Don’t Be Scared, Be Prepared: Short-Term Succession Planning Issues in the Coronavirus Era

Don’t Be Scared, Be Prepared: Short-Term Succession Planning Issues in the Coronavirus Era

In light of recent events, our team held an emergency e-conference to review our short-term succession plans.

So far, we’ve escaped the coronavirus scourge, yet many of our family, friends and colleagues have not been so lucky. Meanwhile, there’s no shortage of victims in the upper reaches of corporate management across our industry.

Our meeting was all business, but Genya, a Moscow native with endless tales of his early life in the Soviet Union, was as close to cheerful as one can be these days. So much for the image of the dour Russian.

As a youth, Genya did time in the Pioneers, the Communist party’s evil twin of the scouting movement. Their motto was “Always Ready” – vsegda gotov in Russian – and we can all say it now. In the 1990s and beyond, several of our team members worked in Russia, where we needed to be ready for surprises every day – rain, snow or shine. It’s a good maxim to ruminate on when preparing a succession plan, short-term or otherwise.

The coronavirus calamity has unbalanced the world – from the widest macroeconomic and geostrategic realms right down to our shopping lists. Psychic imbalance is the virus’s most widespread symptom: even the most resilient are wracked with unease. Reaching beyond reasonable fears of acute illness, the keenest shock is the revelation of our unpreparedness. How can we work when the office is shuttered, teach children when schools are silent, stay clean and fed when supermarket shelves are nearly bare?

We’re a literary team, and one of our writers recalled Ralph Waldo Emerson’s essay Self-Reliance. Written in 1841, it contains the enduring observation that life is about “learning and forgetting and learning again.” In the US, to say nothing of elsewhere, we’ve witnessed the dire before. 9/11, showed us the fragility of life and gave us the skills to carry on. In 2005, Hurricane Katrina demonstrated that federal agencies tasked with recovery after a natural disaster can be laggard, even inept. Under pressure, people fended for themselves in circumstances of destruction, privation and criminal danger.

These great storms provided impetus for the prepper movement. Long practiced by people living in Hurricane Alley and other regions familiar with nature’s deadlier side, prepping involves storing enough food, water and medical supplies to last a month or so. City sophisticates tended to disdain the homespun movement, but these days the preppers’ message is gaining traction. That message is simple: plan for the worst; don’t expect help; be ready.

In the corporate world, particularly among the advanced mortals in the financial field, as a rule, we prepare. For bulls, bears and all manner of wildlife, for political upheaval, economic tremors and catastrophic shocks, death and new life. We should be ready for anything, with even the murky unknown unknowns factored into our planning.

Succession planning, long term and short: in our writings and everywhere, the warning has long been sounded. Consider the basics: what happens to a company when a key executive retires, takes a new assignment or is gravely incapacitated? It’s a case where responding on the fly simply won’t do.

There is no legal requirement for companies to disclose whether a CEO or other top-level executive is unable to serve due to health incapacitation, whatever the cause. Recently, though, a number of firms have chosen to do so. For example, tobacco major Altria Group just announced that its chairman and CEO, Howard Willard, had contracted Covid-19 and would need to take indefinite leave. The company implemented its short-term succession plan, and accounts suggest business as usual, at least within contemporary limits.

Altria’s CFO will step into the breach for the duration of Willard’s absence. The CFO, with an eye in every corner of critical operations, is often the replacement of choice in these cases. But what if the financial chief goes down as well? Today’s hiring market is hobbled by travel restrictions, and what’s more, a dearth of candidates: loyalty and reward are freezing many CFOs in their posts. In-house replacements are currently the name of the game.

Preparing for short-term succession is conceptually simple: identify key roles, risk factors, loss impact and so on, and designate alternates. Firms often stumble, though, in identifying second-tier replacements. Found among employees deeper down, these are up-and-coming candidates who can replace the replacements, if necessary. Board members are usually intimates of the top-level management team and know who would replace whom, but should all of the seniors become hors de combat, could effective candidates even be found among the unusual suspects further down the pyramid?

There’s another factor, simple, yet often missed: while the main duties of C-suite executives are clear, like over-ornamented Christmas trees or generals festooned with medals, managers tend to acquire a tangle of small, absolutely vital jobs. Companies great and small need to identify these tasks, codify the arcane knowledge that makes them run, and be sure replacements are trained and ready to go.

The current writer has seen this in play. As an equity research editor for a major investment firm in Singapore, I had the simple duty of distributing the morning meeting agenda to staff across Asia. Organizing the transcontinental meeting was a convoluted, daily process, which somehow worked like clockwork. How did we pull it off, across time zones and language barriers, so seamlessly?

One particular manager was the linchpin. She was our bank’s subcontinental fireman, ever dousing sparks before they blazed up, but one day she was abruptly terminated. A quick survey showed that no one, no matter how senior or corporately muscled, had a full notion of how to arrange the morning meeting. Questions with no answers mushroomed: which of the 3,000 IT wizards issued the call-in codes? Who decided which analysts got airtime? After some jostling and jousting, the wheel was reinvented, but the question was long asked: why hadn’t it all been written down?

When they look back on the viral crisis, veterans are unlikely to swaddle it with any aura of tragic romance. Lessons will certainly abound, though, one in particular: self-reliance, individual and corporate, starts with preparation. A future shock will come, unbidden, yet assured. There’s no use for fear. Simply relearn and get ready. Always ready.

For more information, please read:
Boards Are More Likely to Review Temporary Succession Plan Amid Pandemic | Wall Street Journal

I Don’t Want to Be a Burden: Why People Buy Long-Term Healthcare Plans A Guide to Thriving as an Advisor in the Time of COVID-19