An analysis of FTSE chief executives shows that it takes more than an accountancy qualification to reach the top. Ruthless determination and hard work are the key qualities.
Imagine the boss of one of Britain's 100 biggest companies - someone at the very peak of their business powers. What do you think this person - let's call him Mr FTSE - is like? Male? In his fifties? A financial background? Fairly conservative - small 'c'? Sounds like a cliche from central casting, doesn't it. It would be nice at this point to reveal that the FTSE-100 is, in fact, littered with women and shot through with diversity. Of course it isn't. Most of the gilded 101 (Reed Elsevier has two for the moment) captains of industry are more or less what you would expect.
The average bloke (women are out-numbered by 100-1) is a shade under 54 years old and has been in the job since mid-1994. He may well have come up through finance (36%), in which case there's a good chance he has an accountancy background (17%). Marketing is another well-trodden route to the top (13%) as is some sort of general management career path (11%). Popular, too, as a starting-point is a scientific or engineering background (15%), though this covers a multitude of disciplines.
And clearly the job-for-life is another route: eight of the 101 chiefs have spent all, or nearly all, of their working lives with the same company. Ladbroke's Peter George and Marks & Spencer's Sir Richard Greenbury have spent nearly three decades with the same employer. Mr FTSE is a bright, talented fellow but it is determination, hard work and ruthlessness that line his path to power. Indeed, even now, his goal achieved, work intrudes on every area of life: he has little time for family, friends or life's little pleasures. And, although the package - likely to comprise at least £800,000 a year, a cool car, swish pension scheme and all the share options he can exercise - is great, it's not the main reason he makes these sacrifices, he just enjoys being number one.
Being a FTSE-100 chief is about more than having the right mixture of skills, brains and background, it also requires relentless determination.
Being a top boss is invariably very, very hard work. Most FTSE chief executives, and indeed aspiring ones, have much in common with Olympic athletes. Unlike the rest of us, they are driven, single-minded people (Scottish Power's Ian Robinson, for instance, claims to take 'a foot of paperwork' home at weekends) and many make enormous sacrifices on the altar of ambition.
'They don't have much of a social life or a personal life, they work terribly long hours, they travel extensively, they virtually live on aeroplanes and they see their families maybe once a week,' says Alannah Hunt, head of executive search and selection at PricewaterhouseCoopers. John Viney, chairman of Heidrick & Struggles (international head-hunters who found the likes of Pehr Gyllenhammar for insurance giant CGU) goes even further: 'You must remember that most people who get to the top of businesses give up almost everything to get there. They're pretty well one stick short of a bundle - psychologically unbalanced even. I would say what they need to get there means that in other areas of their lives they're probably 18 years old or less - and they're 80 years old in terms of business.'
Which poses the question: why do it at all? Why give up all this to head up a FTSE-100 company? 'Power,' says Hunt. Of course, it's not just that.
The chief executive usually earns a lot more than the rest of the board and with remuneration packages in some cases going up to tens of millions, some of those cats are pretty fat. That said, the true money man would be better off in the City where riches come faster.
It is, says Nigel Nicholson, professor of organisational behaviour at London Business School, this machismo and vying for power that still puts women at a disadvantage. Rather than discriminate overtly, he continues, 'they just don't want to play these games'. Thus many big companies with male-dominated senior management (and that more or less means all of them) find many female players leaving to set up on their own. Indeed, although many FTSE companies now have women on their boards, it is more often than not in a non-executive capacity and it is axiomatic that Britain's best known female boss, Anita Roddick of the Body Shop, would not have made it anywhere near the top in a traditional, hierarchical organisation.
As the table shows, the safest, but by no means the only, starting place for aspirant FTSE bosses is probably accountancy. Not because being an accountant is necessarily a passport to high places but because it is a good way into the finance function; and a good finance director is well placed to become chief executive. One of the reasons for this is obvious - those who control the money hold the power.
But there is a slightly more subtle one, too. Managing relationships with the City is so important that vetting committees look on City-savvy finance directors (who are used to dealing with institutional investors and analysts) as a safe pair of hands.
