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Tesco's quiet man checks out after 14 years at the top.

Tesco's quiet man checks out after 14 years at the top

Few business leaders - in any sector - have been as successful as Tesco's Sir Terry Leahy (Lay-Hee).

The man who steps down in March after 14 years at the helm has seen the company quadruple in size and become the dominant supermarket in three-quarters of UK postcode areas. It has reported record earnings every year since it first broke through the £1 billion profit mark in 2001. Last year it made a £3.4 billion profit on sales of around £60 billion.

Under Sir Terry, Tesco has successfully introduced a loyalty-card scheme, expanded into sectors such as financial services and broadband, opened up a chain of convenience stores and grown overseas. Around £1 in every £7 spent in Britain changes hands at a Tesco till.

But his business record apart, what does the public know of this self-effacing man? The answer is, very little. Quite simply, Sir Terry has always put organizational needs ahead of self-aggrandisement and personal ambition.

In the October 2010 issue of Management Today, Stern contrasts Leahy's low-key style with that of charismatic ex-UK prime minister Tony Blair. 'Diligent, obsessive, relentless, driven: the Tesco boss is all these things,' says the author. 'But the cause is not Leahy's; it is Tesco's.' In his account of his own life in politics, in contrast, Tony Blair imparts the strong sense that his own reputation and standing are crucial to him.

'This is another view of heroic leadership; more romantic, more Hollywood, but less grounded that the version...displayed by Sir Terry Leahy,' Stern concludes. 'Readers will have to make up their own minds which is the role model they find more compelling.'

It is no coincidence that Philip Clarke, Sir Terry's replacement as Tesco chief executive, shares many of the characteristics of his erstwhile boss. Both joined the company stacking shelves part time as teenagers, both went through the company's management scheme after university. As head of international markets, Clarke is steeped in the Leahy tradition. Tesco investors have been unfazed by his appointment to the top position.

In Volume 26, Issue 9 of Financial Executive, published in November 2010, Conlon and Smith discuss the increasing importance that successful companies are paying to succession management - the practice of carefully identifying and selecting talent to succeed incumbents in a firm's critical roles.

The authors describe the six key steps involved in good succession planning: defining the role requirements; assessing the candidates and providing them with feedback and coaching; measuring the progress of internal candidates; generating an external candidate pool (if needed); reassessing candidates and making a selection; and providing leadership development and conducting talent reviews.

Conlon and Smith concede that, while a large percentage of directors believe in the importance of having a succession plan, some organizations have nothing more than an emergency interim plan in place. A number of boards have put succession management on the back-burner during the recession, while they concentrate on what they mistakenly believe are more urgent operational imperatives.

The dangers of such an approach are evident. It is precisely when the external environment is uncertain that firms should be as sure as possible about who should lead them - today, tomorrow and into the future.