...“Charismatic CEOs and Succession Planning: Not so Charismatic” This article takes a look at CEO succession planning. It essentially focuses on charismatic CEOs and how they chose their successor. This article argues that the approach most charismatic CEOs take is flawed, hence, their successors tend to struggle. Most charismatic CEOs often do not make succession planning a priority until it is too late. In cases where a company puts a process in place, charismatic CEOs tend to be domineering in their choice of a successor. In other cases, charismatic CEOs die on the job, thereby making the transition shaky. Although this article delves into the open literature for insights, it also uses a case study to drive home the point that charismatic CEOs’ approach to succession planning is flawed. The challenges of succession planning are truer today than ever. Indeed, the abrupt departures of two important charismatic CEOs – Charles Prince of Citygroup and Stanley O’Neal of Merrill Lynch – in the aftermath of the 2008 financial crisis, which fetched these firms colossal losses have made scholars to beam their searchlight on this neglected aspect of corporate governance. The nonchalance with the way some CEOs handle the process of succession planning not only puts their companies in jeopardy, but also signposts a major criterion on which outgoing CEOs and their executive board members will be evaluated. Before we proceed, we will issue a caveat: the practice of succession planning...
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...Research Paper BASED ON Career Concerns of Top Executives, Managerial Ownership and CEO Succession By M. Martin Boyer and Hernán Ortiz-Molina Career Concerns of Top Executives, Managerial Ownership and CEO Succession INTRODUCTION This research shows that how a top manager’s stock ownership in the firm affects their chance of appointment in CEO succession events and how non-appointed managers with higher ownership reacts to search of better career opportunities elsewhere following the CEO turnover event. Career concerns induce top managers to take costly actions that improve their chances of appointment in CEO succession events. This research posits that managerial ownership choices can serve for this purpose. Maintaining larger ownership stakes upon appointment at the CEO position is less costly for more talented managers because they can more profitably run the firm. As a result managers should use their ownership in the firm to signal their ability to the board; and more talented managers should own a larger equity stake in the firm than less talented managers. After developing the conceptual framework in which the ownership decisions of managers with career concerns signal managers’ talent to the board, Researchers derive and empirically test several predictions relating CEO appointment decisions, managerial ownership and executive departure surrounding CEO succession events. The first two predictions follow directly from the intuition that higher insider...
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...Case Overview In September 2010, the business world was shocked by a public boardroom debacle at HSBC. Incumbent Chairman, Stephen Green, had announced his pre-mature departure from HSBC ahead of schedule, putting HSBC’s succession plan into the spotlight. An unforeseen and public power struggle ensued, with speculation as to whether incumbent CEO Michael Geoghegan or one of several other possible candidates would get the top job. The chaotic succession process undermined HSBC’s stellar reputation for smooth management succession, and damaged the credibility of the board. The objective of this case is to allow a discussion of issues such as the importance of board and senior management succession planning and what it entails, the difference between a Chairman’s and CEO’s roles, attributes of a good Chairman, and whether former senior executives should become board chairmen. HSBC: A Model of Smooth Succession HSBC has a long history of smooth board and senior management succession underpinned by clear succession plans. Regular review of these plans by independent non-executive directors also serves to strengthen its robustness. This is the abridged version of a case prepared by Apple Goh, Chidambara Thanu, Mabel Koh, Lew Karxieu, Oh Kai Li and Song Huizhen under the supervision of Professor Mak Yuen Teen and Dr Vincent Chen Yu- Shen. The case was developed from published sources solely for class discussion and is not intended to serve as illustrations of effective or ineffective...
