THE HUMAN FACTOR: An outgoing chairman should be shown off the premises; giving him a title, however empty it is intended to be, can be misinterpreted

THE HUMAN FACTOR: An outgoing chairman should be shown off the premises; giving him a title, however empty it is intended to be, can be misinterpreted - Like a modern married couple, a company separating from its chairman should favour the clean break. No

by PATIENCE WHEATCROFT, business and City editor of The Times
Last Updated: 31 Aug 2010

Like a modern married couple, a company separating from its chairman should favour the clean break. No matter how happy, or otherwise, has been the partnership, both parties must be strong and walk away without a backward glance when it ends.

This is not easy, particularly when an individual has spent most of their working life in a company, but it is essential. To have the former chairman hanging around is at best an irritant to the successor and at worst a threat.

So it will have done nothing to ease the task of the headhunters in search of a new chairman for Dixons when a company spokesman revealed that Sir Stanley Kalms intended to maintain 'a continued closeness' with the company after his retirement.

Kalms' reluctance to sever his links is understandable. From a single camera shop, he has built a formidable business over the past 46 years.

He is taking time to adjust to the idea of retirement: it will be autumn next year when he officially bows out, aged 71. But although he says he is giving up the day job to devote more time to campaigning against Britain's entry into the single currency, he will be president of Dixons and may well keep an office at corporate headquarters.

These are danger signals. An outgoing chairman should be shown off the premises; giving him a title, however empty it is intended to be, can be misinterpreted. This became horrifyingly clear when Sir Iain Vallance was finally winkled out of his role as chairman of British Telecom. In what was surely intended only as a gesture to salve Vallance's dignity, the company conferred on him the title of president emeritus.

Given BT's parlous state, most onlookers were reminded of the title's conventional explanation - 'e' because you're out and 'meritus' because you deserve it - but Vallance seemed intent on taking his new job as an elevation to even greater heights.

As the City greeted the news of his departure as a welcome sign of change, the man who has steered BT into a bog of pounds 30 billion debts was busily explaining that he would still be there to make available to the firm 'the best global contacts in telecommunications'. Sir Christopher Bland may well feel that, judging by what those global contacts have done for BT so far, he can manage without them.

Vallance obviously feels attached to BT, having worked there since it was part of the Post Office. But he has plenty of other things with which to occupy his time, including the presidency of the CBI and the deputy chairmanship of the Royal Bank of Scotland. He should concentrate on those and leave Bland to shake BT out of its deadening bureaucratic culture.

Outgoing chairmen find it difficult to give up the trappings of office: the comfortable, thickly carpeted base, the secretary and chauffeur. Some, such as Sir Richard Giordano of what is now Lattice, have it written into their contracts that once they give up the job, the trappings remain.

Successors, thinking ahead to their own retirement, may be reluctant to be mean about such things. But the wise incomer will not encourage his predecessor to stay on the premises where his very presence can undermine any attempts to change.

After David, Lord Sainsbury took over from his uncle as chairman of the supermarket business, Lord (John) Sainsbury continued to turn up at the company headquarters in London's Stamford Street. He told me that it was not his intention to interfere but that if he had spotted something in the shops that was not right, he felt obliged to let David know.

It is hardly surprising that in a family-dominated business it is particularly difficult for an outgoing chairman to sever all links but, if a company is to move on rather than be dogged by its past, it is vital that the new leader be allowed to stamp his authority on the business.

Lord Simpson of Dunkeld was Lord Weinstock's chosen heir at GEC, yet their relationship soured as the man who had devoted much of his life to creating one of Britain's major companies found it difficult to let go. Granted the inevitable presidential status, Weinstock continued to turn up at GEC's less than luxurious Stanhope Gate office.

While Simpson's decision to move to rather more comfortable accommodation at Bruton Street was justified by the company's need for more modern premises, many suspected that the need to escape Weinstock's presence was also part of the motivation.

Just days into the job at BT, Bland has let it be known that the company will be exiting its London headquarters. If he is as tough as his reputation, it is certain that the office planners will find that the new premises do not have room for a president emeritus.

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