OVER 30 YEARS, Sir Martin Sorrell has turned a wire-basket maker into a global advertising powerhouse. Along the way, he has become an elder statesman of the industry and a symbol of corporate Britain. He appears in the news and on TV, talking about everything from the rise of Facebook to Brexit. He has earned millions––and a knighthood.
His downfall took less than a month. On 3rd April, WPP said it was investigating its CEO. On Saturday, after allegations of personal misconduct and misuse of company assets went public, he resigned with immediate effect. The conclusions of an investigation into his alleged misconduct were due to be published this week. The Wall Street Journal reported that if Sorrell had stayed, he risked having WPP’s board making those results public.
I’ve spoken in the past about CEOs and company identities. For many people, Mark Zuckerberg is Facebook. Steve Jobs is Apple. Elon Musk is Tesla. You could say Sir Martin Sorrell was one of the first CEOs to ‘be’ his organisation. And this causes problems when things go badly. The longer such a CEO hangs on, the more damage he or she inevitably does: after peaking at almost £19 in February 2017, WPP shares have fallen sharply, and closed on Friday at £11.88.
Getting a CEO to go, let alone a founder or someone who has built a company from the ground up, is never an easy thing. But timing is essential to avoiding reputational damage to the company and to the individual. Hanging on in a job looks desperate and graceless. When the allegations are serious enough to need independent counsel, the CEO’s position is no longer tenable. This was echoed by insiders, who told the Evening Standard that the nature of the allegations against Sorrell meant that he had to step down. When the CEO hangs on, the company’s image starts to be damaged––sometimes irreparably––and the share price starts to tumble. It creates insecurity for just about everyone.
And so it proved for Sir Martin Sorrell. His resignation has been called ‘tragic’ and ‘undignified’. WPP has missed revenue forecasts three times in the past year, and there had been debate over whether Sorrell was still the right man for the job even before the allegations came to light. Meanwhile his failure to plan for a future without himself at the helm means that WPP, which comprises 400 businesses including Oglivy & Mather and Kantar Group, may have to be broken up. Some have speculated as to whether the company can survive.
Across the Atlantic in California, Mark Zuckerberg should be watching closely. Like Sorrell, he has been a disruptor and a game-changer. He has grown something from nothing and changed the lives of millions. His fate, and the fate of Facebook, are closely linked. But there comes a time for many chief executives when they have to decide what matters more: their position as CEO or the success of the company they lead. And if they take too long to choose, both will suffer.