The implementation of a chief executive succession plan is tricky in any organisation.
In a business such as Boohoo, where the founders are joint CEOs with significant shareholdings, it’s a potential nightmare.
The process usually requires the engagement of an independent headhunter, who produces an initial long list of candidates for the nominations committee to consider.
The long list is then whittled down to a short list, who are then interviewed by the nominations committee or a subset and, after what can be a lengthy process, an appointment is made.
“Founders can be suspicious of an external recruiter; they don’t always understand or appreciate the value a headhunter brings to the process”
In a situation where the founder is currently the chief executive, the normal route may not be the most appropriate.
Founders can be suspicious of an external recruiter; they don’t always understand or appreciate the value a headhunter brings to the process.
An entrepreneurial founder who starts a business at a young age has likely never been headhunted themselves, and just sees their firm’s talent being stolen by the ‘people thieves’.
It is an extremely brave decision for any founder to give up or reduce their role in running what they still see as their baby, being understandably passionate about the business they gave birth to.
Moving over or moving on
The trick is to keep the founder engaged and involved whilst allowing the incoming boss enough breathing space to carry out the role.
However, there are some situations where it might be best for the founder to exit the company, because they have outlived their usefulness and become a blockage to growth and development.
We have some infamous examples in retail!
Succession can come about for many reasons, including the founders recognising that they have taken the business as far as they can, or they want to move on to other things.
At Boohoo, we have been working on a succession plan for more than a year to help the founders and joint chief executives Mahmud Kamani and Carol Kane make this difficult change.
The hiring of Primark’s chief operating officer John Lyttle was a slightly unusual process.
No headhunter was involved as both founders had known him for many years. However, it was essential that the non-executive directors were comfortable with a potential ‘rifle shot’ appointment.
Once the board was convinced Lyttle was right for the role, the big question was what should be the role of the founders going forward.
The board recognised the importance of keeping them engaged, but also allowing Lyttle the freedom to carry out his job.
The Boohoo group comprises four fast-growing online brands (Boohoo, BoohooMAN, PrettyLittleThing and Nasty Gal) but, as with any retailer in this situation, changes will need to made in the future in order to maximise its potential on the world stage.
The group will need to become more international in its outlook and develop an appropriate infrastructure and management team, as its elder sister Asos has already done.
But as a public company with a market capitalisation of over £2bn, Boohoo needs to respect good corporate governance.
This is not a topic to which all entrepreneurs and founders naturally warm.
In the case of Boohoo, the board has made the commitment of ensuring that when Mahmud becomes executive chairman, he continues to have a team of robust and independent non-executive directors to support him in his new role, whilst at the same time reassuring institutional shareholders that there is sufficient challenge and oversight.