No 1, your time is up

Do Britain's top bosses hang on too long? Paul Rodgers weighs the argument for reining in the power brokers No 1, your time is up

THE ESSENCE of Anita Roddick, patron saint and chief executive of Body Shop International, permeates her organisation. From headquarters in Littlehampton, Sussex, to her farthest-flung shops, Roddick appears on posters with Amazon tribesmen and in monthly company videos extolling the virtues of environmentally friendly unguents and oils. She even publishes an in-house broadsheet, Gobsmacked, to inspire her staff and promote her beliefs.

For seven months a year she travels, visiting every shop and supplier. Her aphorisms litter the corporate literature. Although her management style has all the trappings of a personality cult - and her autobiography, Body and Soul, has been dismissed by some critics as a manifesto for a mini-tyrant - Anita Roddick is unapologetic. "How can you be wrong when you borrow ideas from Mahatma Gandhi, from Martin Luther King?"

An interesting question, but not one that prevents two academics at the London Business School believing Roddick should have been turfed out of her job years ago. John Kay and Aubrey Silberston have joined Sir Adrian Cadbury and Sir Rick Greenbury in the debate on corporate governance with a suggestion that chief executives and executive chairmen face term limits like those that restrict US presidents - a four-year contract renewable once only.

"For all but the most remarkable of men and women, authoritarian structures are insidiously corrupting," argued the duo in a paper published in the National Institute Economic Review.

"Leaders hang on to power too long, and many prefer to undermine those who might seek to replace them than to develop potential successors. Cults of personality develop, and are supported by sycophantic lieutenants. These are often associated with inappropriate accretion of privileges and excessive fascination with the trappings of office. Slogans replace analysis, rallies replace debate. There is an alternation between periods of too little change and phases of instability in which there is too much."

Their unusual opinions are not without precedent. Like many companies, ICI, Britain's chemical giant, has a mandatory retirement age - in its case 62. As most new chairmen are over 54 when appointed, it effectively works as a term limit. Interestingly, the system was set up in 1968 after ICI endured two overwhelmingly powerful chairmen, founder Lord McGowan, who lasted 24 years, and Sir Paul Chambers, who stayed for 9.

Most observers admit that boardroom power can distort a director's perspective. "We all run the risk of becoming petty Napoleons," noted Sir Alistair Grant in an article he wrote in 1993 after taking over as chairman of Argyll Group after a 15-year stint as chief executive. "And none of us has Napoleon's compensating genius."

Tim Melville-Ross, director-general of the Institute of Directors, agrees. "One has to ask serious questions about anyone who has been in a post 10 years or more," he said. "In principle there does need to be some kind of term in the minds of the non-executive directors." But that is a far cry from a legal cut-off, he insists. "At the end of the day these people are leading the wealth- creation process, and you have to give them their head. The suggestion [of statutory term limits] seems a wholly inappropriate way of dealing with chief executives' appointments." A spokesman at Tomkins, where Greg Hutchings has held sway for 13 years, said: "It would be like Bjorn Borg retiring after winning Wimbledon three times because his time was up."

That view would be widely shared in Germany, which has no shortage of long-term chief executives. The country's economic backbone, the Mittelstand of medium-sized companies, was built up almost entirely by managers who started up after the war, and stayed in charge for 30 years or so. Helped by supportive banks, industrial relations peace and the lack of a stock market of any size, they were able to build their companies smoothly and steadily. Almost to a man they were autocratic and hard - the German expression for them is "Manchester capitalist".

The academics admit their proposals are not foolproof, but argue: "The number of [executives] for whom more than eight years is too long outnumbers considerably the number for whom it is too short." One of their key examples is Lord Weinstock, managing director of GEC, Britain's leading electronics and defence contractor. Like Baroness Thatcher's, they say, his reputation would have been "immeasurably higher" had he left office after eight years.

This seems perverse. It would have pushed Arnold Weinstock on to the streets in his prime - just after he had bought AEI and English Electric, assembling the modern GEC. But there is a widespread feeling that he has stayed on too long. At 71, he still has another year to go, and envisages taking on a "consultative role" after that.

His delayed departure has served mainly to give him one more chance to spend GEC's cash - on an pounds 835m bid for VSEL, the submarine maker. His decision last year to seek a change in the company's articles to allow him an extension was not welcomed in the City. Nor is his desire to see one of his sons take over from him. His management style has changed little in more than 30 years. He still goes over the

monthly reports of each of his subsidiaries - about 150 now - making brutally direct comments in the margins.

On occasion, long-serving executives have ended up losing control to their rivals. Sir Neville Bowman-Shaw started the fork lift truck company Lancer Boss in 1957, built its sales to pounds 200m, then last year was bought out in a hostile takeover by Jungheinrich, one of Germany's real Mittelstand companies. Sir Neville was a brilliant strategist and a natural engineer, but with his aquiline looks, military manner, and fierce temper, he became known as one of the most domineering managers in British industry. A high management turnover resulted - and when Jungheinrich took charge, it was difficult to find workers or managers who regretted Sir Neville's departure.

Sir Geoff Mulcahy, the boss of Kingfisher for 13 years, was recently demoted from chairman to chief executive after a year in which the company was the worst-performing FT-SE stock. Sir Geoff blames its troubles on a confused management structure which he is sorting out, but critics, including ex-Kingfisher directors, say the confusion stems from the boss's management style.

Sir Geoff has concentrated power in his own hands so that his managers often know less about their areas of responsibility than he does. "He's not a great respecter of reporting lines," noted one.

Even more successful companies can show a tendency to drift towards the problems the professors complain about. John Ritblat, who has headed British Land for over a quarter of a century, is said to have a coterie of supportive, long-term lieutenants at his elbow, and is thought to be grooming his sons to replace him. Stanley Kalms, the man behind Dixons for 28 years, has the opposite problem. The most common criticism is that he is too hard on his colleagues, and even he admits that he gets through a lot of them. Some rivals have, with grudging respect, called him autocratic.

Given the wide range of personalities and circumstances that prevail in British corporate headquarters, it is hard to imagine institutional fund managers, let alone the executives themselves, voting for the professors' proposals. That may be no bad thing. Fixed terms in US presidential politics often result in a leader losing control - and the last thing Britain needs is a nest of "lame-duck" chief executives.

Start your day with The Independent, sign up for daily news emails
newsAnother week, another dress controversy on the internet
Life and Style
Scientist have developed a test which predicts whether you'll live for another ten years
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
news... and what your reaction to the creatures above says about you
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

SThree: HR Benefits Manager

£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003