Starting At the Top: Some Lessons from Politics

This article first appeared in 'Between the Lines' published by Grandfield Public Relations

Nigel Pantling worked for ten years in the Home Office for the Labour and Conservative governments of the seventies and eighties and was twice private secretary to Home Office ministers, including Leon Brittan for almost all of his time as Home Secretary. Since then Nigel has built up nearly twenty years experience of advising chief executives, as an investment banker at Schroders, as Head of Corporate Finance at Hambros, and since 1997 as an independent Strategy Adviser. He specialises in working one-to-one with chief executives to give them personal and objective advice on high level strategic issues.

Starting At the Top: Some Lessons from Politics

Business and politics may seem like chalk and cheese, but there are lessons that a new chief executive can learn from the experiences of the most senior executives in the land. A chief executive said to me recently that his first year in his new job had been exciting and exhilarating for about the first week, and daunting and dispiriting thereafter. He had been ambushed early on by events, and felt unprepared for the role he had taken on and unsupported by those around him. That volatility sounded familiar to me from another perspective with which I was familiar: I knew that politicians in a new Government feel vulnerable to the same switchback of fortune. Somewhat to my surprise, I realised that there is much that a new chief executive can learn from his political masters.

Taking the job on your own terms

All politicians know that once in power it is too late to change people's expectations about what they have been elected to do. Governments come to power because the electorate has backed a detailed manifesto that sets out their intentions. The manifesto doesn't bind a new Government absolutely, but it has a strong moral authority and enables the Government to say "we did warn you" when they push through an unpopular policy.

As an incoming chief executive you will need a manifesto too, albeit not one that will be published. Your manifesto should emerge from a process of negotiation with your new employer on some key issues that will determine your success. The negotiation process must take place before you accept the job: thereafter you lose the power to make sure you have things your own way. In particular, this is the moment to use the leverage provided by your ability to walk away to define the expectations of what you are to achieve in the job, the limits of your authority, and the rewards you will receive if you succeed.

For example, you might aim to agree the extent of your capacity to decide changes of strategic direction in the business, to review and reshape the senior team, or to commit the company to capital expenditure. It is particularly important to be clear about your authority over such sensitive areas as remuneration policy. And it is crucial that before you start work you agree the detail of your own personal targets and bonus, in order to avoid painful disagreements later on.

Choose the senior team you want

Prime Ministers come to power with a settled view on who they want in key positions. They appoint a ministerial team that balances the drive for maximum efficiency in Government and strong appeal to the electorate on the one hand against the need to reward past loyalty and to minimise internal (party) discord on the other. And they are willing to be ruthless in ignoring the claims of the experienced but mediocre in favour of those they believe in from their own past experience.

You must make similar judgements. Unless you intend to combine the centralist management style of Joseph Stalin with the physical stamina of Margaret Thatcher, your achievements in your time as CEO will reflect the quality of those you work with. You need around you executives with strong and overlapping skills. Key skills for most boards include strategic thinking, financial control, operational rigour, commercial acumen, and the ability to communicate with key audiences. Weaknesses in any one of these among the senior team will leave you as chief executive undesirably exposed. You also need a mix of thinking styles: a board full of analytical thinkers, for example, would probably be as dull and unproductive as a board full of rough diamonds would be anarchic and impossible to manage.

Your role as a new chief executive is to ensure on arrival that you have the right skill and style mix at board level, and to plug any gaps quickly. Your first couple of months is the time to assess those around you by direct observation, by setting demanding management tasks and assessing the response, and by seeking the views of well-placed third parties, such as customers and shareholders. If your instinct is that management changes are needed, don't shy away from making them: you will find it much more difficult later. And when looking for new directors, remember that unlike a Prime Minister you are not limited to making senior appointments from among a small group of people you already know. You can and should be willing to search widely for new colleagues, even if it feels risky to stray from the familiar.

Making full use of the honeymoon period

A new Government knows that it has a period of grace before the criticism starts. The press, in particular, tends to allow the "first 100 days". In that period the Government is expected to take stock of the mess they (somehow inevitably) find on coming into office, to take some key high profile decisions and to announce their longer-term priorities. And ministers know that as long as it is clear that things are changing, mistakes made during these early days will be tolerated to a degree inconceivable later in their term.

As a new chief executive, there will be a similar weight of expectations on your shoulders, but an equal temporary extension of goodwill. You will have been appointed to achieve change and you must show that you intend change to happen. Start by using the early months to get the best possible grasp on the commercial factors that drive the profits of your business, and to understand the needs of your customers and the attitudes of your suppliers. Listen to the views of your workforce as well as your management. Make sure that you have the right external advice: be willing to scrap long-standing advisory relationships that have grown stale, in favour of someone who will bring a more objective view.

Then translate all this information into a strategy that demonstrates that you have understood the business, and where the threats and opportunities lie. Be open about the risks and the costs of what you propose. Your willingness to take tough decisions that move the business in new directions will be as much welcomed at this stage as it will be feared later on. If painful measures are needed, use your honeymoon period to implement as many as you can. And be aware of the declaratory value of radical early change as a way of showing that you mean business; it will invigorate those around you. Remember how excited the business world was when, in his first day as Chancellor, Gordon Brown made the Bank of England independent.

Communication, communication and communication Spin, whether we like it or not, is part of any new Government's tool kit. Presenting the ministerial team and its first decisions in the best possible light, and showing that the outgoing administration were worse than could possibly have been imagined, are essential early priorities for Government communication. And so is the preparation of defensive briefing for every potential calamity, so that neither of the key political audiences of electorate or party comes to doubt the wisdom of their choice of new leader.

The two key business audiences for you as a new company chief executive are your board and shareholders. Each must be encouraged to remain convinced that you are the right person for the job, even when things are going badly. So give time to establishing channels of communication with each audience and making sure you get across the positive messages about the changes you are instigating. Arrange ways to update both board and investors regularly, demonstrate a willingness to give them the detail, and cultivate a confident manner. Don't be defensive when they ask testing questions: remember that as a new CEO you are not expected to have all the answers, although you are expected to go and find them out!

Be ready, too, to tell board and shareholders bad news as well as good. Neither will thank you if a problem arises that they have not been warned about. The doctrine of "no surprises" applies as much in business as in politics. And since as a new arrival you may not yet have a strong instinct for where the potential elephant traps are, conduct a rigorous risk analysis. Once you know where the major risks are, develop for each plans to reduce the likelihood that something will go wrong and how you will mitigate the impact if it does. One of the mitigating steps for any problem should be a strategy for handling the public relations aspect, for which you will need the right PR adviser. Choose a firm that understands your business, has a settled team of the right calibre, and who you will be able to work comfortably with at times of great stress!