Last week, Gordon Brown, the British Prime Minister changed his ministerial team. It was very much like rearranging the decks of the Titanic.

Last week, Gordon Brown, the British Prime Minister changed his ministerial team. It was very much like rearranging the decks of the Titanic. His days as prime minister are numbered.

Companies can be very similar to governments. When things are going well, the CEO can be all powerful and the management team will toe the line and challenge within the right forums. Minority shareholders will not have that much power to challenge the authority of the management team if all is going well (and you may ask – why would they want to if things are going well)

However, given the dire straits that the government finds itself in, Gordon Brown has re-arranged the team rather than do what most companies do which is to change the leader. CEO’s are paid a huge salary premium because there is a recognition that there role is very risky. It is easy to get caught up in the ‘fat cats’ story when talking about CEO’s. But the reality is very different.

Most CEO’s only manage three years in their role (for public companies the length of time served is significantly worse). Most of these CEO’s will not be able to get another job at that level again as they will have been branded a failure.

Hence it would seem logical that any person getting a CEO role would want to be paid a significant ‘losing-job’ bonus. This ‘bonus’ may have to last them a very long time as they will probably struggle to get another top level job.

If you are starting a business with external shareholders, just be aware that even if your business does survive, you may not as the CEO. This process can be very painful and I have talked about this before on this blog.

What CEO’s should do though is make sure they have a good blend of skills that fit into the organization. The management team should complement and build on the skills of others in the team. They should all though fit into the organization that they are leading.

For example, Sir Alan Sugar (soon to be Lord Sugar), will be joining the government. This appears to be a horribly mismatched appointment. Sir Alan has achieved great success and is a very clever businessman. However, his style of doing business and management is not one which I would advocate needs replicating. He is a man who appears to dislike education and will now be working in government leading very bright people who have a policy background. I am not saying which style is better – I am just suggesting that is a marriage made in Hell.

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