The king is dead, long live the king Article icon


Michael Geoghegan is not a household name. Indeed, it is likely that the outgoing chief executive of HSBC, Britain's largest banking group which has operations in 87 countries and territories, could walk down a high street right past one of his branches without being recognised. Sir Terry Leahy, who is retiring as chief executive of Tesco, would probably suffer a similar fate, along with Andy Bond, who stepped down as chief executive of Asda earlier this year. Sir Richard Branson, on the other hand, would probably be mobbed, while Michael O'Leary, the outspoken chief executive of Ryanair, might be heckled.

All five have enviable track records in leading major organisations and, in some cases, transforming their fortunes - Tesco was seen as a down-at-heel supermarket chain before Sir Terry took over 14 years ago but now takes £1 in every £7 through British tills - but only two could be described as charismatic leaders inextricably linked to their brands.

So, while Tesco's share price admittedly fell 2.3 per cent on the announcement of Sir Terry's departure and, rather ignominiously rose on Geoghegan's retirement, the likelihood is that when O'Leary finally decides to silence the soundbites and leave his post, Ryanair shares will suffer a major fall. (Virgin Group is privately owned.)

It is the charismatic leaders that the public remember. But the danger with placing such hope in the hands of an individual is manifold. The bold, decisive and risk-taking charismatic leader may indeed transform a company a la Sir Terry or they may destroy it through an innate willingness to engage in perilous behaviour. Shortly after Jeff Skilling took over as chief executive at Enron, the Texan energy company draped a huge banner at its entrance: From the world's leading energy to the world's leading company. Rakesh Khurana, an assistant professor at Harvard Business School, once argued that Skilling's charisma helped in 'converting people to his cause at Enron'.

And even the most successful leaderships, as in the case of Sir Terry, have to come to an end. Losing a particularly effective leader may leave companies with a gaping hole and no suitable replacement.

Is the charismatic leader more risk than it is worth?

It seems the corporate scandals of the past decade may have been enough to put most companies off the charismatic leader. 'Examples such as Enron, Polly Peck, Tyco and WorldCom should act as a big red warning sign about the risks associated with putting all your eggs in the charismatic leader's basket,' says Andy Brown, partner at Engage Group. 'Most traditionally hailed 'charismatic leaders' have strong ego as one of their main psychometric veins. However, it is also a double-edged sword. Strong ego can lead to extraordinary effort, visionary behaviour and compelling leadership, which, in turn, leads to success and, as a result, hero status. However, strong ego can also lead to dangerous and over-risky behaviours that land the organisation in Chapter 11, the courts or, at best, hot water due to unethical or illegal practices.'

'The risk-taking personality can be part of what makes the charismatic leader exciting, but it is often now seen as a negative rather than a quality,' adds Rod Clayton, head of issues and crisis communications, EMEA, at Weber Shandwick.

Regardless of the risks, it is difficult for companies not to be seduced by the cult of personality. Many a brand has been tied up with the leader - Sir Richard Branson and Virgin is an obvious example, but David Ferrabee, managing director at Able & How, also cites Sir Bernard Matthews, Britain's most famous turkey farmer who fronted the advertisements for his products in the 1980s with his 'Bootiful' catchphrase, and Microsoft with Bill Gates (although he adds that both these companies have since tried to shift away from the personal to corporate brand). Similarly, when Lord Sugar was made 'enterprise tsar' by the Labour government last year, it was undoubtedly off the back of his personal ability to inspire people, rather than his knowledge of government or the public sector.

Charisma may also be viewed as vital considering the external spotlight still shines brightest on the leader. This was apparent in the BP Gulf of Mexico crisis, where chief executive Tony Hayward was put under at least as much scrutiny as the crisis itself. The Spectator said that Hayward 'had as much charisma as a wet kipper', while other media commentators said he had neither the charisma nor personality of leadership to manage the crisis effectively.

'Leaders are always going to be seen as figureheads but the nature of media in particular means that leaders are more exposed than ever before,' says Andrew Griffin, managing director at Regester Larkin. 'If you think of how the media deals with a problem or crisis, then they are looking for victims, villains and heroes. More often than not, the media will want to personify a problem.' Steve Milton, corporate communications director, EMEA, at eBay, goes further. 'I'm not sure any chief executive sets himself to become a brand, but it happens, particularly in a social media world where people connect people and brands very easily,' he says.

Managing and succeeding the charismatic leader

Appointing a charismatic brand ambassador who can manage these myriad and public-facing challenges continues to make sense therefore. But it does lead to the second problem: managing the potential risks of the charismatic leader and then dealing with their departure.

