Tesco Succeeds With Succession Plan
Tesco CEO Sir Terry Leahy is widely credited with turning
Tesco into an international retailing powerhouse and now his job is “almost
complete.” The final
stage, as Sir Terry gets ready to retire from the company next March, is to turn
the business over to Philip Clarke, who heads up Tesco’s European and Asian operations.
“I
wanted to develop a purpose and values that could sustain Tesco through its
challenges and encourage and grow future leaders,” said Sir Terry in
a press release. “It has taken 14 years but that strategy has become a
firm reality now and so I feel my work is almost complete.”
Mr. Clarke
said, “I am honored and delighted to succeed Terry who has
taught me so much. I am very excited by the opportunity to lead such a fantastic
team of executives, many of whom I’ve worked with for years. Together
we will build a global business which focuses on the customer and fully respects
our people, our communities, our supply chain and our shareholders.”
Among the members of Mr. Clarke’s team will be Tim Mason, who will become
deputy CEO of Tesco plc. Mr. Mason will continue to be responsible for Fresh & Easy
in the U.S. as well as “branding, corporate values and climate change.”
David
Potts has been named as the first chief executive of Tesco’s Asian operations.
He currently is retail and logistics director for the U.K. and the Republic
of Ireland.
Commercial director Richard Brasher will take over in the newly-created
position of CEO of Tesco’s business in the U.K. He will also assume responsibility
for the chain’s business in Ireland.
Analysts expressed satisfaction with the
choice of Mr. Clarke and also assessed Sir Terry’s tenure with Tesco.
“Leahy is an outstanding executive who has intellect and vision that
is second to none,” Darren Shirley, an analyst with Shore Capital, told The
Guardian. “I wouldn’t call him Britain’s greatest grocer, that accolade,
to our minds, rests with the likes of Sir Kenneth Morrison and Lord John Sainsbury,
but he must surely be written up as one of Britain’s greatest businessmen.”
James
Grzinic, an analyst with Jefferies, told The Wall Street Journal, “Philip
Clarke is a Tesco lifer who has been instrumental in spearheading international
growth. We expect little change in strategic direction in coming years.”
An
unidentified former business associate of Mr. Clarke described him to the Financial
Times. “He is a hard Scouser (someone from Liverpool), like Terry.
He does not suffer fools gladly.”
Discussion Questions: What is your assessment of how Tesco is handling the
transition of power as Terry Leahy prepares to step down as the company’s CEO?
What lessons in succession planning can other retailers learn from the Tesco
experience?
Succession planning is still more an art than a science. In many companies a horse race atmosphere is developed in which one of the participants is the winner and, by definition, the others are “losers”.
What happens next is those that were considered for the top spot now see themselves as CEO material–weren’t they just considered that by their current employer? They then place themselves on the market (or the market senses their potential availability) and they depart to head some other company (where the same events take place). The bottom line: this method of succession planning leads to the loss of talent.
Based on the information in the article, it appears that Tesco will avoid this scenario. By selecting a well-respected internal candidate, Tesco should be able to not only keep its senior talent but maintain the momentum that it has built up.
Finding your replacement and ensuring that your vision becomes their vision, throughout the growth of an organization is near to impossible. More companies have their ex-founders, or ex-CEOs return to power after “retiring” simply because it is so hard. Only time will tell if Tesco’s succession plan will truly work.
In many ways this seems reminiscent of when Bob Ulrich turned over the reigns for Target to Gregg Steinhafel. It worked pretty well for Target here. Based on my knowledge of Tesco, there’s no reason to think it won’t work there.
Wanting what you build to succeed you is a long-term goal of most CEOs. I applaud Tesco for having the succession plan and sticking to it.