The City is beginning to worry that, as contracting’s top bosses edge closer to retirement, the industry is not doing enough to find and groom their successors.
Whatever you may think about them, the six men pictured opposite are all great leaders. Four have knighthoods. Each of them is, by turns, inspirational, egotistical, telegenic and entrepreneurial. All could easily be described as “larger than life”. They are also all of advancing years.

The absence of emerging figureheads is one of the critical concerns facing the construction industry as it starts the 21st century. Where are tomorrow’s Frank Lampls, Neville Simms or Martin Laings?

One contractor says he is not the only one worried that finding the next generation of people who will make an impact in the industry will be a “real problem”. He says: “There are lots of guys out there who are very good at running a project, but I see few coming through who have genuine vision. It is easy enough to predict where the business is going for the next 10 months, but not many can judge where it should be going over the next 10 years.”

One management consultant who works closely with the UK construction industry thinks it is 20 years behind other sectors in locating and training its next set of leaders. He says: “Manufacturers that have woken up and invested in their leaders of tomorrow have survived, but the rest have disappeared.”

The issue is a worry for the City, too; the retirement of a successful chief executive can send a share price plummeting if an equal or better successor is not in place. Mike Betts of analyst JP Morgan says he can think of at least six contractors that have no obvious successor for their current chief executives. “You don’t see many dynamic people in their 40s coming through,” he says.

“It looks like, once again, contractors are trailing behind materials suppliers. You don’t see the likes of the chief executive of Blue Circle, 44-year-old Richard Haythornthwaite, emerging in contracting,” Betts says.

So, how has this worrying situation come about? Mike Roberts, technical director of BAA, thinks the cyclical nature of contracting has contributed greatly to its short-termism. “The traditional rollercoaster by which the client commissions work one year and doesn’t the next does not encourage contractors to look at long-term succession strategies.”

Manufacturers that invested in their leaders have survived. The rest disappeared

Management Consultant

This should be less of a issue in the current sunny economic climate, but overheads are being squeezed tighter than ever in contracting. Businesses are still not being encouraged to invest money in expensive training for their top talent.

Another critical factor is the strong family roots of many contracting firms. Institute of Management research shows that only 15% of family companies survive into their third generation. Construction has seen numerous cases in the industry of the oppressive father figure overshadowing his offspring. The sons of Peter Birse and Peter Costain both chose different career paths to the succession plans they were expected to accept.

And even those family firms that have looked outside their kin for leaders have been unwilling to completely let go. When Sir Fraser Morrison ousted his managing director Keith Howell in January to resume his role as chief executive of Morrison Construction, analysts said it was because of “increasing frustration” that the firm was not going in the direction he wanted.

Bill Tallis, director of the Major Contractors Group, says another reason is that regional directors are often extremely busy. He says: “Construction is like many other sectors in that, immediately below the top jobs, you have people in very busy operational roles that do not allow them space and time to learn about strategy or guiding the company’s decisions.” It’s no surprise, then, that they feel out of their depth when they are suddenly thrown into the cauldron of the boardroom.

JP Morgan’s Betts agrees: “People have struggled to move from the detailed expertise needed on site to become regional and then national managers because they don’t get the financial training.”

Mobility is another issue. With very few top managers coming from outside the industry, fresh ideas are scarce. But simply parachuting in greenhorn managers into construction’s top levels is not necessarily the answer. Taylor Woodrow’s appointment of former BP and Marley director John Castle as chief executive was a six-month affair that ended acrimoniously.

Most construction firms prepare you for leadership by sending you for a day running around a moor

Ian Sprigings, Connaugh

Betts says: “Tomorrow’s managers need hands-on construction experience, as well as financial and leadership skills.”

Two construction firms that are making moves to meet these needs are privately owned Mansell and Alternative Investment Market-listed Connaught. Mansell has sent its 51-year-old chief operating officer Philip Cleaver to Harvard University for a £35 000, 10-week course in advanced management. And 41-year-old Ian Sprigings, commercial director of Connaught Property Services, is currently studying for a postgraduate diploma in leadership studies at the Business School of Exeter University.

The school has taken managers from all sectors of industry since the course began in 1993, but, tellingly, Sprigings is the first with a construction background.

“Most construction firms think it is enough to prepare you for leadership by sending you off for a day running around a moor and crossing raging rivers with a ball of string and two pieces of wood,” he says. To get the best entrepreneurs, firms will have to attract top graduates, as well as training existing staff. Miller Construction chief executive Keith Miller says he has little problem attracting highly skilled graduates because of a targeted recruitment programme.

But he is one of only a few bosses who can say that. Jennie Price, chief executive of the Construction Confederation, says it is a real concern that many civil engineering graduates are being tempted to work for large accounting firms after they leave university.

In the USA, big construction firms make big efforts to lure the best graduates with design skills and intellectual nous. In the UK, such students tend to end up within architectural practices.

The question is, what will be the next major move? Who is going to lead it?

Mike Betts, JP Morgan

But perhaps things are not as bad as they seem. The MCG’s Tallis believes that the best people will continue to come through because, in any industry, there tend to be a few people who go on to make an impact on the whole sector. “Do I think the industry will throw up leaders? Yes, I think it will.”

Indeed, one City analyst thinks that “the better contractors” are now much better at grooming their successors. He also believes that the new breed will be less entertaining than their forefathers but far more successful at creating profit. “The cigar-toting field marshals of old managed to destroy billions of pounds of shareholder value with their misguided empire building that led to massive write-offs during the mid-1990s.