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...Module 3 - Case Mgt 401 Trident University Module 3 - Case Mgt 401 IS CEO Meg Whiteman an example of internal or external succession at Hewlett-Packard and why? CEO Meg Whitman is an example of external succession at Hewlett-Packard. Hewlett-Packard went in search of a new CEO outside of the organization as a reaction to then CEO Leo Apotheker’s struggle to keep the $ 9.5 billion organization competitive, and a stock plummet of 47 percent. (Levy & Kucera, 2011) I venture to guess that Hewlett-Packard’s board was banking on Whitman using her proven talent as CEO of EBay Inc. to expose Hewlett-Packard to fresh management methodologies, systems, and approaches that differ from those used internally. (Sullivan, 2005) What happended at HP under the leadership of Leo Apotheker? Leo Apotheker was replaced after only eleven months as Hewlett-Packard’s CEO. Apotheker was the former head of European software giant SAP and was hired by Hewlett-Packard, one of the United States’ predominate hardware companies. HP’s software business made up around 2% of the company’s annual $125 billon revenue. (Goldman, 2011) Apotheker unsuccessfully tried to shift Hewlett-Packard’s culture from a hardware company to a more profitable software business. He knew and was successful in the software business and couldn’t make the transition to HP’s business plan. He made poor leadership choice and was stubborn about acquisitions, like Palm and Autonomy. By the end of tenure he wanted to...
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...Succession Plan Risks HRM 420 Mr. Cardillo January 25, 2016 Quest Diagnostics Succession planning is "a strategy for passing each key leadership role within a company to someone else in such a way that the company continues to operate after the incumbent leader is no longer in control" (Investopedia, 2016). Quest Diagnostics is "passionate about developing innovative, ground-breaking tests, products and tools to enhance patient care, provide value to our clients, and transform information into knowledge and insights" (Quest Diagnostics, 2000-2015). Due to the commitment to its customers and company a succession plan must be in place to avoid any interruptions during transition periods. Like all plans, a succession plan also runs risks; however, the following succession plan for Quest diagnostics will consider vacancy, readiness, and transition risks for the next President and Chief Executive Officer. It will also consider internal candidates and external candidates for the positions that need filling. Vacancy Quest Diagnostics needs to have a succession plan set in place in case the current the current President and CEO of the company retires or resigns. The current President and Chief Executive Officer is Steve Rusckowski. He is currently making "$9,266,835 in total compensation." (Salary.com) Steve is only 57 years old which means that in eight years, he will be at retiring age. Quest Diagnostics needs to plan ahead in case he makes an early retirement. ...
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...Succession management plans are valid in all types of businesses (corporate, family business, small business) and is critical to the effective functioning and internal alignment of an organization for retaining employees, ensuring that critical tasks are completed, and helping the organization fill vacant positions more quickly and efficiently. There are several major benefits of implementing a succession management process. First, succession management allows for an organization to respond quickly and stay on target amidst change or turmoil such as a drastic and sudden change in the economy or business cycle. For example, if a significant change in the Canadian dollar appears quickly, with an effective succession management plan in place, the company is able to take appropriate action quickly to ensure the stability of the company regardless of any external factors that could potentially take a significant toll on the organization. Secondly, by having a plan in place it creates smooth, internal transition of staff, allowing the organization to save both time and money. By putting in a succession management plan, a company will be able to support new organizational structures and flexibility by providing back up for various positions and removing stress from one particular employee, such as having a program that involves employee rotation. Fourthly, succession plans help to develop employees for new opportunities and in turn giving them the required skills to increase...
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...1. Outline the major benefits of implementing a succession management process. Succession management programs are used to identify individual employees who have the skill and ability to assume fundamental roles within the employing organization and prepare them for positions if and when they become available, do to uncontrollable situations (1). Otherwise a succession management program can ensure a smooth transition of power under normal circumstances (4). A succession management program can identify and replace a vital member of an organization quickly and effectively. Without a succession management program in effect, it can take anywhere between 6 months to 2 years to replace a key employee and therefor decrease the operating performance of the company producing a negative effect on the organization for years following the replacement. Here are a few reasons why an organization should ensure they have a succession management program in effect as outlined in course text (2): 1. Provide increased opportunities for high-potential workers. 2. Identify replacement needs as a means of targeting necessary training, employee education, and employee development. 3. Increase the talent pool of promotable employees. 4. Contribute to implementing the organization’s strategic business plans. 5. Help individuals realize their career plans within the organization. 6. Tap the potential for intellectual capital in the organization. 7. Encourage...
