Did they have succession plans in place?

It’s gone un-commented upon in the past few days but both the boards of Qantas and retailer, Woolworths can be criticised for failing in perhaps their most important task.

Making sure there is a succession plan in place to replace the CEO.

How else do you describe the retention of both Geoff Dixon for another three years at Qantas or Roger Corbett at Woolworths. Dixon is about to turn 65, Corbett is verging on 62.

Both have been very successful at their jobs and are very committed to their companies Both men were due to retire at the end of the year. But both are being retained because they and their boards want them to stay on. But what it really means whatever succession planning that is in place at Woolies and Qantas has failed, and that in turn is a failure of both boards in this highly important process.

In the case of Woolworths it’s complicated by the decision by Supermarkets boss, Tom Flood, to retire early because of his wife’s illness. But the sharp slowdown in sales growth at the end of the 2004 year probably cast some doubt on Mr Flood as being a logical successor to Roger Corbett.

Likewise Bill Wavish, the former finance director and consultant. His complete lack of retailing experience was always going to tell against him. Plus his people management skills, or the lack of them, according to Woolies insiders.

But knowing that Roger Corbett was due to go at the end of this year and had constructed his company shares package accordingly, the board had done nothing to develop a successor. By re-signing Corbett for another two years indicates the board believes the candidates need that long to prove themselves in their current jobs.

That is not good enough. It’s poor corporate governance and performance.

The most logical successor is Marty Hamnett, head of General Merchandise, former head of Big W and the Queensland and West Australian Supermarket groups of Woolies. That gives him an impeccable track record to follow Roger Corbett, a former head of Big W, into the top role.

Corbett was named to replace Reg Clairs in 1999 after the board decided that costs and other issues were not being full addressed by Clairs.

So there is an obvious pattern of testing executives at Woolies, but it was felt that none were ready to succeed Roger. Marty Hamnett is still in his late 40’s and it was felt he needed more experience in an overarching management role, such as Director of General Merchandise, as well as his more operational, hands-on roles.

But what this does point to is that Woolies has been slow in developing this succession route. Although Roger Corbett is fit and healthy, what happens if there is a repeat of the shock, sudden death of former CEO, Harry Watts in 1993.

When Wavish departed last year, Corbett’s contract was extended and this year its been extended for another two years. A sure sign that despite his comments and those from chairman James Strong, that a succession plan is in place, nothing emerged from it to give the board a choice.

But Roger wanted to stay on, as this story in The Australian from last May shows – Woolies’ market maestro

The irony is that in wanting to remain at the top, Corbett shares a common trait with Qantas’ Geoff Dixon, who has made it clear for the past year or so that he was eager to remain in the captain’s seat.

It was a case of what Geoffrey wants, Geoffrey gets. Geoff wanted the gig and the board led by chairman, “Dame” Margaret Jackson, said sure, “take another three years”.

While Woolies seems to be in the process of planning for succession, Qantas seemingly has nothing in place. The most visible candidates seem to be Peter Gregg the finance boss and John Borgehtti, Executive General Manager and something of a public face in recent months. They don’t seem to have Dixon’s ability.

But no one else has stuck their head up, or been allowed to stick their head up. So in comparison, Dixon looks good, articulate and on top of job. More important for a board bereft of ideas, Dixon not only wants to be there, he has the successes in the job to make it easier to give him another three year term.

But the board now has to knuckle down and find some candidates and start identifying them.

“Dame” Margaret could do worse than drop around to Woolies spartan Sydney digs, near Town Hall Station, or go a little further up town to the more palatial executive area of Insurance Group Australia. Why? Well she might be able to catch James Strong, Geoff Dixon’s predecessor. She will be able to talk about a couple of things.

One would be to exchange notes on the problems of arranging a succession, and two to ask him about how CEO’s depart.

What’s fascinating about the desires for Dixon and Corbett to remain firmly in the saddle for as long as they can is that they don’t see any role for themselves in boardrooms.

Dixon has a directorship of Leighton, Corbett is on the John Fairfax board.

James Strong left Qantas and aimed up and scored two of the best boards in Australia and their chairs, Woolies and IAG. That makes him a major player at the highest levels of national business, a role both Dixon and Corbett, for all their tremendous successes, don’t aspire to.

Having done well as a CEO at Qantas and proved himself at that level, Strong deliberately decided to take his career one step further in the boardrooms. Which he did to great success.

The irony is that Strong is very much the younger man, having just turned 60.

But nevertheless having taken this course, he now knows he has to prove that he can drive the succession planning at Woolies, after being a part of it at Qantas.

A final point. What happens if Corbett and or Dixon suddenly become ill or can’t do the job. Shareholders would be entitled to scream, who’s up next and where’s the successor?

That’s always the test of a succession plan. It worked at Woolies back in 1993-94.