RUTH SUNDERLAND: Running a listed company is a position of great trust, acting as a steward of shareholders’ assets – selection processes need to work better than this
As Boris Johnson is discovering, doing the top job is not as easy as it looks. That is as true in business as it is in politics.
So it is only to be expected that a fair proportion of chief executives will fail. It is also inevitable there will be some ill-advised hiring decisions.
At the moment, though, there seems to be more than the usual quota of duff appointments at the top of UK plc.
What a load of bull: Boris Johnson is discovering that doing the top job is not as easy as it looks
Shareholders in The Restaurant Group must surely be wondering what they have done to deserve Andy Hornby, who has just made his first public appearance in the role. He is the former chief executive of HBOS who was in charge when the lender hit the rocks in the financial crisis, at a huge cost to taxpayers and his then shareholders, many of whom were small savers.
His subsequent career at Boots the chemist was not a huge success either, though he has made large sums at Gala Coral.
Why, then, was he chosen? According to chairman Debbie Hewitt, the discredited bank boss was the ‘standout’ candidate in an extensive search, an ‘outstandingly talented individual who since he left HBOS has created incredible shareholder value’.
‘From our perspective, we are feeling very good about the appointment,’ she gushed.
Great. So let’s forget about the little matter of all the value destruction during his time at HBOS. Never mind that thousands of staff lost their jobs and that taxpayers were left with the tab.
Let’s also gloss over the fact that the matter is not yet closed: City watchdogs are still investigating HBOS senior managers over its downfall.
Miss Hewitt might perhaps want to remind herself of the verdict of the Parliamentary Commission on Banking in its investigation into the lender in 2013: ‘The weaknesses of group risk in HBOS were a matter of design, not accident. Responsibility for this lies with [former chief executive] Sir James Crosby, who… was responsible for that design, [and] with Andy Hornby, who failed to address the matter.’
Of course there should be the possibility of redemption in the corporate world, as in other walks of life. But a catastrophic failure which threatened to help bring down the entire banking system is a different matter. And if Hornby really was the ‘standout’ candidate, it does raise questions about the quality of people being canvassed for top corporate jobs.
Perhaps the best candidates are turning their back on public companies and going into private equity and hedge funds where their pay attracts less publicity. Or perhaps the net is not being cast widely enough among women and ethnic minorities.
Another head-scratcher is the hiring of Kevin Loosemore, executive chairman of the software group Micro Focus, to chair the embattled banknote manufacturer De La Rue. You would have thought he had enough on his plate, what with Micro Focus being booted out of the FTSE 100 last week. But no, it seems he is considered the best person to steer De La Rue through its many troubles after it failed to win a contract to produce UK passports.
The situation at HSBC is also deeply odd. It parted company with chief executive John Flint after a mere 18 months, ostensibly because chairman Mark Tucker felt he was not performing dynamically enough. But Flint had been an HSBC lifer, so how come nobody had noticed his supposed defects over the previous decades?
Running a listed company is a position of great trust, acting as a steward of shareholders’ assets. Selection processes need to work better than this.