Posted by nyssa on February 28, 2013 in , , , ,

The past four or so months have seen some of the biggest moves at an executive level that I have seen in years. These moves have covered both business, government and social institutions and they will have a massive impact on the global economy over the next five years. The changes that I am going to highlight have been particularly interesting to me because they have involved succession planning and internal promotions which

is a challenge to any organisation.

The first significant leadership transition occurred in November when China appointed Xi Jinping to replace Hu Jintao as the President of China, together with the role of Chairman of the Military Commission and General Secretary of the Chinese Communist Party. Xi had acted as deputy to Hu in all of these positions and his ascendancy was planned and executed with a minimum of fuss and fanfare. This comes at a time when the western world is asking questions of the Chinese economy as it seeks guidance in its ability to sustain economic growth at rates above 8% as well as politically sensitive issues such as the treatment of Taiwan and Tibet. The transition was a massive event on the world stage as the world’s second super power changed leadership in a secretive and methodical manner and it remains to be seen as to what, if any, real change or reform will follow.

The second significant leadership transition was much more brutal but equally efficient in its execution. Rio Tinto CEO Tom Albanese “stepped down” from his role in January amid shareholder dissatisfaction with his judgement and decision making. His tenure had not been a smooth one and he was criticised for his acquisition of Alcan for $38 billion as well as his handling of a hostile takeover attempt from rival BHP. The final straw, however, was a $14billion right down of coal investments in Mozambique which saw Chairman Jan du Plessis move to replace both Albanese and highly regarded executive Doug Ritchie. The man handed the gig is Sam Walsh, the head of the highly profitable Pilbara operation, Sam Walsh, described as a “safe pair of hands with a great understanding of capital management and shareholder returns”. Once again, rather than move for an external appointment to refresh the culture, a large organisation has looked internally for the answer to improved performance.

This week, BHP has followed suit and appointed Andrew Mackenzie to replace long term CEO Marius Kloppers. Kloppers had long been considered a “dead man walking” following a leak in the British media late last year that a head hunter was appointed to source a replacement. Recognised as an efficient operator with a keen eye for detail, Kloppers had been actively criticised for his micro managing style and his inability to secure a sizeable acquisition in recent times. Failed acquisitions such as the Rio Tinto attempt, PotashCorp in Canada and highly expensive shale gas acquisitions in the United States saw the investment community grow weary of Kloppers and demand a change. Unlike his peer at Rio Tinto, BHP Chairman Jac Nasser embarked on a global search and considered both internal and external candidates. Rumour has it that there is a shortlist of four candidates who were interviewed before he settled on MacKenzie who has a background within mining and oil and gas and is proficient in five languages. In his first interview following the announcement, MacKenzie signalled a strategy that was going to build on the foundations that Kloppers had laid focusing on cost management and conservative diversification. Once again, BHP looked internally to appease their shareholder base.

The final “internal transition” is perhaps the most interesting one for me. It is interesting because the process is unique and the potential impact significant. Pope Benedict XVI announced his resignation last week and this shocked not only the Catholic and religious worlds. He sighted an inability to physically meet the demands of his job but one must think that the burden of dealing with multiple sexual abuse revelations and pushing a conservative doctrine among an ever liberalising world must have worn the 85 year old pontiff down. His successor will be determined at a papal conclave where cardinals from all around the world vote until an ultimate majority and elect the pope. The college of cardinals are locked away from outside influences and black smoke is released to signify that a vote has not reached a clear verdict and white smoke lets the outside world know that a new pope has been elected. It is a unique and intriguing recruitment process to say the least and one of great significance for billions of followers. The only certainty with this process is that it will be an internal appointment.

So, maybe 2013 is the year of the internal appointment. Maybe businesses have really got their succession plans in order and never have to look externally for new talent. Only time will tell.

Brad McMahon – Managing Director

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