Stepping in the right direction

Consultancy managing directors are in more demand than ever, and, if industry rumours are anything to go by, we can soon expect to see a number of new appointments to the top job. Just remember it is the season of good will, so if you are considering giving a managing director a home this year, don’t forget, an MD is not just for Christmas.

For a consultancy, appointing a managing director can be a bit of a gamble, particularly if the newcomer comes from outside of the consultancy. But should your consultancy really be gambling with such a key position?

If you lose an MD, hiring one person is not necessarily the answer. When Charles Trevail left Enterprise IG (DW 22 October), chief executive, Europe, Dave Allen said that the consultancy would not change the shared leadership system in place at the time. Key directors would shoulder certain additional responsibilities.

So too with Wagstaffs. With the departure of Clare Anderson (DW 5 November), chairman and founder Steve Puxley also said he would not be replacing her.

But if you are hiring an MD, where do you begin? Ian Cochrane of managing consultancy Ticegroup is an advocate of nurturing talent within the consultancy, thereby eliminating the risks of appointing an outsider.

“The name of the game is to minimise the risk. It’s always better to recruit from within, rather than go outside immediately. The one exception is when you need a jolt to the system,” he says.

Depending on the circumstances though, there is a good case for appointing from outside the consultancy. Wagstaffs chairman Steve Puxley takes the view that bringing in an outsider can add exponential value. Understandably, he declines to talk specifically about Clare Anderson’s recent departure.

There is often a need to “bring in a new perspective to move the business forward in a fresh way,” he says. Possessing the “consultancy culture” he suggests, is not always what’s required for the job.

“Minimising the risk in terms of taking people on is incredibly difficult. You never know until the person joins. You eliminate as many risks as possible, but it does come down to chemistry in the end,” says Puxley.

Rodney Fitch & Co chairman and chief executive Rodney Fitch has seen the management role from all sides. His career has cast him as founder, managing director, chairman and chief executive.

“I think that if there’s one rule for the consultancy founder who employs a managing director, it is that he should employ that managing director to manage and therefore be prepared to see his business change. Things may turn out to change for the better, things may change for the worse. But things will change,” says Fitch

He says such a founder ought to be employing someone in order to make life harder, not easier for himself. There are productive benefits from challenging the status quo, and the chairman who is just looking to make his own life easier, ought not be hiring.

When an appointment is made, whether from inside or outside the consultancy, he continues, it is critical that the role of the managing director be clearly defined.

Ownership of the company is a critical factor when it comes to calling the shots. A privately owned design consultancy in which the founder is the principle shareholder, has to be viewed differently by a prospective managing director to a public company controlled by the chairman of the board of directors, says Fitch.

Veteran Michael Peters subscribes to an alternative way of thinking, as founder and principle shareholder of Identica. Peters fits into the role of chairman, guiding the business by committee, though nominally he is creative director. The business model Peters has created for Identica consciously avoids using a managing director. He calls it a “kibbutz” system, which uses a business committee and a creative committee that put all decisions to the communal vote.

Peters quickly points out that such a model would not suit every consultancy, nor is it more symptomatic of the creative industries. But the business does benefit greatly from its structure, he says.

“If you have a managing director, everything has to be funnelled to one person. Bottlenecks are inevitable,” he says, adding: “I don’t believe in autocracy.”

Peters’ role is, of course, pivotal. “I use the analogy of Manchester United. Alex Ferguson does not play football, but he is still an important member of the team. You always need to have a figurehead, but many businesses have become very autocratic,” he says.

FutureBrand managing director Charles Trevail says that between the consensus and autocratic styles of management, the former is most appropriate to design businesses looking to grow.

Consensus management is not at odds with the managing director function, he says. “You have to provide the vision, you have to provide the clarity of objectives, and then you have to let people get on with it.” Trevail adds that there is a fine balance between bringing your own philosophy of management to a new job and absorbing the existing culture.

Rodney Fitch sees three main reasons for an appointment not working. Incompetence is the first, often the result of misperceptions of the design industry by outsiders, he explains. Incompatibility is the second: when the style of the managing director is not compatible with the other members of the managing group. The last reason is if a managing director simply does not get along with the consultancy staff as a whole. “A managing director who is held in low esteem is simply unable to manage people,” says Fitch. Ensuring a financial compensation clause is built into any contract, should such circumstances arise, also alleviates some of the MD’s pain.

It would seem that smaller consultancies looking to preserve a strong consultancy culture may have the toughest job finding a new MD, and often promote from within. Larger, more corporately styled businesses may offer easier transitions to MDs from outside the consultancy, or outside the design sector. But, that is when the dice get rolled.