lack both entrepreneurial and personal communication skills to benefit a company in the long term
Gordon should be kind-Millie has barely sorted out his pimples and is trying hard to grow a moustache in order to look older.
Give the lad time for his hormones to settle.
Anon said:
Give the lad (mili) time for his hormones to settle.
I was under the impression that Miliblob's hormones have already settled, somewhere across the Atlantic ocean, anon.
Have you not noticed how much time he's been spending in the US?
Hardly a month or two seems to go by without a video popping up of Miliblob with his pal and mutual admiration society, Condi.
"Oh, that accent!" (said Condi)
Have you also not noticed how much time Miliblob's been spending anywhere but UK?
Ok, I know Miliband is half Polish and half Belgian - and he was brought up and educated in America, even doing his post grad studies in the US, I believe, so he obviously has other alliegances.
Yet he does live in UK after all - in Primrose Hill, along with the rest of the Lavender Hill Mob - and he's doing very nicely out of the UK taxpayer as a government minister, after all.
So why doesn't David Miliband like us British enough to spend more time in Britain?
Condi did actually say that, Iain, that's not a wind up.
Iain,
More rot, this on top of Letts. Is the hot air around Labour's supposed downfall getting to Conservative bloggers, is this lot deemed funny now. It don't take much it seems.
A. Tory.
Miliband's married to an American too, isn't he? And his sons were born in the US, though that's where the birth mothers live, of course.
Has Miliband got his eye on the lucrative US lecture circuit, following in the footsteps of his former boss, Blair once his parliamentary career is over?
That won't be long now from the sounds of rage reported in the press as issuing from Broonie's classy holiday mansion.
I wonder Miliblob gets to see Blair when he's in the US?
Auntie Flo said ... ".. he was brought up and educated in America, even doing his post grad studies in the US, I believe, so he obviously has other alliegances."
You exaggerate, Auntie Flo. David Miliband wasn't brought up in the US. He was brought up in Britain and 90% of his schooling was here, as was 75% of his university time.
"The UK is 60 million people, so it's a couple of California's...if only."
David Miliband in US at Google with Condi on 22/5/08
You exaggerate, Auntie Flo. David Miliband wasn't brought up in the US. (Anon)
You are right, Anon, David Miliband has stated:
"I spent a year in the US as a junior high school student" (DM's blog)
His Wikipedia biog states:
"David Miliband was educated at schools in London, Benton Park School in Leeds and Boston, Massachusetts before being educated at Haverstock Comprehensive School in North London..."
"He was admitted to Corpus Christi College, Oxford...
He then took an S.M. degree in Political Science in 1990 at the Massachusetts Institute of Technology (MIT) where he was Kennedy Scholar"
the Massachusetts Institute of Technology is a private, coeducational, research university.
As you appear to have a good knowledge of Miliband, anon, would you happen to know how many overseas visits he has made in the course of his job as Foreign Secretary?
Anon said:
He was brought up in Britain and 90% of his schooling was here, as was 75% of his university time.
That's a very precise knowledge you have of Miliband, anon :)
And that, dear Iain, is a work of genius.
Ma'am,
Since we are hearing that the current young generation know no boundaries and are thus well placed to understand this globalisation that is affecting us, might I suggest that one of your grandchildren be co-opted to assist you, thus preparing him to take this burden off you? Despite the company having decided some years ago to dispense with the yacht, and other companies deciding on custom flying machines, I'm sure that the younger generation would persuade the company to purchase a cruise liner for you and yours, together with that brand new steam railway engine for nostalgia's sake.
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