Monday, July 25, 2011

The succession at Deutsche Bank

Does nationality still play a major part in deciding who should become the Chairman or Chief Executive of the company. It shouldn't, right? But of course it does. Except, to its eternal credit, in the United States of America. A country pretty much devoted to meritocracy and where, by and large, only merit counts. It doesn't matter where you are from or whether you are white or black or yellow or grey or blue. Perhaps to a large extent in the United Kingdom as well. But that's it. Everywhere else, it seems only a local can be a boss.

Consider the succession saga at the mighty Deutsche Bank in Germany. The current CEO, Josef Ackermann is expected to be kicked upstairs to the Supervisory Board. A new CEO is to be appointed. There is general consensus that the best candidate is Anshuman Jain. The problem is that he is Indian, not German. And to add insult to injury, he reportedly does not speak much German either.

This apparently won't do as the boss of Deutsche Bank will have to have "close contact with Germany's political and business elite" whatever that means. Yes we know what it means. Cosying up to the power lobbies and doing backroom deals. Is that how business really ought to be run ??

Yes, I know Deutsche Bank is very German and very special to Germany. But it might have esaped attention that the bank is now a truly global bank. It has some 100,000 employees and operates in 70+ countries. Its listed in Frankfurt and New York. For such a bank, the best man ought to lead it. The best man means the man who will run the bank the best and maximise the returns to its shareholders. Not the man who can wink wink, nod nod with politicians.

Of course, that's Utopian thinking. On Tuesday, the bank is most likely to announce co CEOs - with Anshu Jain running the bank and Juergen Fitschen presumably maintaining the "close contact". Nice compromise and life goes on. And this is exactly the sort of a thing what would happen in France or Japan or China or India.

Now do we understand why Amercian business is where it is. The Chairman of Coca Cola was born in Turkey. The Chairman of Pepsico was born in India. The Chairman of Colgate Palmolive is British. The CEO of Citigroup was born in India. The CEO of Alcoa is German. Senior and middle management in US companies is like the United Nations.

Meritocracy is not just the best policy. It should be the only policy.