Room At The Top: A change of CEO for the Labour Government

Richard Kwiatkowski sums up the challenges facing Gordon Brown as the new leader of the Labour Government and asks whether there are lessons he might be taking from the commercial world that could be applied to the political. Richard is a Chartered Psychologist, Senior Lecturer in Organisational Psychology at the Cranfield School of Management and a former Chair of the Division of Occupational Psychology.

How can organisational psychology help a new CEO taking over an established organisation? The Labour government is complex organisation like many others: how can what happens in the commercial world help Gordon Brown in the political?

In some ways it is easier for a new Chief Executive if the organisation is obviously failing; major and drastic changes can be made, cuts and layoffs are legitimised, there is a sense of urgency and danger, people work hard, peril focuses the mind, and the direction of the organisation can rapidly and radically change. But artificially inducing fear is dangerous; too much anxiety about the state of the firm can lead to paralysing fear and uncertainty; morale and productivity may suffer, the brand may become tarnished or undesirable, the best and brightest may jump ship, stakeholders may become uneasy and raise difficult questions at the AGM, the share price may fall, making borrowing and investing difficult.

The Labour government is in power and is actually running the country, so this analogy may seem tenuous except for one important and unusual external factor - David Cameron and the Conservative party. No commercial organisation will routinely have waiting in the wings an entire shadow Board of Directors, with shadow managers passionately ready and almost pathologically eager, at a moment’s notice, to take over what they claim to be a sinking ship.

In few PLCs will a public appraisal be undertaken by millions of people, with only a sketchy knowledge of the real performance of their local company representative, whom they have the absolute power to replace, without any legal consequences, however competent they may have been. There are other confounding factors: few organisations will have the unremittingly critical press that any government in power receives.

For the Board, the frustration is that normal managerial controls barely exist in the same way as they do in a conventional organisation; for example few organisations would tolerate rebel managers actively and publicly resisting company policy, and, worse, going on to brief the press against their company.

What, then, should Gordon do? He has a good reputation in the marketplace, and therefore it is likely that his organisation’s share price will increase, at least initially, on his appointment. He is replacing a CEO whose foreign investments, in hindsight, are looking unwise. He is being promoted from within, so stakeholders, and the people within the organisation know what to expect. He will want to put his mark on the organisation, but simply "kicking over beehives" for the sake of it would be the mark of a flighty manager, would be very visible, and, because he has cultivated the "prudent" brand, such atypical behaviour will disturb supporters within the firm. But in order to build on the perception of change a brand must be renewed: strategy, or in this case policy, must be different from what has gone before, be coherent, and be convincing.

In many takeovers ill-favoured divisions will be reorganised or closed and their managers removed; here for those without the right connections the backbenches beckon. As psychologists our advice both to people who have been demoted and the demoting organisation would be similar: that it is time to move on and in the interests of the individual and the company it is often best that a new job is found.

What about Whitehall? A key relationship for Whitehall’s senior mandarins is with their Ministers. They will be feeling anxious. The carefully cultivated affiliations with junior ministers and ministers of State could evaporate in a second. Especially in contentious areas this might leave the civil servant dangerously exposed. The next crisis that comes along may need a sacrifice; without strong political support and influence they may find themselves instantly unemployed. But by now the grapevine will be busy: gossip will abound, and strategies for dealing with different ministers will emerge. Those civil servants who have been too political, and have used the coattails of individuals rather than creating a network of alliances will feel more anxious than most. For Gordon Brown, then, keeping in mind these relationships, and making sure that delivery is paramount under conditions of anxiety and change is another consideration.

So, as would be the case in any takeover, there are only two key issues: strategy and people. If the company doesn’t know what it can do better than other organisations in its market, and its customers do not continue to buy its product, then it is doomed. Similarly if it doesn’t take its people with it, the takeover will have been a waste of effort.

Concept Of The Strategic Leader

And is Gordon Brown such a strategic leader? As psychologists we do not have enough data to know, as citizens we must hope the answer is yes. If he isn’t, then at the next election not just the CEO but the Board and junior managers will find themselves on the opposition benches. But that potential stress, and psychological responses to it will wait.