Q: Do internal hires make for better chief executives? Parag Agrawal, who was recently appointed as Twitter’s boss following the departure of Jack Dorsey, was hired, in part, because he had been rising through the company ranks for more than a decade. What do you think?
A: There cannot be a golden rule. It all depends on the circumstances, but I would never look outside if a good candidate is already on the payroll. It’s very different in the world of football, where almost every new manager comes from outside the club. But football managers are like politicians: nearly every career ends in failure, so the new manager is being appointed to revive their performance, both on and off the pitch.
Similarly in business, a failing company should almost certainly find a new leader from elsewhere. Like an incoming football manager, he or she will come with a ready made support team, throw out the old methods, say goodbye to lots of established executives and have a fresh look at the firm. After a wide ranging review, they draw up a business plan and promise better things in 12 months’ time. The new broom sweeps away the old values and imprints a culture of their own, but they’re unlikely to be around in five years’ time – replaced, if a flop, or moving onto bigger and better things if successful.
This classic big company business cycle gives smaller family-owned operations a significant advantage. With each generation typically running the show for about 20 years, family firms enjoy greater continuity and a stronger loyalty from their colleagues.
I admire Tim Martin of Wetherspoons for the stance he has taken against shareholders who, being slaves to corporate governance, want to oust any non-executives who have been around for more than nine years. These investors see non-execs as a police force, checking that the company is totally compliant. But to make a real difference, non-execs should help to develop the strategy and provide support to the chief executive. Nine years of knowledge is a major asset that shouldn’t be thrown away in the name of corporate compliance.
I like to think that we, at Timpson, have a similar maverick approach to Tim Martin. It has taken us 25 years to establish the degree of empowerment that trusts branch colleagues to use their initiative. We call it “Upside Down Management”. Our field managers have learnt a new way of being a boss by supporting their team members with training, help, consideration and kindness so they can become the best they can possibly be. These 350 middle managers are not allowed to tell anyone what to do; they create success by picking great colleagues and looking after them.
Our successful management style is so far away from “best practice” that management recruits from elsewhere become bewildered and try to drag us back to normality. Consequently, we always promote from within. Every Timpson field executive started as an apprentice.
We have just made our most significant executive appointment for many years, following the retirement of retail director, Perry, who has led the core Timpson shop team for more than 20 years. His successor, Sid Hubbard, started working in one of our shops at the age of 14 and has done every role up to regional manager.
I’m occasionally told that we risk becoming too inbred. Others claim that it’s healthy to have a regular influx of new blood with experience elsewhere. I disagree. Any benefit we might gain through their ideas is overshadowed by the damage done by clever recruits who operate a command and control system of management, relying on policy and process.
You don’t need to hire from elsewhere to bring in new ideas. Get out of the office and visit the outside world, find a few friends who run successful businesses and walk around with your eyes wide open. There’s enough going on to keep your company up to date.
Managers are better leaders if they understand the job their colleagues are doing and the best way to know what they do is to have done the job themselves. Twenty-five years ago, our then competitor Mister Minit was acquired by Swiss bank UBS, whose merchant banker claimed to be an expert at buying family firms and putting in professional management. As part of his revolution, he replaced the Mister Minit area managers, who all had a cobbling background, with “professional” area managers from elsewhere. To make matters worse, the shoe-repairing shop managers were banished to a hidden workroom and replaced by young graduates who didn’t know how to cut a key.
That merchant banker did me a big favour. He lost £120m in five years and I was able to acquire all the shops for £1.
Sir John Timpson is chairman of the high-street services provider, Timpson.