What does the sacking of David Moyes tell us about Corporate Governance?

The dismissal of David Moyes as Manager of Manchester United gives us an interesting perspective on how an individual can be treated by a large corporation; the unusual approach taken to senior recruitment in professional sport; what happens if the board does not have an agreed strategy; and how an organisation can lose its way if it focuses on the wrong things.

David Moyes appears to have been treated abysmally by Manchester United. Given a 6 year contract when he started in July 2013 he was sacked after less than 10 months. The press seem to have heard about it before he did and the decision seems to have been influenced by the share price and the prospects of securing sponsorship deals. Even if this was the right decision where was the support from the club? What was the strategy? Moyes appears to have been taken by surprise. If he wasn’t going to be given time to stamp his authority on the club why was this not communicated to him?

The League Managers Association subsequently said that they felt Moyes was treated badly especially in relation to the apparent briefing to journalists before the manager found out himself. Professional sport is a tough business and Mr Moyes will have received financial compensation that will secure his future but he is also an apparently decent human being who has been cast aside by his employer in a highly public and humiliating way.

There are lessons here for corporate governance. Moyes was selected to provide continuity from the previous management regime. He was a canny Scot, with forthright views and a strong sense of purpose. He sounds remarkably like his predecessor who is said to have played a decisive role in his selection. If continuity was the aim of this appointment why were so many other changes made at the same time? A new Chief Executive, a new coaching team and a new set of tactics were implemented in an 8 week period before the start of the new season. Arguably the lack of time for these changes to bed in and the inability to attract significant new playing talent also contributed to a sense that the club was in some chaos. Moyes, with his 6 year contract, must have thought he had time to remake the team in his image. The Board did not share this view. Arguably a Board’s primary responsibility is the appointment of senior staff to carry out their strategy. They can’t just take the view that someone similar to the previous boss will be successful.

The approach of the Manchester United Board (and indeed other clubs) seems to be that they appoint the Manager and everything else is up to him. If the Manager fails then you bring in a new one and hope for the best. The Board should set the strategy and monitor the situation closely. If additional support is needed then this should be provided.

So Boards should carefully think about what type of person they need to lead the most important parts of their business. Professional sports organisations need to raise money from a highly sophisticated commercial operation in order to fund their sports teams. Successful sports teams generate more revenue. Where Manchester United seems to have got it wrong is in spending more time and effort on their commercial interests and overlooking their responsibility to have success on the pitch.

[Alan Hanna, Strictly Boardroom Associate]