Beware the 'Hunger Games' model for hunting new CEOs

 20 November 2016

 The Hunger Games, the do-or-die series of teenage films, may be a model for corporate succession planning, according to some of Britain's top business leaders - but it should not be tolerated.

Sir Philip Hampton, GSK chairman, bemoaned the risk of "Hunger Games behaviour" among chief executive hopefuls, in a nod to the books and films about a band of teenagers caught in a dystopian world of competitive executions.

Good boards should not tolerate "poor behaviour" among potential succession candidates, Sir Philip said, saying it needed to be seen as "terminal to chances of progression".

David Roberts, Nationwide chairman, echoed the view. "An essential part of [the succession process] is a very clear understanding among all parties that any form of destructive or overly competitive behaviour is a sure fire route to disqualification."

Both men have overseen chief executive appointments this year. At GSK, Emma Walmsley beat internal rival Abbas Hussain to the top job in September. At Nationwide, Mr Roberts brought in external candidate Joe Garner as the building society's new chief executive in the spring.

Their comments came as part of a debate on how organisations should best plan for the sometimes unexpected departure of the chief. The online exchange of views, staged by the FT City Network, was pegged on the recent uncertainty over the tenure of Bank of England governor Mark Carney.

Mr Carney, whose role is seen in the City as a key plank in maintaining financial stability as Brexit starts to bite, this month committed to extend his original five-year contract to six years, expiring in 2019.

The Canadian's own appointment in 2013 led to the immediate departure of then deputy governor Paul Tucker.

A number of the business leaders who contributed to the debate said succession planning should be undertaken far more seriously and earlier into the tenure of a new chief executive.

"Succession planning should be one of the key priorities of a CEO from his first day on the job," said Jean-Pierre Mustier, who took over as head of Italy's UniCredit this year.

Ruby McGregor-Smith, who recently announced she would step down as head of outsourcing group Mitie, said: "A decade is enough for a CEO of a listed stock. The board knew this last year so we could start some proper planning then."

Some of the contributors said the risk of aggressive competitive behaviour among succession candidates was worth it. "Planning is a higher priority than worrying about problems caused by people manoeuvring to fill positions," said Lady Barbara Judge, chairman of the Institute of Directors.

David Morgan, from private equity firm JC Flowers, praised the traditionally cut-throat approach to succession at GE. "[They] have at least three internal CEO succession candidates available when it comes time for CEO change. Once the decision on the new CEO is made, as a matter of longstanding GE tradition, the unsuccessful internal succession candidates leave the company."

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