Three cheers for Sir Terry Leahy for appointing internal candidate Laurie McIlwee finance director, replacing the well-regarded Andrew Higginson .

McIlwee has worked at Tesco for nine years following a similar spell at PepsiCo. While something of a new kid on the block for Tesco (Sir Tel himself has been with the company for 30 years, while logistics director David Potts is soon to notch up 36, and even every supplier’s favourite rottweiler commercial director Richard Brasher, is close to his quarter century) he is seen as a strong choice.

“His appointment is a great example of the strong internal talent coming through the business at every level,” said Sir Terry at the time of the announcement.

The City too appears pleased to see a steady hand on the tiller. “The continuity (operationally and financially) offered by an internal appointment blends exceptionally well with McIlwee’s external experiences and offers the best of both worlds to investors,” said Nomura analysts.

Of course, Higginson has got out at a good time and McIlwee will have to work hard to satisfy investors that the company can deliver solid margins, particularly given its moves to position itself as a rival to Aldi and Lidl. With a lacklustre Christmas and last minute attempts to cut costs before year-end today (28 February), he will have all eyes on him during April’s results announcement.

But the new FD also needs to make sure he hangs on to the talent in his own department. For, while Tesco is one of the few to actually walk the walk when it comes to managing talent and promoting from within, the severity of the economic downturn is creating a shift in attitudes .

A new study by global leadership firm Personnel Decisions International finds that talent management has dropped down leaders’ priority lists. It’s no surprise to find ‘financial pressure to cut costs’ and ‘rapid market decline’ jumping to the top of leaders’ challenges, but ‘loss of leaders in key areas or insufficient talent to quickly adapt to change’ is cited by a mere 5% as a current challenge, in stark contrast to 2006-2008 figures.

“Organisations should be asking, do we want to be in business after the downturn?” says PDI UK managing director Simon Callow. “If yes, they must focus on leaders who can guide them through these turbulent times.”

If companies ignore their top performing employees at times like this, these same employees will be first out of the door once the recession ends. Developing and retaining talented staff is critical to any effective workforce, and business strategy. Lose such people now and you will be vulnerable when the economic crisis ends.

If you don’t believe me, ask Sir Terry. Is it coincidence that Tesco is now one of the world’s leading companies?


Sîan Harrington is editor of Human Resources magazine.

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