Fighting to stay on track.
Steven Marshall, Railtrack chief executive and its former FD, has
Steven Marshall, Railtrack chief executive and its former FD, has
As news from the failing Railtrack lurched from bad to worse at the end of last year, an exasperated public focused on the background of its then chief executive Gerald Corbett.
Critics looked at Corbett’s previous roles as finance director – even if they were blue chip names such as Grand Metropolitan and Dixons – and asked: ‘What does an accountant know about running a railway?’.
Corbett finally walked from the top rail industry post in November. His resignation had been rejected by the board the previous month after the Hatfield rail disaster.
Pundits expected a rail man to take Corbett’s position to instill confidence in the failing engineering behind the network’s engineering. Railtrack directors thought otherwise. The boardroom appointed finance director Steven Marshall, a management accountant with less than a year’s experience at the embattled group, as chief executive. For many, insult was added to injury by the fact 43-year-old Marshall, a former FD of Thorn, had previously worked in a finance department of the the international drinks division of Grand Metropolitan when Corbett was the group’s FD.
Sir Alistair Morton, chairman of the Shadow Strategic Rail Authority, was widely reported in December to have expressed alarm at the move. Marshall, a CIMA fellow and member of the One Hundred Group of Finance Directors, has had to draw on leadership not usually associated with accountants over the last three months to pull Railtrack through an acute national crisis.
Meanwhile, Marshall’s baptism under fire has intensified with the nation looking on to see if he can deliver his promise last week that 85% of the services would be operating on a normal timetable by the end of the month and that the network will have returned to normal by Easter. In the shadows, David Varney, the former chief executive of BG and a Labour supporter has been tipped as in line to replace the accountant chief executive.
The high-profile boardroom shuffle has underlined a residual distrust of accountants that still lurks in British industry, some three decades or more since the profession began to break out from the relative sanctuary of the finance backroom into the cut and thrust of the corporate boardroom.
It’s a migration that has gathered pace since the 1970s, and notably since the reign of engineering specialists at Rolls-Royce, where product was put ahead of financial controls. This had in 1971 led to the receivership, break-up and the humiliation of one of the UK’s industrial totems.
Marshall and Corbett in their capacity as accountants have become scapegoats for an industry suffering from decades of under-investment and poor management.
Although Corbett was consistently attacked for knowing more about finance than engineering, he did secure an easy ride for Railtrack finances from regulator Tom Winsor a month before his departure, with a five-year plan that pushed revenue up until 2006 to #14.9bn with a #4.7bn government grant.
And Marshall last month negotiated a new funding arrangement with the rail regulator in which Railtrack would be given financial incentive to invest in the network, which could net up to #200m if it successfully upgrades signals, track and overhead lines.
The former Grand Metropolitan colleagues are part of a burgeoning number of accountants at the head of UK plc.
The Chartered Institute of Management Accountants says it has 189 members who are now chief executives at the helm of UK companies, with a further 906 working as managing directors.
There are also almost 3,347 members working as FDs and another 3,736 who are financial controllers in the UK.
Qualified management accountants at the top of household UK companies include Charles Allen, chief executive of the Granada Group, as well as his chairman Gerry Robinson, Brendan O’Neill at ICI, Cable & Wireless chief executive Graham Wallace and Mike Smith at the Rank Group.
Robert Jelly, director at CIMA, says: ‘At the level of chief executive, it is not the specific skills of an accountant or, an engineer that need to come to the fore, but leadership skills and a highly developed professionalism that can come from a variety of backgrounds.’
He argues the shift in training by the profession’s institutes during the 1970s has begun to show in the number of accountants now in their mid-40s taking the top role in boardrooms. ‘In large plcs in both the UK and USA, the days when an industry specialist chief executive could get by without an in-depth knowledge of finance are over,’ he says. ‘Leadership is obviously a quality that some people just have or do not have, but the core skills and varied experience of accountants and management accountants are more relevant than ever to the chief executive role.’
Bass is an example of one UK plc where accountants were represented in strength during the 13-years in which the formidable chartered accountant Sir Ian Prosser reigned as both chairman and chief executive.
Management accountant Iain Napier headed up the brewers division as chief executive for the last four years as the group has moved to divest itself of its 223-year-old brewing tradition. When Sir Ian relinquished the chief executive half of his power base last year, he appointed his chartered accountant finance director Richard North as his successor to push through aims to see the group relocate in the leisure and hotel sector.
Analysts this autumn reacted predictably to the appointment of accountant North with the suggestion that the group needed a stronger chief executive than the former FD to stand up to Sir Ian’s tough reputation.
What is certain is that any business professional who steps into the chief executive role will come under ever closer scrutiny.
As one chief executive and chairman, Barry Gamble of Fountain, the Oxfordshire-based environmental management group, says: ‘If businesses were only run by specialists, we would have the ludicrous situation where only doctors run the health service and only engineers run engineering companies. In business the things that matter are how you work with and lead your team. That’s communication and leadership.’
– For Railrack news visit www.accountancyage.com/Business/1113610 and for news on Bass visit www.accountancyage.com/Business/1114928.
– Raitrack’s website is at www.railtrack.co.uk and more about CIMA can be found at www.cimaglobal.com.