Archive for February 11, 2009

Succession Planning – Chapter 2!

Each year Fortune Magazine comes out with a list of “Americas Most Admired Companies.” These are companies that are known for their strong records of innovation, leadership and financial strength – characteristics that we could all use more of at the present time.

In the context of succession planning I examined the top 20 companies on this year’s list to see if I would find a pattern of where their CEOs came from. The results are remarkable.

All of these companies except two (Google and 3M) are being run by CEOs that have either founded them or spent most of their career rising through their ranks. The founder-run companies on this list include Apple (in spite of the current leadership issues, the company has been a major success), and Costco. Interestingly, more prominent on the list are companies with CEOs who have many years of experience in positions of increasing responsibility within the organization. Included here are Johnson & Johnson’s CEO William Weldon who started at the company in 1971 and at Proctor and Gamble, Alan Lafley who started there in 1977.

Can this informal, non-statistical assessment be taken to mean anything? While the methodology may not be scientific the results are intuitively sound. CEO’s who rise within a company have experience and detailed knowledge that their outside counterparts do not. They have “lived the organization” and there is no substitute for actual experience. Furthermore, the founder or internally appointed CEO is known to the workforce and in turn knows those he or she must influence. This executive understands the formal sources of power within the company and maybe more significantly, the informal sources of power and how decisions actually get made. Experience within the organization prior to taking the top spot implies an understanding of politics or the lack thereof. A person who has risen in a company has developed a strong commitment to and identification with this company, a factor that surely impacts their success and importantly longetivity in the job. Finally, promoting a CEO from within the ranks of the organization sends a loud and very motivating message that successes are rewarded and accomplishments celebrated.

While there are clearly so many advantages of succession planning, the internally promoted CEO may not always be an option. Nevertheless, it should be a best practice to at least consider this possibility.


February 11, 2009 at 2:26 pm


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