Financial Times: Lifer is still doing time at the top: “Among more recent chief executive appointments, Jeroen van der Veer, head of Royal Dutch Shell, joined the oil group in 1971 after military service.”: Tuesday 29 November 2005
By Alison Maitland
Published: November 29 2005
It is tempting to think that Sir John Bond's departure marks the end of the era of the "lifer" - the business leader who reaches the top after an entire career with the same company.
Headlines about boardroom coups, and surveys about diminishing chief executive tenure, create the impression of a constantly revolving door to the top office as external successors move in. A Booz Allen Hamilton study, for example, has found that underperforming chief executives in Europe are removed after just two-and-a-half years on average.
In fact, there are still plenty of examples of chief executives of leading companies who have served the same organisation, if not quite "man and boy", then at least for a substantial part of their career.
At HSBC itself, the preference for "growing your own" is clear. Stephen Green, who succeeds Sir John as chairman, is himself a virtual lifer, having joined HSBC 23 years ago. He will be succeeded as chief executive by Michael Geoghegan, 52, who joined the bank in 1973, while Mr Geoghegan's successor as chief executive of HSBC Bank is Dyfrig John, 55, who joined in 1971.
Elsewhere, Lord Browne, chief executive of BP, started at what is now the world's second largest publicly traded oil company as a university apprentice in 1966.
Sir Terry Leahy, head of Tesco, joined the company in 1979 after a stint at what was then its much larger rival, the Co-op. Both are long-serving chief executives, with 10 years and eight years at the helm respectively.
Among more recent chief executive appointments, Jeroen van der Veer, head of Royal Dutch Shell, joined the oil group in 1971 after military service. John Varley, who became chief executive of Barclays last year, started in the corporate finance department of Barclays Merchant Bank in 1982, although he took a year out. Todd Stitzer, head of Cadbury Schweppes, has been with the confectionery and beverages company since 1983.
The trend for FTSE 100 companies to appoint internal candidates is continuing, according to Elisabeth Marx, a director of Hanover Fox International, the search firm.
Ms Marx is updating research of three years ago that showed that 77 FTSE 100 chief executives had reached the top through internal promotion and that they had an average of 17 years' service with their company. "I don't think the pattern has shifted," she said. "I think the trend would be for even more internal appointments. Very often the risk is much less with internal candidates."
However, there is a distinction between large global companies, which can groom internal candidates by giving them experience of a wide range of jobs, and the rest, according to Luke Meynell, head of the board practice at Russell Reynolds Associates, the executive recruiting firm.
At the same time, aspiring executives are realising they could become less marketable if they stay with the same company too long. "I think it's increasingly rare, across the senior searches we do, to find an individual who has served in only one company prior to becoming chief executive," he says.
However, Margaret Exley, UK chairman of Mercer Delta, the management consultants, says: "It's very clear from research that there's a much higher rate of failure with chief executives who are appointed externally than with those appointed internally." Insiders not only know the business and the board well but are themselves well-known, warts and all. That does not mean, however, that they need necessarily be "lifers" such as Sir John.
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