M&S boardroom regains its calm

News Analysis: The succession battle may be over, but the retailer still has a tough job ahead

AFTER THE storm that has surrounded Marks & Spencer over the past few weeks, there was a strange sense of calm yesterday. Finally, after nearly a month of gossip, leaks and high-octane power play, Britain's biggest retailer had decided who should take the company into the next millennium.

Peter Salsbury is the new baron of Baker Street. Keith Oates has been forced to walk the plank after his high-profile, high-risk, bid for the top job ended in failure.

In the end the battle was not even close. The board voted unanimously for Mr Salsbury and the defeated Mr Oates left immediately. Although M&S directors have no service contracts he can look forward to a generous pay-off based on his total pay of pounds 646,000 last year.

After the marathon two-and- a-half hour board meeting finished on Wednesday at 5.30pm, the M&S top brass did what they do best. They carried on regardless. They began preparing for the annual dinner for former directors, which takes place at the head office after every November board meeting.

Sir Richard attended, even missing his beloved Manchester United take on Barcelona in the Champion's League. But, canny operator that he is, he videoed the game to watch later and instructed guests not to tell him the score.

But by yesterday morning there was a palpable air of change. The company, famed for its stuffy, inward-looking approach to public relations, had hired a top City PR firm to handle the announcement. Mr Salsbury was available for interviews, the kind of access that is almost unheard of at M&S where the directors rarely appear outside of twice yearly results meetings.

There was more than a hint of "glasnost". After washing its dirty linen in public for nearly a month, the company recognised that it could not realistically pretend that nothing has happened. As one rival retailer put it: "They have thrown away two generations of goodwill. It will take a long time to win it back."

That is a harsh assessment as M&S remains hugely popular with shoppers. Its halo has certainly slipped, underlined by its slip from third position to 11th in the new Management Today "Most Admired Company" awards, won by Tesco. But M&S remains a benchmark for quality.

Even so, two key questions emerge from the wreckage of this corporate embarrassment. What kind of manager is Peter Salsbury? And what kind of changes will he make to kick-start the spluttering M&S machine?

First, the man. Mr Salsbury was educated at the London School of Economics before joining M&S as a trainee in 1960. A former rugby player at school, he supports Arsenal football club and is married for the second time.

There are similarities with Sir Richard Greenbury, his combative chairman. Both are single company men who have worked at M&S for their entire working lives. They are imbued in the M&S culture of discipline, honesty and the logic that there is "an M&S way of doing things".

But as personalities they appear very different. Sir Richard is a prickly, somewhat curmudgeonly character with the temper of a wounded rhino. Mr Salsbury is more of an amiable bear of a man. With his florid face and genial expression, he has an avuncular air. In management terms he is described as an inclusive "team builder". As one analyst says: "He is spoken of very highly inside Baker Street. He is respected and I think his appointment will be a very popular choice."

In the City there are concerns that as non-executive director Sir Richard will interfere; that he is incapable of taking a "hands-off" approach. But Sir Richard was described as being "as happy as Larry" with the changes.

He said yesterday: "When the roles of chairman and chief executive are split, I believe it is essential that the chairman and chief executive like each other - we do; that they have complementary skills - we do; That they have different characters and personalities - I am more instinctive and outward going, while Peter is intellectual and quiet... But we both have a common interest. We love the business. We want it to do well."

But retail experts say Mr Salsbury will have to introduce changes at M&S if it is to re-capture past glories after its recent stumble which saw profits fall by 23 per cent.

Mr Salsbury recognised as much yesterday: "The company is expanding [by adding a third as much floor space over the next few years] - that is a fact. That change will bring the need for other changes. We have a different [management] structure at the top. We need to look at working practices, to modernise them and become more flexible."

Mr Salsbury wants to reduce the group's bureaucracy and devolve decision making. "We need a slightly lighter touch," he said. The 21-strong board will be examined to see if it needs to be trimmed, and more emphasis will be placed on product presentation and marketing.

The company will also become more open in its dealing with the outside world. "What we are signalling is that it is good for the business to communicate well. We need to explain, not just to our customers, but to other stakeholders. Perhaps, after what has happened, we will be able to be more open," he said.

There may be other changes too. There was criticism yesterday that the company has appointed no new blood. But that may be addressed and a new non-executive deputy chairman may yet be appointed. The supply base will probably be re-examined and M&S may begin to source more goods from cheaper overseas markets, as painful as that will be for UK manufacturers.

But it will all take time. As Mr Salsbury says: "We need strategy first and structure second. We have a strategic review under way that should be completed next year. This is not all going to happen in a day."