Lost years at Rentokil

After a messy succession, new CEO Doug Flynn must tidy up the sprawling firm.

by Patience Wheatcroft
Last Updated: 31 Aug 2010

If Sir Clive Thompson had adopted a slogan to describe his management style, it might have been 'I'll show them who's boss'. So it is ironic that the man who now thinks he can put right the wrongs that came about at Rentokil as a result of Thompson's reign has made a television series under just that label.

In his television shows, however, Sir Gerry Robinson was applying his tactics to small businesses. Thompson was trying to control an international company with more than 1,000 different brands and 93,000 employees. In the end, his technique failed. As the new management has moved to fend off Robinson's putative bid, the litany of criticisms of Thompson's regime has grown. No mention is made of the phenomenal annual growth he delivered, earning him the admiring soubriquet 'Mr Twenty Per Cent'.

But something went badly wrong. Rentokil Initial remains a strong corporate identity with solid brands in competitive markets. The growth record, though, has been obliterated; Thompson and his new chief executive were shown the door. The new CEO, Doug Flynn, admits that it should not take rocket science to fix it, just time and hard work.

The new chairman had been on the board for eight years before deciding that there was a need for change at the top - which hardly makes Brian McGowan the hero of this story. What he now finds reprehensible in Thompson's style was always there. Nevertheless, last year McGowan decided that Thompson had to go.

Shortly afterwards, having voiced his complete confidence in chief executive James Wilde, he axed him.

The list of criticisms that McGowan and now Flynn level at the previous regime are so damning that it's surprising they had not been spotted before.

When Flynn made his first public appearance as CEO, the organisation was blasted for 'top-down decision-making; risk aversion; blurred vision; lack of clear leadership ...'

This last allegation raises the biggest question. For nearly 20 years there had been no lack of clear leadership at Rentokil. Thompson took over as chief executive in 1982 and made the business what he wanted.

By the mid-1990s, he'd decided that he could combine running the company with being chairman; his shareholders, more than happy with the performance he'd been delivering, had no qualms about what is now seen as a politically incorrect move.

On the basis that two heads are better than one, splitting the roles seems preferable, although there'll be occasions when someone needs to be so definitely in charge that they should do both. When Richard Lapthorne, for instance, took on the top job at Cable & Wireless, he wanted to be in control of the reins until he felt ready to hand over the day-to-day running of the business to a CEO of his own choosing.

Thompson held on too long. And it's hard to ignore the fact that when he was pretty much in sole charge at the sprawling Rentokil Initial, he was playing a pivotal role at the CBI. He was deputy president from 1997 to '98, president from 1998 to 2000 and deputy again from 2000 to 2001.

Well, someone has to do it, but Rentokil investors might wonder whether that someone should be the man they are paying (and not ungenerously) for running their business. If Thompson was distracted by his CBI duties, the effects might not have been so bad if he'd created an organisation that looked to him merely for occasional strategic insights.

His successors, though, believe the command-and-control atmosphere stemming from the top turned into a vacuum when his attention was elsewhere.

Rentokil had, apparently, not embraced the modern ideas of relatively flat management structures and lots of empowerment. Thompson's dominance may have left those running the numerous businesses within the organisation relatively powerless and unable to take the decisions that needed to be taken. It may sound trivial to complain that in a company of Rentokil's scale, it has overlapping businesses in the European washroom market, but it symbolises the fact that on the ground managers were not able to control what happened. They looked to their short-term targets and left the rest to HQ.

What McGowan belatedly noticed was that the centre, operating from an elegant country house, had not been doing its job adequately. Thompson, it seems, had been in favour of a drastic solution. With his CBI commitments ended and his attention now focused, he wanted to hive off the less important businesses to concentrate on the core hygiene and pest-control operations.

The board did not agree with him.

Robinson's solution remains a tantalising secret. But what is clear is that running a business as big as Rentokil is a full-time job. Current CBI president John Sunderland may have upset corporate governance purists in moving from CEO to chairman at Cadbury Schweppes, but at least he ensured that there was a full-time, and highly competent, chief executive running the show.

- Patience Wheatcroft is business and City editor of The Times.

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