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The importance of process – how MortgageBrain’s succession planning paid off

June 22, 2021

When your CEO of twenty years announces plans for retirement, managing the process to minimise disruption and ensure the business isn’t derailed, is crucial. Throw in the volatility and uncertainty of a global pandemic, and reassuring stakeholders becomes even more important.

MortgageBrain was established thirty-five years ago to provide a link between mortgage brokers and lenders. CEO, Mark Lofthouse, joined in 2002 and has overseen the business’s move into enhanced CRM and software services while also growing the business into one of the leading media companies in the mortgage space. With Mark at the helm, MortgageBrain has seen revenue increase by 78% in the past five years, as the firm moves from connecting customers with products to providing full CRM and ecommerce capabilities.

“Mark was very invested in MortgageBrain; it was his baby,” says Peter Hill, Chairman at MortgageBrain. “He had built an award-winning business, with a strong technology roadmap and a really good team in place to take that forward. With an important personal milestone coming up, he felt comfortable handing it on.”

The stars were clearly aligned, remarks Peter, when initial discussions around Mark’s pending retirement first started in early Spring 2020. But then the pandemic happened. However, careful planning allowed the business to take all of this in its stride. “As an executive board, we’d been aware for some time that Mark was likely to retire in the next few years,” says Peter. “It was then a matter of timing and working with Mark to ensure that we had a good process and could effect a smooth transition.”

Given the uncertainty the sector faced in the early days of the pandemic, this was particularly important, he says, adding that Mark’s approach was hugely accommodating. “In fact, you couldn’t get a more flexible, sensible approach from an outgoing CEO.”

As well as having that flexibility and a clear process, transparency and communication were key to handling Mark’s exit and the subsequent succession of a new CEO. “We engaged the board in open discussions early on, and then we informed shareholders.”

 An open dialogue

With the business owned by five banks and one building society, each nominating a non-executive director to the board, Peter says that keeping the shareholder group informed was very important.

“We’d been talking to them about how the pandemic was affecting business,” he continues, “so when we explained the upcoming succession event, they already had a clear understanding of how we were positioned, and they knew we were properly organised to execute it.”

Gaining shareholder confidence was clearly down to MortgageBrain’s robust succession planning process. But research shows it’s an area that often proves emotive and is frequently overlooked by businesses – with just over a third of organisations reporting having no formalised succession planning process in place[1].

The consequences can be significant. According to recent findings by the Harvard Business Review, poorly managed transitions of C-suite executives within the S&P500 has taken out around $1tn of market value each year[2].

Handling the exit, of course, is just part of the equation. Recruiting the right person into the role is another big challenge. Replacing years of experience is tough, but with the business clearly reframing itself as a leading technology firm, the parameters were even more difficult for a board grounded in financial services rather than tech expertise.

“If I was faced with recruiting a CEO into a big financial services business, I’d know how to do that,” says Peter. “The challenge was to hire somebody into the role of a leading technology business.”

A fintech partner 

It was at this point that Peter decided to seek support. “I needed an executive search firm that really knew and understood technology and how you recruit in technology. Getting to the point where we had a trusted partner on this was the most high-risk component of this activity – and the most challenging.”

MortgageBrain’s partnership with Drax proved instrumental in sourcing and recruiting the right candidate. “We were very keen to recruit somebody with a deep and practical understanding of technology and SaaS in particular. But we were also looking for the attributes you’d expect in a CEO – leadership, stakeholder management, a strategic mindset and communication, and a track record of senior leadership in businesses with a strong growth history.

“We worked together around the Drax competency framework, which helped me to break the search down into the competencies I was familiar with and to realise that leadership is leadership irrespective of the industry. That allowed us to look systematically and logically at the candidates.”

The search led to the appointment of Zahid Bilgrami, who assumed the role of CEO on 1st May 2021. “He’s landed really well, which I think is testimony to the quality of the individual we found and the energy that he brings,” says Peter. “With a strong technology platform, a strong market position, and a young, strong leadership team, MortgageBrain is in a really great position to take advantage of the legacy that has been created.”

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[1] https://www.td.org/insights/succession-planning-is-your-organization-prepared

[2] https://hbr.org/2021/05/the-high-cost-of-poor-succession-planning

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