Outlook: Pru succession
Tuesday 11 May 1999
The habit now seems to be to announce the succession well in advance - sometimes years - so that when the moment comes, there can be no argument about the anointed head.
In theory this ensures an orderly passage, but is management stability on this level really what investors want? Isn't it better to leave managers on tentahooks, and have them fight it out for the top post?
When it was made clear to Phil Yea, finance director of Diageo, that he wouldn't be getting the chief executive's job after John McGrath bows out a year and a half from now, he promptly quit, thus depriving Diageo of one of Britain's most promising corporate executives. This is fine for Phil Yea, not so good for Diageo. Just think what would happen if this policy was adopted throughout the organisation. The company would lose half its best people.
There seems to be no similar fall out at the Prudential - or none that we know of yet anyway - but is it really healthy to settle the succession a year in advance?
After a life time in the City, Sir Martin Jacomb is finally yielding the chairmanship of the Pru. Up steps Sir Peter Davis, whose experience of the City is a good deal less. Even so, he'll presumably make a reasonable enough chairman. City memories are short, and his error of judgement in appearing in his own advertisements as the man from the Pru seems already forgiven.
Into his shoes as chief executive steps Jonathan Bloomer, the obvious internal candidate for the job and widely seen in the City as the man behind the Pru's recent acquisition strategies, including Scottish Amicable and M & G.
The first of these was undoubtedly a success. As to the second, it is possible he and Sir Peter overpaid. By the time we find out one way or the other, most people will have forgotten the price. The big acquisition, that of a bank or converted building society, continues to allude them. Having decided that converted building societies were too expensive, they set up Egg, which if nothing else has shown that starting your own bank from scratch can end up costing you a good deal more.
Still, nobody's going to quarrel too much with these appointments, even if they have been announced a year in advance in the manner of an internally determined fait accompli.
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