Dynamism means dangerous. Battle Royal at the Royal Mail

February 10, 2007

Royal Mail

Allan Leighton, high profile leader of Royal Mail, seems likely to have his ambitious schemes blocked for turning round the company. He seems to be turning his attention to other challenges, while the Government is actively seeking his successor through a firm of headhunters. As a leader, Mr Leighton seems to be demonstrating the principle that dynamism means dangerous.

Update

The post is followed up with a report on events around the subsequent one-day strike in June 2007

The original post

Mr. Leighton is credited with turning round Royal Mail since becoming chairman in 2002. Since his arrival, the Royal Mail has cut 30,000 jobs, shut thousands of post offices, and moved away from record annual losses that had reached £1bn. The various changes have been forced through against considerable opposition internally and externally.

The changes have not resolved the fundamental problems of the corporation which remains in dire financial circumstances. It recently announced that the gap in its pension funds would be tackled by ending the corporation’s final wage pension scheme, another move described as unilateral bullying by its Union leaders.

Power to the workers – or another capitalist wheeze?
Further changes are likely to be needed. To achieve them, the Royal Mail board has been making the case for a share incentive scheme as a motivational lever. This was opposed by the Government. The scheme would have been difficult to implement for various reasons (How to assess share value when the company is technically still a bit of a financial basket case?). There was also ideological opposition from ‘old’ Labour MPs who saw the scheme not so much as akin to a shift towards the John Lewis partnership’s set up, as a shift toward privatization. Whatever, the scheme was turned down. At which point, the resourceful Mr. Leighton came up with the idea of phantom shares.

The Leighton-Crozier show

Allan Leighton has an appetite for self-publicity as inspection of the Royal Mail website reveals. He presents himself as a dynamic (and somewhat terrifying) leader. In public he attempts to soften the image by implying he is very much one of a team, operating closely with CEO Adam Crozier.

The styles of the two reminds me of an earlier high profile double act, Lord King and Colin Marshall at British Airways. The pugnacious King had also been confronted with an ailing BA facing vigorous competition. Like Leighton, King presided over job cuts on a similar scale, and had serious internal morale issues and Union conflicts. Colin Marshall, like Adam Crozier, had a more urbane style.

The rewards of forceful leadership

Royal Mail has a leader with ideas, and vision. So we might expect him to be appreciated by his masters, ultimately The Government. So what happens? He suffers the fate of many dynamic leaders. Robert Peston, the BBC’s Business Editor, claims that the Government has hired headhunters to find a successor to Allan Leighton

Dynamism means dangerous.

Suppose this is a game of three dimensional chess? Allen Leighton is leading the Government forces in a battle to implement its wishes. Those nasty forces resisting his attacks are led by the Union leaders. Leighton wants more help from the Government. He becomes powerful enough to be dangerous. What if he threatens to resign at the most telling moment to devote more time to other business interests? He has been associated with stories of his interest in acquiring Sainsbury’s for several years (and it seems the stories are coming to the boil again this month).

This is why it’s three dimensional chess.

As Chairman, Allan Leighton is not a full-time operational leader controlled by the Government. He has other and extensive business interests. At the time of writing, he has been the subject of increasing speculation that he has been active in takeover moves for the retailer Sainsburys, and would be interested in a major role in the acquired company.

Even in two dimensional Chess, according to the Nimzowitch principle, the threat is more dangerous than its execution. And that, I suggest, is why even a powerful leader is always battling on several fronts, which in a rather complex way why we get the leaders we deserve, in this case through the ballot box and then through the hired guns of our elected representatives.