New Rio Tinto chief Sam Walsh has been quick to put his stamp on the company’s top job.
Photo: Bohdan Warchomij
The hero CEO has become an indelible and often unsettling feature of the corporate landscape but three companies this week – Rio Tinto, QBE Insurance and National Australia Bank – have provided a welcome reminder that at its very best corporate leadership is a shared responsibility.
Even the strongest and most visionary leaders – indeed, especially such leaders – recognise the essential value of the combined strengths of a leadership team.
The chief executive of mining giant Rio Tinto, Sam Walsh, Rio’s former iron ore head who was appointed to the top job in January following the abrupt departure of Tom Albanese, has been quick to put his own stamp on the miner’s leadership team.
Walsh became Rio Tinto boss when the board acted swiftly in response to the massive $US14 billion in write-downs – including a $US3 billion write-down on its ill-fated $US4 billion 2011 coal acquisition in Mozambique. The Rio board said that particular write-down was “unacceptable”. Doug Ritchie, who led the acquisition of the Mozambique coal assets, stepped down as head of strategy, like Albanese, “by mutual agreement”. The rest of the write-downs came from Rio’s troubled aluminium division.
Not surprisingly, Walsh, a career executive at Rio and a director since 2009, wants to put his own stamp on the executive team that will be responsible for moving Rio on from the “unpleasantness”. His replacement as iron ore chief executive is Andrew Harding, the former chief executive of Rio’s copper division. The new chief executive of copper will be Jean-Sébastien Jacques, formerly head of international operations at the copper division.
Walsh says the appointments “strengthen our senior management team and are in line with our strategy of developing the next generation of talented Rio Tinto leaders”.
On Thursday, Walsh appointed a new chief financial officer – Chris Lynch, a non-executive director of Rio since 2011, until last year chief executive of Transurban Group and a former chief financial officer at BHP Billiton.
Walsh is also streamlining his executive committee by reducing the number of positions reporting to him from 11 to nine.
QBE, under chief executive John Neal, is in the process of transforming the global insurer into a more clearly focused, operationally integrated group after 14 years of frenetic acquisition-led growth under his long-time predecessor Frank O’Halloran. The times suited O’Halloran’s acquisition strategy, but Neal, in the job since last August, has to adapt QBE to a vastly different and more volatile economic and insurance environment.
As part of his transformation strategy Neal has appointed a new executive team. The chief executive of QBE Europe, Steven Burns, becomes group chief financial officer; Burns’s deputy Richard Pryce, former UK chief of global insurance group ACE, will succeed him as head of QBE’s European operations; insurance industry executive David Duclos has been appointed chief executive of QBE North America; and Allianz Asia Pacific chief executive David Fried has been appointed chief executive of QBE Asia-Pacific.
Succession, often viewed in the context of the chief executive’s position, is also critical for building leadership teams.
Neal notes that Richard Pryce’s appointment as deputy CEO of QBE Europe in 2012 was “critical to our succession plans, both in terms of our European operations but also to facilitate [Steven Burns’s] move to group head office” in Sydney.
On Friday it was revealed in The Australian Financial Review that National Australia Bank chief executive Cameron Clyne will shortly announce the first major shake-up of his executive team since becoming chief executive in 2009. The current head of retail banking Lisa Gray is widely expected to be appointed head of NAB’s MLC Wealth business. The management reshuffle is expected to coincide with a review of the bank’s business lines.
A marked feature of management restructures in the corporate sector is how smooth they are when compared with government cabinet reshuffles, and especially when compared to changes of leader.
One notable feature of successful leadership teams is the role of succession planning. Another is a more faithful correlation between talent and strategic intent, as opposed to appointments at the ministerial level that are more likely to be influenced by favours owed and factional alliances than choosing the best person for the job.
Ultimately, however, the lesson of these recent announcements is the importance of leadership teams, rather than unquestioning reliance on a single individual. It’s not a bad lesson for governments, but certainly an important one for businesses big and small.