LONDON (Reuters Breakingviews) - The scarcity of people equipped to run Britain’s corporate boards is partly man-made. Jan du Plessis shows the problem. The Rio Tinto chairman is leaving the UK-listed miner for telecoms group BT to take up his fourth such role for a FTSE 100 company. The merry-go-round is not ideal, and shows a need for lateral thinking.
People like du Plessis are in demand because of their experience. Chairs are supposed to help set company strategy and hold the chief executive to account. At BT, du Plessis has a mandate to root out and remedy control problems that led to an Italian accounting scandal. Having worked in mining, tobacco and banking, his experience of regulatory scrutiny will come in handy dealing with Ofcom, which might force a legal separation of BT’s infrastructure arm.
But while experience is precious, it also results in too few people for too many posts. The result can be dizzying. John McFarlane is to stay in his role at lender Barclays until 2019, the Financial Times reported on Thursday. Gerry Grimstone, deputy chair at Barclays, is staying on at Standard Life as it merges with Aberdeen Asset Management. Grimstone was chair of lobbying group TheCityUK until 2015, a position McFarlane now holds. Meanwhile, HSBC is trying to find a replacement for its own chairman, Douglas Flint, whom Sky News reported to be in the running for the BT job.
The problem is how to introduce fresh blood. If the same people are continually appointed, how can others develop the requisite skills? A study by recruitment firm Spencer Stuart found that, while progress was being made on diversity in many respects, 50 percent of FTSE 100 chairs in 2014 had previously chaired another listed firm – up from 39 percent a decade earlier. The average age also went up from 56.8 to 60.4.
The solution requires lateral thinking. If scarcity is the problem, forcing up the supply should help ease the shortage. The quickest way to do this would be by setting limits – or guidelines – on how many jobs a chairman can hold at one time, or even how many FTSE 100 companies a single person can chair in their career. That could worsen the scarcity at first. But over time it ought to expand the pool of chair-ready directors, and reduce the reliance on the boardroom merry-go-round.