An argument against such people is that they are perhaps a little risk-averse, but then so are many FTSE-100 boardrooms. One of the gripes which David Varney, British Gas' (BG) maverick chief executive, has about his ex-employer, Shell, is the predominance of Scottish accountants. Typically, these finance-fixated graduates or recently chartered accountants would join a large plc and go on to outshine their peers in their twenties.
By the time they are in their thirties, competition heats up, says Viney.
Terrific number skills by themselves are not enough, he believes. 'They need to have the crisp, analytical brain of a top-quality finance director but also the interpersonal skills to go with it. Then they're destined for great things.'
Typically these high-flyers will be given the first chance to demonstrate team leadership skills in their thirties; if they do so successfully, then, by the time they are in their forties, great things should be happening - perhaps a directorship or responsibility for a large area of business.
Niall FitzGerald, a Unilever career man, is an excellent example of someone with just such a career path. He came up through Unilever, one of Europe's biggest consumer goods companies, via the finance function and made his mark as a man with that little bit extra. 'I got to know a lot of company chairmen very well,' he says, 'and I could see just how dependent individual companies were on the quality of individual leadership.' By the time he was 40, he was on the board, (good going by any standards). He subsequently became finance director and, at 51, having survived the Persil Power debacle, was appointed (executive) chairman.
For every FitzGerald, there are numerous also-rans, people who are convinced they have what it takes yet still fall by the wayside. 'A lot of people,' explains Hunt, 'have it bred into them from their school days that they've got to be number one and nothing else will do.' It's a shame, really, she continues, because too often these people are convinced they can make the grade when 'they haven't got a hope in hell'. Viney concurs: 'There are a lot of frustrated finance directors around this town who get to their forties and fifties and don't have the skills to make the transition and never will.' Self-awareness, he says, is the thing: 'You've got to ask yourself, "Am I analytical through and through, or could I be analytical with people skills?"'
In addition to self-awareness, aspiring leaders must also demonstrate considerable breadth of skills and interests, says Hunt: 'Someone who has just done number-crunching is unlikely to become chief executive. The ones who do get selected tend to get involved in issues like corporate finance, mergers and acquisitions or marketing and business development.' Indeed, this functional mobility is vital and Hunt believes that we are going to see more of it. Companies increasingly move those they are grooming for greatness around a variety of functions, both corporate and away from the centre, in the way the Civil Service does. Big business, she says, is becoming ever more aware that its leaders need a broad view and this is one way of ensuring that they have it. In today's business world, it is also worth bearing in mind that many FTSE-100 companies are operating in the global marketplace and consequently some sort of geographic diversity is as important as functional diversity; those who haven't got this by their early forties may well be precluding themselves from the top job.
It is not only the bean counters who make it to the top - another fertile breeding ground for top bosses is marketing. It is worth noting, though, that while finance has a near universal applicability, marketers tend to be far more prevalent in some areas than others. If, for example, a company's main business is heavy engineering, it is highly unlikely that there will be a marketing man at the helm. But if marketing is a core function, say, in a company which produces fast-moving consumer goods, the opportunity is there. At Allied Domecq, the wine and spirits company, Tony Hales took it.
Knowledge of a specific sector can in itself be a qualification: for instance, Rio Tinto, the mining company, is run by Leon Davis, a metallurgist who spent many years in the field. Similarly, Shell's Mark Moody-Stuart started out as a geologist. Sir John Browne, who is about to turn BP into Britain's biggest company by buying Amoco, also has a scientific background.
Then there are a few interesting, off-piste CVs. Martin Taylor went from Chinese at Oxford to the Financial Times where he worked on the Lex column in before Sir Christopher Hogg, then chairman of Courtaulds, spotted his potential. He spent a period at the corporate centre of things and by the age of 35 he was running Courtauld Textiles. Now he heads Barclays Bank. Perhaps most beguiling of all is Jan Leschly, SmithKline's Beecham's supremo: while many of his contemporaries were beavering away in finance, his early career was spent whacking balls around Denmark's professional tennis circuit.
