Comment: Sue Shipley on managing senior departures

When Richard Pennycook announced his resignation as group chief financial officer of supermarket giant Morrisons on Monday, the immediate response from the market was negative. 

Shares closed the day down more than 2% on the news. Pennycook is a longstanding, well-respected executive, who was widely credited by those close to the business with reversing the fortunes of the grocer, notably after the acquisition of Safeway. He has been with the business since October 2005, and will leave at the end of June next year.

Yet, with a 12-month notice period, the right succession plan and good internal communication, the business, Pennycook and shareholders could all benefit.

At the time of Pennycook’s resignation, Morrisons chief executive Dalton Philips said: “Richard is an exceptional CFO who has made an enormous contribution.  We have worked very closely together for more than two years and he is held in the highest regard by the company and all its stakeholders.”

Although the market’s initial response was negative, over the course of the next few months this open approach to managing the exit of a senior executive could yet prove to be the most effective way of handling a high-level departure.

If an individual announces his intention to leave with such a long notice period, he is effectively taking control of his career and signalling his availability early to the marketplace. This allows interested parties to seek him out openly and in a well-ordered and grown up fashion.

Internally it is far better that a leaver agrees with the company a mutually beneficial strategy for an open departure, which allows time for both parties to plan for succession in a timely and considered way. 

Although markets rarely respond favourably to such news, an open approach is less likely to cause long-term damage to an individual’s career prospects or to the employer brand.

Sudden departure announcements which leave a company without clear leadership cause uncertainty and damage confidence amongst stakeholders, and can prove to be problematic for all concerned.

It’s also more challenging to manage succession if a search firm has to operate ‘under the wire’. This approach is becoming less common as companies work with their executives to manage change in a more transparent, ordered fashion.

Pennycook has decided that he wants a portfolio career, and by announcing that intent to the market he is effectively placing a marker in the sand, which will flush out options, some of which he may not have considered. 

He will now have the luxury of a full year to build a customised portfolio which will suit him and his many talents perfectly. In the meantime the business can consider alternative scenarios in terms of structure and role content subject to future business needs.

• Sue Shipley, head of the retail practice at executive search firm, The Miles Partnership.