However, there are signs that the concept of charismatic leadership is changing sufficiently to help both mitigate the risks and support the succession challenge. There is now a rising appreciation for not just a dynamic personality at the helm, but a leader who is both 'engaging' and a team player. 'Engage Group's view is that the classic charismatic leader (those with a strong 'froth' of charisma who are effective as a PR figurehead and a corporate City-hustler, but who tend not to engage and take their own people with them in large droves) is actually a dying breed,' says Brown. 'The new age of emerging leaders - younger, less traditionally 'corporate' and beginning to have a more female profile - are charismatic in a different way.' In Brown's view, good examples of the engaging leader would be Justin King at Sainsbury's, Ronan Dunne at O2, or visionary ethics and values-based leaders such as Julian Metcalfe at Prêt A Manger, and Richard Reed, Adam Balon and Jon Wright, the founders of Innocent Drinks. He sums up the new charismatic leader as follows:

• All round engagers - good at engaging employees, customers and shareholders alike

• Inspiring confidence and commitment - but through leading by example more than big set pieces of communication

• Empowering - great at harnessing the power of the talent around and below them and releasing that power by involving people in decision-making based on individual's ability to contribute rather than whether they sit on the board or not

• Effective team builders - linked to their ability to empower, they are excellent at creating strong teams, which come together to address particular challenges, such as entering emerging markets; restructuring a business or claiming a new customer segment

Such leaders also benefit from considerable training in the right leadership skills. 'In my view, there is less nature and more nurture in leadership today,' says Suzanne Peck, business development director at Sequel Group. 'There are more MBAs and Harvard training programmes. Before you couldn't put your finger on what good leadership is, but now there's reams on it.'

Sheila Parry, managing director at theblueballroom, has also seen coaching become a much bigger part of leadership development. 'People who achieve leadership because they are charismatic often advance very quickly - so coaching is a kind of really positive insurance policy. It enables leaders to know that they are not up there on their own,' she says. Parry also thinks that this move is part of companies becoming learning organisations, in which leaders, their peers, and employees learn from each other. 'You don't have to be autocratic,' she says. 'Autocracy, rather than charisma, has gone out of fashion.'

Such a shift may have significant repercussions for leadership stability and succession. With the emphasis on leaders being part of a learning team, there is the sense that it will be far easier to keep leader behaviours in check. It may also help build succession into an ongoing management plan, in which potential successors are groomed years before the departure of a leader - essential if organisations do not want to risk opening up a leadership void.

'The death of Anita Roddick, the founder and long-term leader of The Body Shop, has left the organisation with no true figurehead,' says Brown. 'It is unlikely another Anita figure will appear - many in the business world believe that she was a true one-off - but neither has there been any strong transition to an equally captivating new leader, strategy or vision.'

For Brown, the solution is to plan leadership succession way in advance. He suggests almost as soon as the latest leader is in place. Milton says that this was the key to ensuring a smooth transition from eBay's 'real rockstar' president and chief executive Meg Whitman to present incumbent John Donahoe. 'Whitman did an incredible amount of transition work herself and succession plans were put in place years in advance to ensure a smooth handover,' he says. The fact that the appointment was an internal promotion may have also helped. 'I have seen more of a trend of promoting from within,' says Peck. 'I think this is a good thing as such a leader will understand the business and help ensure continuity.' Internal promotion may also mean that deputies/successors can be identified long before the departure of the leader.

Sudden succession

Of course, these rules may be more difficult to apply where a leader has to leave suddenly, whether due to illness, death, or personal misdemeanour. The resignation of Hewlett Packard chief executive Mark Hurd for violating the company's 'standards of business conduct' following allegations of sexual harassment from a former contractor led to the swift appointment of chief financial officer Cathie Lesjak as interim chief executive and an immediate 9.3 per cent plunge in Hewlett's share price. In his five years at the helm, Hurd had been seen as a significant leader and a visionary in restructuring Hewlett Packard. 'Several recent high-profile departures of this type have generated a significant trust 'gap' inside the organisations affected,' says Brown. 'This puts a huge amount of pressure on the replacement to be 'whiter than white' as an incoming chief executive.' From a communications point of view, Brown thinks that such cases require even greater focus on effective leadership communication, openness, honesty and improved transparency. 'It requires the new leader to explicitly and demonstrably live the values of the organisation like never before,' he adds. 'There are many cases in history where the resignation of the leader has brought closure enabling the company to forge on with a solution under a new leadership,' adds Regester Larkin's Griffin. Parry also thinks that in difficult situations, a new leader might be a much needed 'breath of fresh air'.

Whatever difficulties arise, however, companies seem keenly aware that the management team plays a vital role. For Milton this means holding up a mirror to chief executives and playing back to them how they are coming across to the outside world. 'In corporate communications, we're in the reality business and we mustn't get swept away with the hype because that's a potentially dangerous place to be.' He believes that those chief executives who find themselves in difficulty may be the ones that have not had the best team around them. 'If leaders don't have people around them who can give direct feedback, and in whom they trust, then that is when things can go wrong,' he says.

A team effort

Today's engaging leader is one that combines personal charisma with an innate sense of the importance of team play. This should help organisations to both mitigate risk and formulate succession plans in which the leader plays a vital part, engaging the next generation of leadership and, most importantly, his or her successor. Such a concept also calls upon the rest of the team to play its part. While the leader will necessarily face the spotlight of media scrutiny, and may even be made ultimately accountable for a crisis, the wider management team is equally if not more vital. In appointing the right leader, supporting his or her leadership work, and then ensuring smooth succession after they are gone, they should transcend the individual - albeit often from well behind the public face of the enduring charismatic leader.