An interesting adjunct to the prevalence of those with marketing and finance backgrounds is the extent to which this is determined by the state of the economy. Conventional wisdom says that those who get to the top during a recession are accountants and those who get to the top during a boom are marketers. The table bears this out: only two of the 13 with marketing backgrounds came in during the recession years (1990-93) - back then cost-cutters were in fashion. Moreover, adds Viney, the cyclical nature of our economy is one of the reasons that people like Richard Branson, who build empires, are so exceptional: 'Our economy is unbalanced, it breeds the type of short-termist top managers who are designed for four years in the sun and then another downturn. When things go south, there is a great call for operations and finance people to turn businesses around (usually by slashing costs).'
This is a view which Allen Yurko, the American chief executive of Siebe, echoes: 'Britain's managers are the world's best at engineering and restructuring.
Americans with their growth mentality and their faster growth economy may be more growth-orientated.'
When they cannot find the right mix of skills and background at home UK businesses simply hunt abroad. Reed Elsevier, for example, is looking to the US for someone with experience in global sales. Others have already imported talent. With Yurko, Pearson's Marjorie Scardino, Orange's Hans Snook and GKN's C K Chow, Britain's top boardrooms are considerably more cosmopolitan than many of their foreign counterparts. Really, says Viney, 'it's a bit like football.
Football teams go worldwide to find the best talent.'
Once the search for an appropriate mix of skills and experience has proved successful, just how secure is that new recruit? Not very, it seems. That there is a reasonably high turnover at the top is obvious from the table: 35 bosses have been appointed since January 1997; go back another year and the figure rises to 56. A turnover greater than 50% in a little over two-and-a-half years means the best seat in the house is hardly a secure one. And the reason for such rapid turnover? Is the boss surrounded by a hungry cabal, all of whom are greedily eyeing his lunch? It's unlikely, says London Business School's Nicholson. Not every boardroom incumbent is a chief executive wannabe. 'A lot of people prefer being, say, chief operations officer because they have power: they're at the elbow of the chief but they don't have to be leaders.'
The real reasons for turnaround at the top have often little to do with internal boardroom battles: a fair number of chief executives are near retirement age and it is a very stressful job. But by far the largest proportion of those who walk the corporate plank do so because the City is dissatisfied with their performance.
Some bosses discover that the management style which got them up the greasy pole is not necessarily what's needed at the top. Many, once they've scaled the heights, realise that it is necessary to modify their style and do so successfully.
Others are less flexible: Lord Hanson's leadership style, which was inextricably linked with the kind of business he built up and the eventual outcome, is outmoded.
And Sir Clive Thompson's diktat (you should not speak to your subordinate's subordinate) will make his tenure as head of the Confederation of British Industry an interesting one. 'It's analagous to the qualities that are needed for a peacetime leader and a wartime leader,' explains Nicholson. Staff, he continues, look for integrity and trustworthiness in their leaders: a Square Mile brawler may not make a good high priest and a good high priest may never get to the top in the first place.
For those that do get the boot, though, it's generally not the end of the world. When Brian Staples was forced to resign as head of United Utilities, he pocketed £600,000. Ernest Mario's departure from Glaxo (now Glaxo-Wellcome) cost shareholders £3 million. At an average compensation of £328,000 for (all) departing directors, an ousted FTSE-100 chief is hardly going to starve.
Given such generous rewards for failure, perhaps the most important question to be asked of the 100 men and one woman who run businesses worth over £1,000 billion is: how do they stack up? Well, most of them are clever, able people and, if their performance fails to pass muster, they will find themselves 'standing down to pursue other interests' before too long.
In terms of what is asked of them by shareholders, says Hunt, 'most of them of them are pretty damn good'. Moreover, most have excellent cost-cutting credentials which endear them to the City.
