Companies in crisis are increasingly turning to their own board members to steer their businesses out of turmoil, creating a new breed of directors/chief executive officers.
In the last two months resources company Lynas, rural group Elders and business information provider SAI Global have recruited CEOs from their own ranks, despite being the bodies tasked with making the appointments.
Recruiting experts say choosing a serving director meant companies can hit the ground running and circumvent the traditional 100-day plan of meeting investors, stakeholders and employees.
“It can take more than six months to land a new CEO when you consider the search process and notice period from someone’s current job, even longer if there is a move interstate or overseas,” said Guy Farrow, managing partner of Heidrick & Struggles’ Sydney office. “Companies are always looking for the best CEO but the business situation can sometimes make someone from the board the best candidate.”
The experts say a factor behind the trend was the increasing prevalence of younger directors who could still return to an executive career.
But companies face their own unique challenges, making a quick leadership transition critical, they say.
Rare earths miner Lynas appointed director, Amanda Lacaze last week, after the sudden resignation of Eric Noyrez following a 70 per cent drop in Lynas’s share price in the past year.
“If you look at Amanda Lacaze, she has deep expertise in turnaround situations and you need to react relatively urgently in a situation like Lynas,” said Jason Johnson, Asia Pacific head of executive search group CTPartners. “She was available, had deep insight into the challenges and had the relevant expertise, making her a logical appointment,” he said.
New managing director of struggling rural services business Elders, Mark Allison was also recently approached by fellow directors after months as chairman and leading the recruitment process for a new CEO to replace Malcolm Jackman.
“Elders had some external candidates who could have done a terrific job,” Mr Johnson said. “But Mark had worked very closely with operations, knew the business and is a relatively young director. So the board felt that current experience outweighed the risk of bringing in someone new who would spend six to 12 months understanding the business before having a real impact,” he said.
And non-executive chairman of SAI Global, Andrew Dutton, is now executive chairman after firing CEO Stephen Porges. Recruiters say Mr Porges’s appointment was “clearly transitional” as the standards and compliance group weighs up a private equity bid.
Other recent examples of the transition from the board room to the C-suite include Telstra director cum Asciano CEO John Mullen; Coca-Cola boss and former ANZ and Woolworths director Alison Watkins and CEO of Jetstar Group and former Qantas director Jayne Hrdlicka.
This is an excerpt from Women part of the move from boardrooms to C-suites by Patrick Durkin in the Australian Financial Review. Click here to read the full article.