So it’s conference season again (actually when isn’t it conference season?) but in the coming weeks I’m off to ‘do a turn’ at the CIPD conference in Manchester (very excited to be asked). I was thinking about some form of presentation (I must finish that) a few weeks ago when I got distracted by the BBC News app and read that Kate Swann is stepping down as CEO of W.H.Smith next year. The share price dropped by 7% after the announcement which I’m sure was a great bolt of confidence for her successor Steve Clarke.
In reading the press coverage that followed it was this comment from retail consultant Matt Piner (reported here on the BBC) that really got me thinking: “The worry is that Swann’s departure signals that the retailer’s strategy of cutting costs is beginning to run out of steam, making it a good time for her to exit on a high,”
Last year at the CIPD conference the opening keynote was Sir Terry Leahy and having watched his presentation I wrote about the fact that no one took the opportunity to ask about how Tesco’s performance was reflecting on his legacy. Since writing about it Tesco have continued to have a less successful time of it than under Leahy issuing profit warnings, losing senior managers and having to really fight for their market share in a way they haven’t for some time. From an uninformed perspective (i.e. mine) it would appear that Leahy has consigned himself to the ranks of Level 4 leaders in that his successor, Philip Clarke is not continuing his success (although hasn’t failed yet!)
So that’s the context but I imagine some of you are asking what the hell a hospital pass is? It’s a term I know from rugby (but is used in several other sports) which describes a player passing the ball to avoid being tackled but in offloading it they put their fellow player in a position to be crunched (or as Wikipedia puts it ‘unavoidable heavy contact’) by a member of the opposition [Please see video below for further clarity]
Are Swann and Leahy both guilty of throwing a hospital pass? Are we seeing a trend of CEO’s cutting as much as they can out of business and then getting out when the going is good? Whilst I understand that human nature (and incentive) says do what you can until the going stops being good but given how good the going gets (i.e. how large executive remuneration is) and the obligations of a company director to act in the interests of the share holders can this really be a successful strategic outcome?
Obviously we don’t know what the closed door conversations are in these two cases but I keep on coming back to the fact that HR need to get in the game, evolve exec reward (specifically LTIP) or we will continue to see these situations arise as the personal incentive is near term enough to not truly focus on anything past 3 years of the individual’s tenure