Succession planning, long term and short, for companies of all sizes: everywhere, the pandemic has sounded the warning.
This plague was predicted; authorities had been warning us for years. Yet when it hit, so few were prepared. This was greeted with mercy, as so many were sharing the same lifeboat. Next time, I predict no patience for excuses.
What happens to a company when a key executive retires, takes a new assignment or is gravely incapacitated? Responding on the fly won’t do.
I tried to discover how many executives were laid low by the coronavirus. There’s no legal requirement to reveal whether a CEO or other top manager cannot work due to health problems, so I simply don’t know.
As the virus spread in 2020, many firms, particularly those publicly traded, faced hard questions: should they disclose that a CEO or other executive was sick with the virus? No company wants to tip its shares over the cliff, yet a quarterdeck bare of its captain causes jitters in the crew – and markets. Saying nothing leads only to damaging rumor.
Some opted for the big reveal. Tobacco company Altria Group announced that its chairman and CEO had contracted Covid-19 and was taking indefinite leave. Altria had a short-term succession plan in place, activated it and then reported business as usual. Most companies chose to keep silent.
I’ve read countless stories of CEOs disappearing, then turning up in quarantine. The big Q was a leveler, an inconvenience to all, so it wasn’t seen as destabilizing. Top executives are often away, travelling from meeting to meeting (or spa to casino), so the pandemic merely dramatized the mundane. This makes a good point: succession plans should include a PR strategy to explain executive absence. Markets hate the opaque.
Altria’s CFO took over during the leadership crisis. The CFO is an excellent replacement to the CEO, as both positions’ duties involve scrutiny of all critical operations. Companies should consider this choice, prepare a candidate, ‘wargame’ the scenario, practice for the worst. Yet consider: what if the CEO’s replacement is incapacitated, too?
CFOs are a tough hire. Crucial to operations, they’re richly paid, often nailed to their posts. Recall the strangling travel restrictions of last year, still in place in some big markets. Anyway, hiring outsiders and bringing them in fresh – with share price plummeting, chaos in operations, markets demanding info, and microbial barbarians at the gate – hardly supports a smooth transition.
There’s a better way: in quieter times, foster in-house replacements.
Short-term succession is easy on paper: enumerate key roles, their duties and impact on operations and clients, then identify promising alternatives.
Yet wrinkles can form, which take time to iron. First-tier replacements are easy, even obvious, but second-tier talent is harder to vet. Office politics can intrude: I suggest you as replacement CFO; my rival objects, proposes her candidate. We get in a rumble, the real problem forgotten. This is quite normal.
Untangling this gridlock takes top-down direction. Top executives can’t pick these tier-2 replacements; they haven’t time. C-suite executives and board members may be entwined (not literally, let’s hope) with the top management team, so the CEO knows the CFO is a good replacement. The next level down, they likely don’t know.
I’ve palm-slapped CEOs at every company I’ve slaved at – even Jamie Dimon glittered his smile in London, just once, likely hoping I was bringing his lunch. They may know our faces, but darned if they know what we do in the kitchen.
Here’s a factor, simple enough, yet often missed: the duties of top executives are clearly codified, solid as stone commandments. But chiefs tend to acquire myriad duties that escape these descriptions. Pandemics prove it: companies must codify these ancillary tasks, reveal the arcane that makes everything run, and assure replacements are trained and ready to go.
I know about it, done it myself. A decade ago, in Moscow, I worked in equity research at a small Russian player. I edited their works great and small, invented compliance rules in a market with none, amassed a deep stack of these ‘small, vital jobs’, including assembling the morning note that launches our financial day.
Morning notes are all about pace; Secretariat couldn’t keep up with my galloping fingers. The analysts would email their articles (“Dinnur – 300 word limit! Sergey – source for the table! Davai! Poyékhali! Mámmachka, help!), I’d rapid-fire edit, load them into the report generator, crafted by our quirky IT crew with fiendish inefficiency.
Living in Russia is trying for demanding, pushy, naïve Americans, so we’re hard on the natives. We need to be calm; work isn’t a wolf running for the forest, say our hosts: please, take it easy. Fine; but when the morning note deadline is flashing its fangs, there’s time for neither poetry nor brandy. Like Gagarin said on the launchpad, Poyékhali! Let’s go! That’s why they hired us.
It took 24 keyboard and mouse clicks to convert simple text into an emailable note. The programming glitches were heart stopping – tech-artistry with claws. Following a period of reform (unencouraging words in Russia), IT tamed their creation. Post-reform, it only took 19 keystrokes to publish. My doctor noted a slight diminution in blood pressure (“What have you done, divorced?” – he asked, charging no extra for wit), so it was worth it.
Our CEO was a hands-on leader, charging down hallways, popping alarmingly ‘round corners, tie off, jacket tossed, sleeves rolled up, revealing his tank corps tattoo.
“There’s Thomas! First in, last out! He works longer than I do!” he’d shout, trailing dust. Gladhand now for fate awaits you, bourgeoise wrecker, I’d think. Yet I loved him, as we all did. But there’s no question, despite bonhomie, that he had no idea what I did. And why the heck should he?
When time came to replace me, it suddenly mattered. That morning note was square one on the board of a game played for money. I’m not C-suite material – I admit, I’m not sure where this term even originates – but losing one shlub could derail a department. My job was humble, yet it influenced inputs vital to everyone’s performance. The dangers only get worse as you rise up the pyramid.
I saw the crisis coming – the silent one, Moscow 2012. Investors love emerging markets, until they start nipping the hands that feed them, and Russia has bear teeth. I took early steps, found a Singapore job, pulled the rug from under my colleagues. It was OK, though, because I’d prepared a succession plan.
I still have it: twelve pages of instructions. It covers all duties, the glitches and fixes. Training my replacement involved leaving him alone with the guide, while I took long liquid lunches. It’s really the best way.
Moscow is my true hometown and I loved that job, mainly for the team. I’m glad I didn’t burn down the joint when I left, like that so-and-so-you-know-who, as my father would word it, did in 1812. If you must leave a job, on your brogues or your back, your colleagues’ eyes should shed tears, not red rays of rage.
I was an editor; think what happens when the chief flees Mission Control at Baikonur Cosmodrome – or your iced latte startup. Given what we’ve learned this last year, I hope your company has a good succession plan in place. If not, professionals are ready to assist. It’s a smart way to proceed, and even if your firm has a scheme, let the pros give it a look. Objective eyes are wise.