Heads Roll - Update

Following on from this morning's post, I can't resist pointing towards a bit more about Mr Hyman's departure from Serco ahead of the SFO investigation and as reported here in the Independent today:-

Mr Hyman, a 50-year-old devout Christian who donates 10 per cent of his annual income as a tithe to his local church, had held the top job at Serco for 11 years and worked at the outsourcer for 19.

He is to receive a pay-off of a year's basic salary plus benefits worth £1.1m. He also departs with a pension pot worth £2.2m, paying out £128,000 a year, and 917,000 shares in Serco, worth £5.1m.

"He believes that the company will have the greatest chance of success with new leadership at the helm and he has, therefore, decided to step down with immediate effect," Serco said. It is now looking outside for a new chief executive.

Shares in Serco rose 5p to 557.5p on news of Mr Hyman's departure, which came one day after the UK boss of rival Government contractor G4S – also involved in the tagging scandal – resigned. The outcome of an inquiry into Serco and G4S's tagging contract is expected next month.

Serco said it wanted to demonstrate "substantive evidence of corporate renewal". Ministers are currently deciding whether to blacklist Serco from future central Government contracts, which provide about a quarter of revenues.

The outsourcer also plans to split its UK & Europe division in two, with one focused solely on Government contracts and the other on the public sector. Serco is also hiring three more non-executive directors and a group general counsel, establishing a board committee for corporate responsibility, and appointing full-time ethics officers to each division.

The chairman Alastair Lyons said its actions "should leave no one in any doubt about how seriously Serco takes these issues".

A Government spokesman said it would take full account of the changes and called them "a step forward".

According to the Guardian:-

But Keith Vaz, the Labour MP who chairs the home affairs committee, said: "I am surprised by the resignation of Mr Hyman who has always maintained that there is nothing untoward with the contracts that Serco holds with the government, even after the company was referred by secretary of state for justice to the SFO."

Underlining the scale of the task involved in repairing relations with the government, Alastair Lyons, the Serco chairman, said a new chief executive would be appointed from outside the group. In the interim, Ed Casey, head of the Americas division since 2005, will take the helm.

The management upheaval came less than 24 hours after rival G4S, also caught up in the controversial electronic tagging fiasco, parted company with the head of its UK and Irish operations Richard Morris. The G4S chief executive, Nick Buckles, left in May.

Both companies are being subjected to a government-wide review of every one of their contracts and have been ordered to prove they are taking steps to improve their operations.

Serco, which was transformed into a major international firm under Hyman, is embarking on what it describes as a "renewal programme".

The UK and Europe division is to be split in two, with one section to focus on the "UK government customers" and the other on activities in the wider public sector.

Three new non-executive directors are to be appointed along with a new general counsel. A board committee for corporate responsibility is also to be created.

Andre Spicer, professor of organisational behaviour at Cass Business School, said Hyman may have become a scapegoat. "Typically, CEOs at companies that face a scandal are often pushed out to clear the air. This tends to lead to some short-term confusion, but pays off in terms of an increase in corporate performance. But in some cases it can be a fatal distraction where companies feel they have addressed the big issues by changing the leader."

I'm often quite a stern critic of twitter as typically being filled with platitudinous bollocks, endless inconsequential trivia or mind-numbing PR puff, but occasionally there are gems. Francis Crook, CEO of the Howard League for Penal Reform, usually only tweets when she has something useful to say, and I love this earlier today:-

told SFO to link tagging investigation to false data in NHS cornwall, as looks like systemic corporate fraud I wrote to SFO urging a little more vigour in Serco/G4S investigation, talked to them yesterday - changing a few top people is irrelevant, it's profiteering from imprisoning people that's morally corrupt