But in terms of actually creating something (only five of the 101 made their way to the top as entrepreneurs or deal-makers) - Mr FTSE has much to learn. WPP's Martin Sorrell and EMI's Sir Colin Southgate are exceptions.
Where, for example, is Britain's Microsoft? 'I believe that the core skill of the British manager is downsizing; it's the containment of risks. Which is one of the reasons I don't have a great deal of time for British managers,' sighs Viney. 'I don't have any delusion that the UK has a particularly prominent place in the pantheon of managers worldwide.'
COMPANY NAME CHIEF EXECUTIVE SINCE PROFESSIONAL
Abbey National Ian Harley 1998 Accountant
Alliance & Leicester Peter White (gce) 1991 Accountant
Allied Domecq Tony Hales 1991 Salesman
Asda Allan Leighton 1996 Marketing
Foods Garry Weston (ch) 1967 Family business
BAA Sir John Egan 1990 Engineer
Bank of Scotland Peter Burt 1996 Economist
Barclays Martin Taylor 1994 Journalist
Bass Sir Ian Prosser 1987 Accountant
BAT Martin Broughton 1993 Accountant
BG David Varney 1997 Personnel
Billiton Brian Gilbertson (ch) 1997 Physicist
Industries Keith Orrell-Jones 1992 Civil engineer
BOC Danny Rosenkranz 1996 Chemical engineer
Boots Lord Blyth (ch) 1998 Marketing
British Aerospace John Weston 1998 Engineer
British Airways Robert Ayling 1996 Solicitor
British Energy Peter Hollins 1998 Chemist
British Land John Ritblat (ch) 1970 Surveyor
British Petroleum Sir John Browne (gce) 1995 Physicist
British Telecoms Sir Peter Bonfield 1996 Computers
BSkyB Mark Booth 1997 Television lifer
BTR Ian Strachan 1996 Lecturer
Cable and Wireless Dick Brown 1996 Telecoms lifer
Cadbury-Schweppes John Sunderland (gce) 1996 Cadbury lifer
Communications Michael Green (ch) 1983 Direct mail
Centrica Roy Gardner 1997 Accountant
CGU Bob Scott (gce) 1998 Insurer
Colt Telecom Paul Chisholm 1996 Telecoms lifer
Compass Francis Mackay 1991 Accountant
Daily Mail & GT Charles Sinclair (ce) 1988 Accountant
Diageo John McGrath (gce) 1997 Physicist
EMI Sir Colin Southgate (ch) 1996 Computers
Enterprise Oil Pierre Jungels 1997 Engineer
GEC Lord Simpson (md) 1996 Accountant
GKN C K Chow 1997 Chemical engineer
Glaxo Wellcome Robert Ingram 1997 Sales
Granada Charles Allen 1996 Accountant
Exchange John Robins (gce) 1994 Marketing
GUS Lord Wolfson (ch) 1996 Retail (GUS)
Halifax Mike Blackburn 1993 Banker
Hays John Cole (gmd) 1998 Marketing
HSBC Holdings Keith Whitson (gce) 1998 Banker
ICI Charles Miller-Smith 1995 Accountant
Invesco Europe Tristan Hillgarth 1997 Accountant
Kingfisher Sir Geoffrey Mulcahy 1995 MBA
Ladbroke Peter George (gce) 1994 Ladbroke lifer
Land Securities Ian Henderson (md) 1997 Surveyor
Legal & General David Prosser (gce) 1991 Actuary
Lloyds TSB Peter Ellwood (gce) 1997 Banker
LucasVarity Victor Rice 1996 Product planning
Marks & Spencer Sir Richard Greenbury (ch) 1991 M&S lifer
Misys Kevin Lomax (ch) 1985 Deal maker
NatWest Derek Wanless (gce) 1992 Banker
National Grid David Jones (gce) 1994 Engineer
National Power Keith Henry 1995 Engineer
Norwich Union Richard Harvey 1998 Actuary
Nycomed Amersham Bill Castell 1990 Accountant
Orange Hans Snook (gmd) 1994 Hotels
P&O Sir Bruce MacPhail (md) 1985 Accountant
Pearson Marjorie Scardino 1997 Lawyer
PowerGen Edmund Wallis 1988 Electricity lifer
Prudential Sir Peter Davis (gce) 1995 Retail
Railtrack Gerald Corbett 1997 Consultant
Reckitt & Colman Vernon Sankey 1992 Marketing
