Poor Paul Tucker. After being endorsed by the Financial Times as the ideal replacement for Mervyn King as governor of the Bank of England, the deputy governor was beaten to the role by the demi-God that is Mark Carney.
Now, two weeks before Carney rocks up at Threadneedle Street, Tucker has tended his resignation. He says that he wants to become an academic in the U.S. and to offer his ‘support’ for Carney from afar.
The Bank of England isn’t the only place partial to parachuting in rock stars in times of trouble. Investment banks are prone to hiring big name outsiders. Just ask Carsten Kengeter, who was head of UBS’s investment bank (having himself been parachuted in from Goldman Sachs) until he was displaced by Andrea Orcel in October 2012. Orcel had been hired from Bank of America seven months earlier. Like Carney, he came on a gigantic package. And like Tucker, Kengeter subsequently resigned. Kengeter is rumoured to be setting up a hedge fund, but has yet to resurface.
You may not be as senior as Tucker/Carney or Kengeter/Orcel, but if you work in an investment bank, what can you do to avoid a Tucker-esque position beneath a new and exalted boss who’s been hired in above you? And how should you react when a new boss arrives despite your best efforts to avoid that happening? We suggest these takeaways from Tucker’s pain.
1. Don’t stay so long that you become part of the furniture
Tucker joined the Bank of England straight out of university and stayed there for more than three decades. In 2012, Tucker was paid a total of £263k and hadn’t had a pay rise for two years, according to the Bank of England’s most recent report. Carney, on the other hand, has worked at Goldman Sachs, the Canadian Department of Finance and the Canadian Central Bank. He is joining the Bank of England on a total package of £874k.
The discrepancy is notable. Not only would Tucker have been managed by a man whose job he wanted, but his new boss would have been earning more than three times as much as him. This is what happens when you stay in one place for too long.
The pay differential between Tucker and Mervyn King, Tucker’s previous boss, was only 17%. Mervyn King had worked at the Bank of England for 22 years.
2. If you do stay so long that you become part of the furniture, have some other things going on
Being Deputy Governor of the Bank of England may have been Tucker’s day job, but it was far from being his only gig. In the press release announcing Tucker’s exit, the BofE listed all his other activities, including: being a member of the G20 Financial Stability Board’s Steering Committee, chairing the FSB’s group on resolving large, complex financial firms, being a member of the Board of the Bank for International Settlements, chairing the Basel Committee on Payment and Settlement Systems (CPSS), being co-chair of the Steering Group established jointly by the CPSS and the International Organisation of Securities Commissions (IOSCO).
Tucker built a large constituency of international fans. This constituency boosted his profile and will make it easier for him to move into his new role as a U.S. academic. If you end up spending decades at a single bank, make sure people are aware of you externally.
3. Be gracious in defeat
Tucker hasn’t gone so far as to say that Carney is the ‘smartest man in the room’ or that he’s the ‘most outstanding central banker of his generation,’ but neither has he publicly questioned Carney’s ability.
Instead, when Carney’s appointment was announced, Tucker ‘warmly congratulated him’.
4. Resign at a tricky moment
Tucker’s contract as deputy governor for financial stability at the Bank of England doesn’t expire until February 2014.
Tucker could have hung on until then – providing Carney with a little consistency and offering general advice on the inner workings of the Old Lady. Alternatively, Tucker could have asked George Osborne for his contract to be curtailed earlier this year – giving the Bank time to find a new deputy to join alongside Carney in July. Instead, Tucker will leave only a few months after Carney arrives (quite possibly after taking a long civil service summer holiday beforehand).
Carney will therefore have to get to grips with his new role and hire a new deputy. To make matters worse, Charlie Bean, the Deputy Governor for Monetary Policy is also stepping down in June next year. Let’s see how the Canadian rock star deals with that, eh?