The on-going process to recruit a replacement for Mervyn King as Governor of the Bank of England presents a number of issues, not least of which is whether the job is actually achievable in its current form.
The job comprises two very distinct parts, each of which is an expansive and demanding role in itself: firstly there is the need for a general manager (a CEO, in effect), and secondly the incumbent will be expected to act as Head of UK monetary policy.
The CEO role calls for confident, strategic leadership which is particularly important during such a significant agenda of change: powers are transferring from the FSA and there are widespread calls for reform and modernisation of the Bank of England. If you were writing the job advert for just this part of the role, you would likely specify that you were looking for someone with a proven track record in leadership of a mid-size organisation (the Bank of England has around 2,000 staff) and demonstrable experience in leading significant, transformational change.
The monetary policy part of the role, on the other hand, calls for highly technical expertise. In this case, the successful candidate will need to be an economist with profound experience of macro-economic issues and monetary policy, built on a long career in the rarefied world of central banking.
Intuitively, you can see that these roles have very different characteristics. The first is focused on people, delivery and results: effectively it is about optimising the smooth running of the Bank. This will place huge demands on leadership skills, as well as the vision, drive and determination to shape, implement and communicate a massive programme of change.
The economist role, on the other hand, is much more of a ‘think-tank’ role – requiring the job holder to be the foremost expert in the country in a deeply technical specialism. His or her decisions about monetary policy will be subject to widespread scrutiny by the media, the government and the population at large. In order to attain and maintain the credibility to operate effectively, he or she must not only be the expert-in-chief in an organisation comprised of experts, but also chair and lead other associate bodies such as the monetary and financial policy committees, themselves formed from the great and the good of the world of economics.
At Hay Group, we are able to quantify these significant differences, both in terms of job measurement and, more significantly, in terms of the personal qualities and behaviours which will be required from the job holder to deliver the role successfully. We have analysed our work with executives from a range of sectors and geographies over the last 40 years and this has enabled us to codify the different competencies required. This is an approach which we use with many clients to help them understand, better define and navigate career pathways and development within their organisations.
It is not impossible that one person might have all of the required behavioural capabilities to deliver both parts of the role. However, based on my long experience of working with senior leaders, it is highly unlikely. I consistently find that people with a deep technical or professional specialism find it much more difficult than others to develop and display the behaviours associated with general management roles. It can be done but it is a long, hard road for most.
Even if the ideal candidate did exist (this would be an all-rounder of historic proportions), it is likely that they would struggle to find ample time in the day to do both roles. Consequently their underlying personal motivation and preferences would cause them to gravitate more strongly to (and consequently pay more attention to) one part of the role and neglect the other.
To make things worse, perception could be a problem too. Showing strong leadership is great for the CEO role but the behaviours associated with this – being outgoing and charismatic – would probably present a barrier to winning support in the economist role, where an air of more intellectual gravitas is a pre-requisite to cultivate the image that this person has the highly technical tendencies required.
It is therefore not a surprise that the search for the new Governor is attracting concern about the lack of diversity of the likely candidates. With the job constructed as it is, those responsible are fishing in a very small pool indeed, primarily comprised of current and ex-governors of other central banks from a small number of countries with economies of similar size and complexity.
This is a clear instance where new thinking could and should be brought to bear on the way the leadership of the Bank of England is structured. Unless this is done, the new Governor will face an almost impossible challenge to deliver what is expected.
Graeme Yell, Director of UK Financial Services consulting, Hay Group