McAlpine: Like one of the family

The level of shock within contracting circles following Sir Robert McAlpine’s recent announcement that chief executive Tony Aikenhead was stepping down after just nine months in his role, was matched only by the surprise that greeted his appointment last November.

The decision of the intensely private, family-run business to hand control to an outsider by appointing the first chief executive in its 147-year history was a momentous shift in strategy. Governed for generations by construction’s answer to the monarchy, Sir Robert McAlpine was a contractor in which, as one industry insider put it this week, the “family was the chief executive”. The numerous McAlpines were so ever-present in the day-to-day running of the business that staff differentiated them, somewhat deferentially, by simply referring to them by “Mr” and their first name: Mr David, Mr Cullum, Mssrs Ian, Richard and Andrew.

A sense of history and of personality in the boardroom have been attributes that many more corporate UK businesses have striven, sometimes with cringing artificiality, to re-introduce in recent years; mindful that new generations of workers and customers alike are increasingly disparaging of bland, monolithic business entities.

Nonetheless, McAlpine’s creation of the chief executive role was viewed in the sector as an apparent realisation that the company was positioned too far the other way – leaving it out of step with both the realities and expectations of modern business. Aikenhead’s brief, in part, was to restore tighter bidding and project controls to the company, following losses incurred on its troubled Fitzroy Place contract in London. And for McAlpine to recover from a turbulent period which has seen it slump to two consecutive £50m-plus losses in the past two years, there was a sense that the business needed the kind of growth and firm-handed repositioning that a family collective would struggle to keep tabs on.

A sense of history and of personality in the boardroom have been attributes that many more corporate UK businesses have striven

Construction is peppered with family-owned firms that have made a success of this approach. Wates and NG Bailey are just two companies that spring to mind for having a chief executive outside the family who has clear autonomy within the day-to-day running of the business, but which also have family members actively involved in both the companies and their boards.

The industry also, however, provides clear examples of firms where the family and the hired hand have found it far tougher to find a way of separating powers, with often hugely disruptive consequences for the business.

Laing O’Rourke is one company where the man whose name sits above the door has a particularly strong reputation for wanting to keep a tight hold of the reins, despite twice making outside appointments to the top role in Tony Douglas and Anna Stewart. The latter’s recent stepping down following a period of ill health has left Ray O’Rourke in direct control once again, and, perhaps tellingly, so far at least there is no sign of a replacement on the horizon.

McAlpine’s transition from direct family control, however, has been arguably the toughest yet. The official reason for Aikenhead’s departure, two years ahead of schedule, was that he had “achieved what he set out to achieve”, having developed a strategy designed to reposition the business for growth. But that strategy, unveiled in May, will in reality take months to come to fruition - and the suddenness of Aikenhead’s departure has inevitably led to industry speculation that there must have been some kind of bust-up between him and the family.

As we explore on pages 20-22, the reality is likely to have been less dramatic. Several sources point to the McAlpines’ genuine backing of Aikenhead’s authority in theory, but also to the scale of cultural change his leadership entailed for both the family members and the business in a short space of time. In short, perhaps there was an underestimation on both sides about just how hard those changes would be to make work in practice.

The company remains adamant it will go outside the family to replace Aikenhead. But this recent history, on top of the daunting prospect of preserving the business’ heritage, suggests that the chief executive role is about as tough a challenge as it gets in the sector. And while those being courted by McAlpine will need to think hard about whether they can handle that challenge, the company itself needs to ensure it is absolutely clear about the type of business it wants to be - or its next marriage, like its first, will struggle to make it past the altar.

Sarah Richardson, editor