November 29, 2017 – Consumer goods giant Unilever has enlisted Egon Zehnder to lead its global search for a new CEO. Paul Polman, who has served as the company’s chief executive since 2009, will reportedly resign in about 18 months. A formal search for Mr. Polman’s successor will ultimately be led by Marijn Dekkers, Unilever’s chairman since last year, and will include fellow board member Vittorio Colao, CEO of Vodafone.
Mr. Polman’s pending departure comes amidst significant change for the company, which is seeking a buyer for the multi-billion margarine division that is home to spreads brands such as Flora and I Can’t Believe It’s Not Butter. Earlier this year, Unilever became a short-lived takeover target for Kraft Heinz. The company expects to decide by the end of the year whether it will combine its headquarters into one, according to Reuters.
Unilever, currently a British-Dutch company, is also considering dropping its dual headquarter structure. Analysts are betting on the Netherlands to win, especially with the changes expected to play out as a result of Brexit. An announcement about whether it will shutter its British office in favor of a Dutch main office could be made as soon as next month, according to the trade publication Retail Detail.
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Selecting the Right CEO
For boards, the task of selecting a new CEO is fraught with more risk and uncertainty than ever. It is no longer a matter of simply choosing a successor based on past performance or current readiness, said Egon Zehnder. The decision is a complex study in forecasting the future, assessing possibilities and mitigating risk.
Egon Zehnder’s global CEO practice works closely with boards to identify, develop and appoint CEOs equipped to meet the challenges and define the opportunities organizations face, both today and down the road. Over the last five years, the firm has led more than 1,000 CEO placements, making it one of the preeminent leaders in C-suite recruitment. The firm’s CEO practice is comprised of 100 senior consultants from across the globe, with cross-sector expertise that includes business and industry, government and the non-profit sectors.
Unilever is one of the world’s biggest consumer goods manufacturers, owning over 400 brands including Dove soap, Lipton tea, Hellmann’s mayonnaise and Klondike ice cream. The company’s products are sold in 190 countries.
Multiple sources have been reporting that the company prefers an internal candidate to replace Mr. Polman. They include finance director Graeme Pitkethly, although an extensive international search is likely to be carried out, one outlet, Sky News, has reported.
Other names that have surfaced are Unilever’s personal care boss Alan Jope; Kees Kruythoff, the president of its operations in North America; Nitin Paranjpe, head of the Knorr maker’s foods and refreshment business; and Amanda Sourry, president of food in North America.
Companies Remain Unprepared to Fill CEO Vacancies
While many companies are performing some form of succession planning for their CEO posts, most are not doing enough to ensure a successful transition, according to a new report, “CEO Succession Planning Survey,” conducted by consulting firm AlixPartners and executive search firm Vardis.
“We believe that Polman will be difficult to replace, but clearly the reaction of the market should depend upon the quality and experience of his successor,” Andrew Wood, an equity analyst at Sanford Bernstein, told trade publication just-food. “We consider that Polman will prefer for the candidate to be internal: After 10 years running the business it would surely be a disappointment for him that he had not been able to find/develop a high-quality successor.”
“However, clearly it is more important to get the right candidate than to merely take the best internal candidate,” said Mr. Wood. “If external benchmarking is genuine, then we consider that none of the internal candidates would surpass the benchmark set by Kasper Rorsted, and some of the other external or semi-external candidates too. However, whether Rorsted or the others would be interested in the Unilever role remains unknown. We consider that it is most likely that the internal candidate will be chosen, with Jope as the current favorite.”
Insiders Are ‘Safer Bets’
Recruiters focused on finding talent for the C-suite, however, said that at least half of all job openings are filled by internal candidates before the positions are introduced to the public job market. This may suggest that companies have relatively reliable bench strength even though leadership development is seen as stagnating at many companies. The main reason given: Companies prefer to promote from within.
Bridging the Skills Gap With Insiders
There has been an emergent skills gap that has plagued almost every industry. While organizations have implemented a series of measures to improve oversight of labor costs and value returns, they have focused more on improving the quality of talent acquisition than they have on sustaining employee performance.
For those searches that go to recruiters, with a clear mandate to look wide and deep both inside and outside a client organization, internal candidates still surface more often and get the job about 80 percent of the time.
Recruiters say clients generally like to be seen as making bold moves but in the end many remain risk averse when it comes to hiring elite executives, especially into their highly protected upper leadership ranks. They look at insiders as safer bets. Knowing this mindset going in, recruiters say they advise their clients that when they have an inside candidate who is 70 percent as strong as an outside choice to hire the insider. Fit and culture seem to be the deciding factor.
“There is a greater risk when you bring somebody in from the outside that it won’t work out,” said Kathleen Yazbak, founder of Boston-based Viewcrest Advisors, a boutique search firm focused on finding leadership talent for mission-driven and high-performing companies, social enterprises and philanthropies.
Internal candidates know the business model, organization goals and inside cultures, say recruiters, and oftentimes they have the requisite skills. They know the customers, clients and co-workers. They have also established relationships with colleagues and their organization’s leaders. But, more importantly, they have already shown their potential. They can, therefore, assimilate faster and will likely be more satisfied in their new roles than outside hires.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media