PATIENCE WHEATCROFT: The human factor - Throughout most of his time running Tomkins, Greg Hutchings combined the roles of chairman and chief executive. As the corporate jets ferried him around, the luxury London apartments awaited his visits and his wife

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

Throughout most of his time running Tomkins, Greg Hutchings combined the roles of chairman and chief executive. As the corporate jets ferried him around, the luxury London apartments awaited his visits and his wife and housekeeper collected their Tomkins' salaries, he was definitely the man in sole charge.

It can hardly be a coincidence that, so soon after glimpsing Hutchings' management style, major investors relaunched their campaign against companies allowing one individual to assume such an all-powerful role. The Association of British Insurers has written to offenders asking them to reconsider.

In its view, and that of many observers of good corporate governance, companies need to separate the jobs of chairman and CEO.

That may be the ideal blueprint, but it is not the only one that works.

Job titles are interpreted differently in different organisations and what they really mean depends on the personalities involved. But it is clear that two heads tend to be better than one.

In its heyday, Hanson Trust was run by Lord Hanson and Lord White as a team. The former was called chairman but this was a partnership: they talked incessantly, bounced ideas off each other and did deals.

A chairman who runs the board and a CEO who runs the business may be the ABI's ideal, but many entrepreneurial bosses would regard it as a straitjacket. Lord Sterling of Plaistow, for instance, has been at the helm of P&O in tandem with Bruce MacPhail for decades. Their skills complement each other, but Sterling clings to his view that he is an executive chairman and MacPhail therefore works under the label of MD.

When P&O hit difficulties there were the inevitable calls for Sterling to step back, but he refused. Now that P&O has demerged its cruise business, he continues to largely ignore the corporate governance bullies and will be chairman of both the demerged P&O Princess cruise division and what remains of P&O. His only concession has been to appoint a CEO for Princess.

It is not really the titles that count but the individuals who fill the roles. Charles Brady, executive chairman of the Amvescap fund management business, was a recipient of the ABI's missive suggesting he should loosen his grip. His first response was a feisty: 'If it ain't broke, don't fix it'. But, because he is now headed towards retirement age, Brady plans to bring on a chief executive to prepare for his eventual exit. In the interim, he will be non-executive chairman - but what does that mean?

An interviewer who inquired met with the telling response: 'I shall be as non-executive as a former chief executive can be.'

Some suspect that this 'can't let go' syndrome is part of the problem at British Telecom. Sir Iain Vallance is part-time chairman at BT - an interesting job description, acknowledging that, although he has other interests, he is not quite non-executive at BT. And how could he be? Sir Iain worked for no other organisation and he was born to it: his father was employed by what was then the Post Office. Sir Iain became chief executive in 1986 and a year later combined the role with that of chairman.

When Sir Peter Bonfield left ICL five years ago to play CEO to Sir Iain's chairman, it was unlikely he would be given free rein at BT. Instead, there was a top team that, in theory, could have brought BT the best of experience and innovative thinking. In practice, it hasn't, and BT has been left looking flat-footed and slow. Over at Vodafone, chief executive Chris Gent has charged ahead, taking brave decisions with the sage counselling of a chairman new to telecoms but with vast business experience. That Lord MacLaurin of Knebworth shares Gent's passion for cricket is just a happy coincidence that adds to the pleasure of boardroom life and perhaps makes it easier to decide where Vodafone's sponsorship money will go.

If the chemistry works, two brains at the top must benefit companies.

Some of the most successful partnerships consist of odd couplings. Sir Nigel Broackes and Lord Matthews, for instance, would never have chosen to mix socially but, when building Trafalgar House, Broackes' strategic vision and the management skills of the former contractor made a formidable combination.

At Asda, it was the double act of Archie Norman, the reserved McKinseyite Tory politician, and Allan Leighton, the ebullient Labour supporter, that transformed the business.

The ABI's insistence on splitting the top jobs is aimed at preventing an excess of power being vested in a single individual. That is too negative: finding the commercial equivalent of Morecambe & Wise should be the aim.

And who would dare say whether the chairman was the one with the short, fat, hairy legs?

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