COMMENT
What To Do When Bosses Leave

Many of us have probably never heard of Rose Marie Bravo. But within the fashion industry Bravo is held in the highest esteem. In 1997, she quit her job at Saks Fifth Avenue (NYSE: SKS) after spending five years as President to head the ailing fashion group Burberry (LSE: BRBY). And in a little under eight years, Bravo has transformed the company from East London backstreet fashion wannabe to catwalk must-have.

But the word is Bravo may be about to leave Burberry. What's more, news of her departure has been taken somewhat badly by investors - shares in Burberry fell by as much as 6% when the word got out. It seems that her possible exit has raised questions about whether Burberry's stellar performance over the last seven years may stall.

Without doubt, Bravo has done a first-rate job at Burberry. And evidence of her sterling stewardship can be seen from the company's exemplary performance where profits have more than quadrupled since she took over. But should the departure of a boss, no matter how good, ever affect our decision to invest in a business?

Ideally, investors should look for businesses that are so simple that they can be run by almost anyone. Investing guru Peter Lynch once said, "Buy companies that can be run by monkeys because one day they will be." However, in practice, different managers can bring to a company different experiences that are right for its particular phase of development.

In the case of Bravo, she took a tired brand and turned it into one of the world's top fashion marques. She hired Christopher Bailey from Gucci who helped her make the brand more appealing to the younger generation. The Burberry range now includes baby wear, fragrances and even bikinis.

But Bravo's work at Burberry is now complete. Burberry's recovery stage is over, and perhaps now it's time for a manager with a different set of skills to take over. The next step in Burberry's development is likely to be cost containment as it sets about pinching market share from rivals. This type of job is probably best suited to a bean counter who will want to grow profits by keeping costs in check.

In the main, any high-level management departure should be carefully watched because it invariably means strategic change. But let's not also forget that the average tenure of a FTSE 100 boss is less than five years, so there are lots changes taking place frequently amongst the top flight.

Some may argue that constant change can be unsettling for any business. But whilst change will inevitably involve uncertainty, without change there will be no improvements either. And who would want to see Burberry return to making tartan raincoats in the back streets of East London again?