Shaking the Old Boy Network

British business has often classed its companies more by the social status of the men at the top than by size, profits or prospects. Eton and the Guards are faultless qualifications, and so is a baronetcy or hereditary peerage. Some Britons believe that directors constitute a gigantic Old Boy network. Last week the British business world was startled by a major corporate change that illustrates a trend in British business: a disestablishmentarianism that is down grading the Old Boys in favor of top managers and directors whose only qualifications are ambition, skill, and a flair for hard work.

In a top management reshuffle, bus-making Leyland Motor Corp. enlarged the board of its principal manufacturing subsidiary, Leyland Motors Ltd., and filled the new posts with three young men (average age: 39) who had risen through the company's ranks. Not a public-school boy among them. Even more surprising, Leyland made two new appointments to the board of A.E.G., another important group subsidiary--and picked a 33-year-old and a 29-year-old from the ranks for the jobs. The shifts reflect the philosophy of Managing Director Donald Stokes, 50, a onetime salesman who took over last year and has made Leyland a trailblazer in professional management.

Sharing the Peers. Relentless competition for worldwide markets in everything from paints to paddles is making British companies turn away from the Old Boy tradition. There is a lot to turn away from. No fewer than 37 peers and 45 baronets and knights are shared by the boards of the five biggest banks, and a Labor Party study found that 35 out of 107 directors of London's top financial houses were all Old Etonians, as were 46 out of 149 directors of the large insurance firms. "The chairman of one board I sat on rang me up," complains one top British industrialist, "and told me, 'We're thinking of putting up so-and-so.' I asked if he knew anything about the business. The answer was 'No, but he's an awfully nice chap and married to so-and-so, you know.' "

This sort of mentality caused little harm 50 years ago, but it has been the core of a stubborn resistance to change that has caused much of British business to lag behind the rest of the industrialized world. Such is the outspoken concern in Britain today about how business is run that it is taking on the scope of a national debate. Said the Times of London: "The need for a managerial revolution is widely evident, but the cry seems to have been drowned by deluding murmurs of contentment from too many board rooms."

The New Managers. One shot in the revolution was fired a few months ago when a London merchant bank openly advertised in the Financial Times for a new managing director--a departure so radical that one banker felt obliged to explain: "Normally, one wouldn't advertise a real job, you see, because if a chap didn't know a job was going he wouldn't be the right sort of chap, would he?" The most startling changes have been wrought on boards where the Old Boy influence was strongest. Old-school-tie companies both, the Rank Organization and Viyella International have been dramatically improved recently by men who never set foot inside the Establishment: John Henry Davis at Rank, Joe Hyman at Viyella.

Three years ago, Standard Telephones & Cables took real responsibility out of the hands of its regular board, which boasted a baronet and a Member of Parliament, and placed it with a six-man "advisory board" whose businessmen members held not a single title among them. Result: the company turned to automation, stepped up its program of research and development, then watched sales increase 50% to $168 million last year and profits skyrocket 350% to more than $7,000,000. Textile Maker Courtaulds, Ltd., replaced its titled chairman and deputy chairman, promoting tough-minded Frank Kearton to managing director, then filled board vacancies with untitled textile men like Kearton. Once the most sedate of all the large British companies, Courtaulds is now one of the liveliest firms in Britain, buying up textile firms and expanding fiber production at the most rapid pace in all Europe.

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