As a company veteran prepares to step down as CEO, the consumer goods giant could benefit from the objective viewpoint and varied experience of an outsider.
Boyden's perspectives on the news and trends that are transforming industries
Unilever CEO Alan Jope announced in late September that he will retire at the end of next year, wrapping up a term that only began in 2019. He is a veteran of Unilever, having started his career at the company in 1985. To outward appearances the decision for him to step down was mutual. Jope has had some notable successes. But he has also had some clashes with investors, who have been losing patience with Unilever’s middling stock market performance.
Prior to his appointment as CEO, Jope was President of Beauty & Personal Care. This is one reason he was initially welcomed by shareholders, many of whom considered personal care the consumer goods company’s most promising division. Further, he had experience in China’s high-growth FMCG market. Investors were also pleased with the choice of a leader known for his pragmatism. They had found this lacking in his predecessor, Paul Polman, whom they criticized for prioritizing corporate social responsibility and ESG.
Under Jope’s leadership Unilever streamlined its dual structure, making London its sole headquarters. He also presided over the sale of the bulk of Unilever’s tea business, including 34 brands, to a private equity firm in 2021. The deal had dragged on for over two years. Its finalization enabled Unilever to shed some slow-growth legacy brands and focus on food categories with more potential, such as plant-based alternatives, as well as consumer health and personal care. Jope is also credited with keeping the company on course during the pandemic, demonstrated his skill in crisis management.
Other moves met with disapproval, such as Jope’s decision to uphold Polman’s target of 20% for operating margins regardless of the impact on revenue growth. “Investors’ confidence was then eroded as expectations for sales and profits sagged,” The Economist reports. ESG came to the fore once again, evoking frustration. Then came Jope’s failed bid for Unilever to acquire GlaxoSmithKline’s consumer health business in hopes of spurring growth at the consumer products giant. Unilever has since reaffirmed its goal to acquire a consumer health firm, and established its Health & Wellbeing unit in July.
Now, with competition for CEO candidates running high and consumer habits rapidly shifting, the search is on for the next leader of one of the world’s top FMCG companies. Investors are urging Unilever to look at external candidates, or at least consider internal candidates who have prior experience outside of Unilever. Polman was recruited from Nestlé, and under his leadership shareholder returns performed better on average than under Jope. Going a step further, some have suggested that a leader from outside the consumer goods sector altogether could bring the renewed vitality the company needs.
Recruiting a CEO from outside the company or even the industry could be a step in the right direction for Unilever, a 130-year-old consumer products company likely overdue for a refresh. An outsider would more likely possess the objectivity needed to heed demands to trim Unilever’s sprawling portfolio of consumer brands, and potentially break the company up into more agile parts. He or she will also need the fortitude to strike a balance on ESG, which the public and politicians favour, while delivering the increased sales and margins investors demand. With the right leaders, a company can achieve both.