“Cocktail parties are going to be less fun, but at least the new bosses will have more managerial ability,” says the analyst.

However, the personable, high-profile players pictured on page 19 have all made an impact on the industry precisely because of their massive personalities. And while their successors will need different skills, they will need the same ability to put into place the kind of new ideas that Sir Frank Lampl did with construction management and Paris Moayedi with rail maintenance.

“The next lot of leaders will need to be less macho and more polished financially than the current crop,” says one analyst. “At the moment, their successors are neither.”

JP Morgan’s Betts thinks there is a gaping hole for a new movement in construction: “A lot of the leaders in their 50s are all trying to get out of construction as quickly as possible and are piling into rail and FM. It’s the classic herd instinct this industry has always suffered.

“And it is really escaping from one problem (low margins) into another. In all these areas, facilities management, rail and even partnering, the margins are coming down.

“But the question is, what will be the next major move? Who is going to lead it? And how will they make it sustainable?”

Construction’s current leading lights - Sir Frank Lampl

The undisputed grandfather of the industry, 73-year-old Bovis Lend Lease chairman Sir Frank exudes tremendous warmth, but insiders say he has the ruthless streak of all successful businessmen. Chairman of Bovis since 1985, he has built its reputation by importing US construction management techniques and establishing an international presence. Never prepared to go as far as to call Bovis a contractor, he occasionally refers to it as a “constructor”. Merger talks with WS Atkins foundered in December 1998, but the company was snapped up by Lend Lease in October last year for £315m.

Construction's current leading lights - Sir Neville Simms

Carillion chairman Sir Neville has been construction’s most colourful character for more than a decade. When merger talks with Aggregate Industries broke down in late 1997, the 55-year-old was branded an egomaniac who was unprepared to give up his position in the industry. But analysts say that, since the demerger of Tarmac, he has settled into running the much smaller Carillion. However, eyebrows were raised at his £1.4m one-off pay deal, causing one newspaper to label it “The golden demotion”. Sir Neville has hinted that he will retire in 2001.

Construction’s current leading lights - Sir Martin Laing

The long-standing president of the Construction Confederation has “the detached air of royalty”, says one observer. The Laing family’s aristocratic Scottish roots run deep through the business, which is more than 150 years old. “When he meets lowly tradesmen at events, he does not remember them from Adam, but he still carries it off with charm,” the observer says. A former chairman of the World Wide Fund for Nature, the 58-year-old is the eldest grandson of Sir John Laing.

Construction’s current leading lights - Sir Fraser Morrison

Described as “quiet and unassuming but a leader of men” by one City banker, Sir Fraser, 51, came to prominence in 1989 with the management buyout of his father’s company from international conglomerate Charter Consolidated. He steered Morrison Group to a successful flotation in 1995 and won many hearts in the City for turning it into a reconstructed contractor. He is not averse to acting ruthlessly in the interests of the firm; in January, he ousted his managing director and stepped back into the daily running of the company.

Construction’s current leading lights - Peter Mason

Amec chief executive Mason has a somewhat dour Scottish persona that has won over many a fund manager. Poached from BICC in early 1996, the 53-year-old has turned Amec into a stock market sweetheart. Colleagues say he does not shout when he’s angry but stonewalls with silences. An evangelist of supply-chain management and partnering, he has taken Amec almost completely out of commercial building. He recently oversaw the purchase of Canadian firm Agra for £221m and is poised to buy electrical contractor Spie.

Construction’s current leading lights - Paris Moayedi

The Iranian-born Jarvis chief executive made his name by transforming the firm from a jobbing contractor into a profitable rail and facilities management firm. Jarvis’ shares outperformed the sector for a year but crashed last summer amid fears that its high margins on rail maintenance contracts for Railtrack were unsustainable. Currently trying to rebuild the City’s confidence in his firm, Moayedi is planning to take Jarvis out of construction into a support services listing. Ex-Jarvis people say the 61-year-old is an “all or nothing man”.

The new breed

Four of the next generation of industry leaders, tipped for greatness by building. David Jackson Smooth, ambitious Peterhouse Group chairman Jackson is one of the few businessmen to publicly state where he wants his company to be in two years’ time – firmly in the FTSE 350. The 52-year-old aims to do it by giving Peterhouse, which has grown out of Leeds builder Totty, a support services listing. Construction analysts should enjoy following the company while they can. John Morgan Jackson’s golfing buddy, Morgan Sindall executive chairman Morgan, 44, has built up the firm by acquiring small niche building firms with strong brand names. He is rumoured to be dissatisfied with the group’s stock market rating and keen to find a merger partner. Andrew Goodall Unperturbed by the failure of his daring bid for Alfred McAlpine last year, the 37-year-old property developer is sitting in his office at Brighton Marina perusing the accounts of any number of listed housebuilders. Rumour has it he has bought shares in a few companies in recent weeks purely because he thinks the sector is underrated and he can make some good dividends for his personal account. Mark Tincknell Connaught managing director Tincknell, 37, has been described as “a very nervous guy but also pretty impressive” by one corporate financier. He took the bold decision to float the company on the Alternative Investment Market last year at a time when all listed small construction firms were pondering delisting. Connaught was voted best newcomer on the AIM last year.