Expert Comments On Impact Of Losing Key Figures In An Organisation

By Rob Dixon

The announcement of Sir Alex Ferguson’s retirement from his managerial position at Manchester United has put the difficulties of replacing a successful leader and the changes it can make to a workplace into the spotlight, according to an employment law expert at Irwin Mitchell.

Manchester United confirmed today (May 8th) that Sir Alex would be retiring at the end of the season after guiding the club to the 13th league title of his 26-year tenure.

The 71-year-old Scot, who has won 38 trophies in total during his time in charge at Old Trafford, including two Champions League titles, is set to become a director and ambassador for the club.

Much speculation has been emerged as to who may now step into the managerial hotseat at Manchester United and Glenn Hayes, a Partner in Irwin Mitchell’s Employment law team and United fan, has said the major upheaval and departure of a successful leader raises a number of issues for the club.

Setting the Standard for a Successor

Glenn explained: “Whoever takes the post at United may well be stepping into the biggest shoes in world football, so it will be fascinating to see what the future holds for the club after a 25-year period of unprecedented success.

“One particular issue of interest will be how a successor’s achievements can be assessed. In football, contracts for both managers and players are often based around a basic salary with bonuses and other increments based on success on the pitch.

“This is a standard move, but judging a newcomer’s performance in line with the achievements of Ferguson could well be pushing it! Whilst this is one of the most coveted jobs in football, like any job, the employer should ensure any bonuses are set at a reasonable and realistic level and with clear guidance as to when and under what circumstances those bonuses are due.”

Impact on Staff Morale

Discussing the impact that the loss of a high-profile leader can have on staff morale, Glenn outlined: “Change at the top of an organisation can generate shockwaves within a business and occasionally lead to speculation, rumour and some dissatisfaction among staff.

“The difference in this case is that employers usually have cause to worry about this when there is the risk of a leader who is heading to another organisation poaching staff members to join them at their new place of employment.

“Firms worried about this can put restrictive covenants in contracts to prevent such activity, but another approach to the issue is using incentives to encourage their top performers to stay. This may come in the form of bonuses or even equity – such as shares – in the firm.

“Of course, United do not face this concern as Sir Alex is purely moving upstairs in Old Trafford. However, it will be interesting to see how his retirement from managing impacts on the future of both backroom and playing staff.” 

“Furthermore, in the global business of football, a new manager is likely to want his own backroom staff in place with whom they are comfortable and have worked before, which may mean a change in role for some at the club or the loss of job for others in the current backroom team”.

A Change of Heart

Glenn added that another issue which may still arise could be if Sir Alex, as he has done in the past, chooses to rethink his retirement for another season or two of domestic and European glory.

He said: “We all know Ferguson changed his mind on retiring around a decade ago, which in hindsight looks like a very positive move for all involved.  Whilst this is not likely to happen again here however, to make such a decision does raise an interesting employment issue.

“Formally, an employer has no obligation to take back a leader who has announced their retirement or who has resigned for other reasons, only to then change their mind. Technically, if Sir Alex was to do that again, United would still be in their right to move on to a new manager and a fresh chapter in their history.

“On the flip side, employers who do choose to put a retiree who has had a change of heart back into their organisation must remember that the move could create as many complications as their departure, particularly in terms of affecting morale amongst up and coming talent desperate for a chance to shine.

“An employer has a delicate balance to consider in terms of both retaining top-quality leaders, but also ensuring up and coming talent are retained and are not disenchanted by a perceived lack of opportunity.”

Read more about Irwin Mitchell's expertise in relation to Employment Law.