Reed Elsevier Nigel Stapleton (joint ch) 1996 Accountant
Herman Bruggink (joint ch) 1995 Lawyer
Rentokil Initial Sir Clive Thompson 1983 Marketing
Reuters Peter Job 1991 Reuters lifer
Rio Tinto Leon Davis 1997 Metallurgist
RMC Peter Young (gce) 1996 Engineer
Rolls-Royce John Rose 1996 Banker
Royal & Sun
Alliance Bob Mendelsohn (gce) 1997 Lawyer
Royal Bank of
Scotland George Matthewson (gce) 1992 Engineer
Safeway Colin Smith 1993 Accountant
J Sainsbury Dino Adriano 1998 Accountant
Schroders Win Bischoff (ch) 1995 Banker
Newcastle Brian Stewart (gce) 1997 Accountant
Scottish Power Ian Robinson 1995 Engineer
Securicor Roger Wiggs 1996 Lawyer
Sema Pierre Bonelli 1988 Engineer
Severn Trent Vic Cocker (gce) 1995 Economist
Shell Mark Moody-Stuart (ch) 1997 Geologist
Siebe Allen Yurko 1994 Business degree
SmithKline Beecham Jan Leschly 1994 Tennis player
Stagecoach Mike Kinski 1998 Electrical engineer
Standard Chartered Malcolm Williamson (gce) 1993 Banker
Sun Life and
Provincial Mark Wood 1997 Accountant
Tesco Terry Leahy 1997 Tesco lifer
Thames Water Bill Alexander 1997 Engineer
3i Brian Larcombe 1997 3i lifer
Tomkins Greg Hutchings 1995 Consultancy
Unilever Niall FitzGerald 1996 Unilever lifer
United News &
Media Lord Hollick 1996 Corporate rescue
United Utilities Derek Green 1997 Surveyor
Vodafone Christopher Gent 1997 Trainee banker
Whitbread David Thomas 1997 Food retailing
Williams Roger Carr 1997 Computer programmer
Woolwich John Stewart 1996 Banker
WPP Martin Sorrell 1986 Finance
Zeneca Sir David Barnes 1993 Pharmacist
COMPANY NAME CHIEF EXECUTIVE ROUTE TO THE TOP AGE
Abbey National Ian Harley Finance 49
Alliance & Leicester Peter White (gce) Finance 56
Allied Domecq Tony Hales Marketing 49
Asda Allan Leighton Sales/marketing 45
Foods Garry Weston (ch) Company growth 71
BAA Sir John Egan Marketing 58
Bank of Scotland Peter Burt IT/marketing 54
Barclays Martin Taylor General management 46
Bass Sir Ian Prosser Finance 55
BAT Martin Broughton Finance 51
BG David Varney Marketing 52
Billiton Brian Gilbertson (ch) General management 55
Industries Keith Orrell-Jones General management 61
BOC Danny Rosenkranz General management 52
Boots Lord Blyth (ch) Sales 57
British Aerospace John Weston Sales/marketing 47
British Airways Robert Ayling Legal/HR/marketing 51
British Energy Peter Hollins Product development 51
British Land John Ritblat (ch) Deal maker 62
British Petroleum Sir John Browne (gce) Field work/finance 50
British Telecoms Sir Peter Bonfield Marketing/
BSkyB Mark Booth Business development 41
BTR Ian Strachan Finance 55
Cable and Wireless Dick Brown Strategy/planning 51
Cadbury-Schweppes John Sunderland (gce) Marketing 53
Communications Michael Green (ch) Deal maker 50
Centrica Roy Gardner Finance 53
CGU Bob Scott (gce) Insurance 56
Colt Telecom Paul Chisholm General management 49
Compass Francis Mackay Finance 53
Daily Mail & GT Charles Sinclair (ce) Finance 50
Diageo John McGrath (gce) Finance 60
EMI Sir Colin Southgate (ch) Entrepreneur 60
Enterprise Oil Pierre Jungels Field work 54
GEC Lord Simpson (md) Finance 56
GKN C K Chow Business development 47
Glaxo Wellcome Robert Ingram Govt/public affairs 56
Granada Charles Allen Finance 41
Exchange John Robins (gce) Finance 59
GUS Lord Wolfson (ch) Entrepreneur 62
Halifax Mike Blackburn Finance 56
Hays John Cole (gmd) Logistics 51
HSBC Holdings Keith Whitson (gce) Finance/gen.
