With an understanding that the death of Henry Ford was the best thing to happen for the Ford Motor Company, I recently asked a Metro Detroit CEO, who had stated his plan to "die in office," if his company had a realistic succession plan. His response was unconvincing.
Of course, this is not an easy time to nurture a new generation of corporate leaders. Yet, the need for top talent is growing. A record 1,484 U.S.-based chief executives left their jobs in 2008, according to outplacement firm Challenger, Gray & Christmas. Many more could step down this year as losses mount.
What's striking about many emerging CEO candidates is that they were identified as promising early on and given opportunities to prove themselves. Their careers highlight the critical importance of an oft-ignored management priority: succession.
While the median CEO tenure today is just six years, according to Booz & Co., few board and managers carefully nurture a stable of successors. Last year, the National Association of Corporate Directors found that 42.4% of companies had no succession plan at all. The economic crisis has exacerbated this problem as resources have diminished. Guy Beaudin, an executive coach at RHR International in Toronto, has seen a 25% reduction over the past year in work helping clients groom future leaders.
For a sense of how to do it well, look at the seamless CEO transition at DuPont earlier this year. Chief Executive Charles O. Holliday Jr. had spotted top lieutenant Ellen J. Kullman as a potential successor more than a decade ago. He was impressed with Kullman's willingness to learn. "There goes a future leader," Holliday recalls saying to himself. Kullman remembers being peppered with questions. "He scared me," she says.
When the time came for Holliday to leave, he knew who was ready to replace him. Along with helping Kullman join the General Motors board in 2004 to broaden her management perspective, he encouraged her to work with a coach to modify her impatient nature. "If I made a statement before, I was just one of the group. Now, it's law," says Kullman. "I have to make sure I am getting everyone's input."
That's especially crucial in a fast-changing environment. Many boards are wondering whether their current CEOs can get them through this crisis. The decisions Kullman makes today may translate into a very different DuPont in the future. With almost one-quarter of sales tied to the auto industry, she'll need to look elsewhere for growth. Kullman knows that her biggest decision, though, is not which businesses to invest in, but which people.
Source: BUSINESSWEEK, May 11, 2009
