The Tesco trainees are taking over
Executives who used to work for Britain's biggest supermarket are leading a retail revolution. James Thompson reports
Saturday 22 January 2011
Domino's Pizza UK revealed yesterday that it had hired Lance Batchelor, the head of Tesco Mobile, to become its heir-apparent.
When he takes the job of deputy chief executive at Domino's in June, Mr Batchelor will join an illustrious list of former senior executives from Tesco who have left and gone on to run other companies.
In fact, the list of ex-Tesco directors reads like a Who's Who of chief executives. It includes John Browett, at Dixons Retail (which owns Currys), David Wild at Halfords, Scott Wheway at Best Buy Europe, Ken McMeikan at Greggs, and Dido Harding at TalkTalk.
Mr Batchelor's exit will again raise the question of the "Tesco-isation" of UK boardrooms and of whether the company has become the new Mars – a reference to the consumer goods giant's reputation for creating successful chief executives. While the Mars alumni – the so-called "Mars Mafia" – include the former Asda chief executive, Allan Leighton, and the current boss of Sainsbury's, Justin King, it is now the Tesco talent pool that large companies often look to when hiring.
A key reason is the depth of experience senior executives acquire at Tesco, which operates in 14 countries including the UK.
James Hyde, a director at Flint Hyde, the executive recruitment firm, says: "Tesco's leaders and business managers have often been exposed to more than one discipline and country." In the year to February 2010, Tesco's pre-tax profits rose by 10.1 per cent to £3.4bn, on sales that were 6.8 per cent higher at a whopping £62.5bn.
Moira Benigson, the managing partner at The MBS Group, another executive search consultancy, says: "[Tesco] have been forward in their thinking and have led the way in many areas, including general merchandise, international and multi-channel. Companies always love hiring from winning companies and hope to get a sprinkle of the pixie dust."
Tesco executives also know a thing or two about the basics of retailing. This is in part because of the determined focus on customers by Tesco's chief executive, Sir Terry Leahy. Ms Benigson says: "First and foremost, they are outstanding traders. [Sir Terry] put together a population of brains and brawn – outstanding strategists and well-educated people, as well as 'hairy-arsed traders'."
The size of Tesco's businesses – whether it is a non-food category or a country, such as Thailand – also make the executives who run them desirable. For example, Tesco's UK non-food operation, run by Laura Wade-Gery, would comfortably fit into the FTSE 250 if it were a standalone company.
Chris Stainton, a partner at the recruiter The Miles Partnership, says: "Tesco leaders are typically massively customer-centric, and they think from a customer point of view in terms of creating a value proposition. If you wanted someone to run British Airways, for example, from outside the aviation industry who was highly competitive, comfortable with scale, and had managed a large number of people, Tesco would be an obvious place to look."
Certainly, Tesco's talent pool is huge. The most senior executive below the main board is a "work level five", of which there are just under 100. At work level four, there are nearly 400 directors globally. There is also the Tesco Academy, an internal centre for leadership and development, which the company says is the largest investment in people in the British retail sector. Sally Elliott, head of retail at Korn/Ferry Whitehead Mann, says: "Organisations that are truly world-class recognise the significance of talent strategy to the achievement of the company's overall strategic objectives."
In contrast to Sainsbury's, Morrisons and Asda, Tesco's executives can also boast overseas experience.
Justin Linger, a director at Barracuda, a boutique search firm, says: "Tesco UK retailers who have also worked in the Tesco international businesses have a unique skill set that is attractive to many global customer-facing businesses."
Once they have cut their teeth working in Britain, Tesco often likes to see how rising stars fare overseas, in a different working culture. Mr Linger says: "If they survive and thrive in these often challenging environments, this makes them attractive as candidates."
But with so many executives at Tesco, some find their road to the top blocked. One insider says that to progress there you have to show your commitment to the cause. For example, if you turn down the opportunity to work in Hungary it is not looked upon kindly.
While the creation of a new UK board at Tesco this year was largely interpreted as its head of international Philip Clarke – who becomes chief executive in March – putting his stamp on the business, he will also have had an eye on talent retention. Ms Benigson said there was a "traffic jam at the top" after Mr Clarke landed the senior role, adding: "They have grown too many very good people who now have nowhere to go, and only one could get the top job."
However, many would love to have Mr Clarke's array of talent, and a fact of life is that ambitious people – just like Mr Batchelor – often want to be a chief executive.
As Ms Elliott says: "Because of its scale, Tesco's executives at the level below the board, and even lower down the organisation, are credible candidates for number-one roles elsewhere." Step aside, Mars.
Appointed chief executive of Best Buy Europe in 2009 after a spell at Alliance Boots. At Tesco, he rose to be chief executive of its Japan unit.
The chief executive of Tesco Mobile leaves next month and will become the deputy chief executive of Domino's Pizza UK in June.
As chief executive of Tesco Direct, he led its online non-food unit. Became boss of the online clothing retailer M and M Direct in 2007.
Ran Tesco's Central Europe business but left in 2003 after 18 years. After a stint at Walmart, he took the helm at Halfords in 2008.
Held UK and overseas roles at Tesco before joining Sainsbury's in 2007. She was named chief executive of TalkTalk this year.
Like Scott Wheway, he also ran Tesco Japan. Poached by Sainsbury's to be a director in 2005, he has led Greggs bakery since 2008.
Joined Dixons Retail in December 2007, having been development director at Tesco. He previously ran the Tesco.com website.
Tesco's fashion business delivers sales well in excess of £1bn, and Reynolds was its director of merchandising and buying for clothing in Europe. She left in 2007 to become chief executive of the online lingerie retailer Figleaves, which was bought by the home shopping group N Brown for £11.5m last year.
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