ICI Charles Miller-Smith Finance 58
Invesco Europe Tristan Hillgarth Finance 47
Kingfisher Sir Geoffrey Mulcahy Finance 56
Ladbroke Peter George (gce) General management 54
Land Securities Ian Henderson (md) Property skills 54
Legal & General David Prosser (gce) Finance 54
Lloyds TSB Peter Ellwood (gce) Retail banking 55
LucasVarity Victor Rice Sales/finance 57
Marks & Spencer Sir Richard Greenbury (ch) General management 62
Misys Kevin Lomax (ch) Entrepreneur 49
NatWest Derek Wanless (gce) Marketing 50
National Grid David Jones (gce) Engineering 56
National Power Keith Henry Engineering 53
Norwich Union Richard Harvey Finance 48
Nycomed Amersham Bill Castell Finance 51
Orange Hans Snook (gmd) Retail 50
P&O Sir Bruce MacPhail (md) Finance 59
Pearson Marjorie Scardino Publishing 51
PowerGen Edmund Wallis Crisis management 59
Prudential Sir Peter Davis (gce) Marketing 56
Railtrack Gerald Corbett Finance 46
Reckitt & Colman Vernon Sankey PA to chairman 49
Reed Elsevier Nigel Stapleton (joint ch) Finance 51
Herman Bruggink (joint ch) General management 51
Rentokil Initial Sir Clive Thompson Marketing 55
Reuters Peter Job Field work 57
Rio Tinto Leon Davis Field work 59
RMC Peter Young (gce) Corporate planning 60
Rolls-Royce John Rose Finance/planning 45
Royal & Sun
Alliance Bob Mendelsohn (gce) Law 51
Royal Bank of
Scotland George Matthewson (gce) Strategic planning 58
Safeway Colin Smith Finance 51
J Sainsbury Dino Adriano Finance 55
Schroders Win Bischoff (ch) Finance 57
Newcastle Brian Stewart (gce) Finance 53
Scottish Power Ian Robinson Field work 56
Securicor Roger Wiggs International 59
Sema Pierre Bonelli General management 58
Severn Trent Vic Cocker (gce) Corporate planning 57
Shell Mark Moody-Stuart (ch) Field work 58
Siebe Allen Yurko Finance 57
SmithKline Beecham Jan Leschly Pharmaceuticals 58
Stagecoach Mike Kinski Personnel 46
Standard Chartered Malcolm Williamson (gce) General management 59
Sun Life and
Provincial Mark Wood Finance 56
Tesco Terry Leahy Marketing 42
Thames Water Bill Alexander Engineering 52
3i Brian Larcombe Finance/planning 44
Tomkins Greg Hutchings General management 51
Unilever Niall FitzGerald Finance/accounting 52
United News &
Media Lord Hollick Finance 53
United Utilities Derek Green Construction 58
Vodafone Christopher Gent Entrepreneur 50
Whitbread David Thomas Strategy 54
Williams Roger Carr IT/general
Woolwich John Stewart Finance 49
WPP Martin Sorrell Acquisitions 53
Zeneca Sir David Barnes Sales 62
ch = chairman, gce = group chief executive, md = managing director, gmd =
group managing director.