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...emeraldinsight.com/0262-1711.htm Integrating leadership development and succession planning best practices Kevin S. Groves College of Business and Economics, California State University, Los Angeles, California, USA Abstract Purpose – Organizations often fail to utilize managerial personnel effectively for leadership development and succession planning systems, and many execute these critical practices through separate human resource functions that shift the responsibility for leadership development away from line managers. The purpose of this article is to present a best practices model for optimal development of the leadership pipeline and a series of practical recommendations for organizations. Design/methodology/approach – A group of 30 CEOs and human resource executives across 15 best practice organizations were asked via semi-structured interviews to describe the content and delivery of their respective organizations’ leadership development and succession planning practices. Findings – Analysis of interview data indicated that best practice organizations effectively integrate leadership development and succession planning systems by fully utilizing managerial personnel in developing the organization’s mentor network, identifying and codifying high potential employees, developing high potentials via project-based learning experiences and manager-facilitated workshops, establishing a flexible and fluid succession planning process, creating organization-wide forums for exposing...
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...Are we on the brink of a Leadership Crisis? Daily news has been flooded with high profile CEO exits from large companies. While some of these exits were planned, most of the CEO turnover is abrupt, attributed to unsatisfactory company performance. Hyper competition and shareholders increasing focus on short term gains have made the CEO job tougher than ever before, CEO turnover is on a rise globally. A leader influences company culture and impacts the organizations strategic constituencies that lead to better or worse business performance. Hence, it is strategically important to choose the most competent leader. Companies must have a leadership pipeline in place that is ready and competent to take over the reins when incumbent leaders step down, voluntarily or involuntarily. Insider vs. Outsider? Both insiders and outsiders have strengths and weaknesses. While more firms look outside for hiring CEO’s, research suggests a strong positive correlation between business success and inside leaders. Insiders have strong business knowledge and industry expertise while outsiders bring in fresh perspectives. Leadership skills require an ability to leverage core competencies and develop internal capabilities. To do that, extensive inside knowledge is a prerequisite along with a greater awareness to the operating environment. The goal for businesses then is to develop inside-outsiders. Inside leaders groomed to look at organizations from an outside viewpoint. Inside-outsiders...
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...Succession Management This year, Jim Pender, the President and CEO of Stonewall Industries, is set to retire after 40 years of service with the company. The executives from the new parent company, US Corp, have absolutely no idea who should replace Pender as President. All of the current VPs have various strengths and weaknesses and no one on the team seems to be viewed as the heir apparent. The internal candidates for the position would be VP Manufacturing, McBain; VP Mining, Khan; VP HR, Byer; VP Finance, Ho; and VP Marketing, Krajevski. Jones, VP of the Plastics Division is not viewed as a candidate because he doesn’t have gypsum wallboard experience. All of the candidates are viewed as ‘competent’ in their current roles. Byer and Ho are viewed as ‘exceptional’. Neither executive, however, has direct line management experience in the manufacture of gypsum wallboard. One of the key problems that the organization faces is that there is no formal performance management system in place, let alone a succession management process. Your group has been hired as consultants to US Corp with the mandate to: a. determine if there is a viable internal candidate for the President and CEO position within the Stonewall organization, and b. develop and implement a succession management process so that Stonewall will not find itself in this position again. Questions 1. Outline the major benefits of implementing a succession management process. (10 marks) - Succession...
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...APPLE, Inc. CASE STUDY WHATIS STRATEGIC MANAGEMENT AND WHY IS IT CRITICAL TO THE SUCCESS OF AN ORGANIZATION IN MEETING ITS GOALS AND MISSION? Regiane Velez Kaplan University GB520: Strategic Human Resources Management APPLE, Inc. What is Strategic Management, and why is it critical to the success of an organization in meeting its goals and mission? What is Strategic Management? The concept of "strategy" is based in a war scenario, the constant fights and battles over the centuries have caused the military to start thinking before you act- the battles are analyzed and planned in advance. In General Sun Tzu’s words: “The general who wins a battle makes many calculations in his temple ere the battle is fought.” When translating it to today’s Strategic Management’s words, it means: “Those companies and individuals who win in the business world make much calculation, planning and deliberations on their strategy and plans. Those who plan less have lower chance of success, much less those who don’t plan anything at all.” (Soo, 2011). Developing a Strategic Planning increases the likelihood that in the future, the organization will be in the right place at the right time. Strategic Management collects all activities and processes utilized by an organization in order to align resources and actions with mission, vision and strategy throughout the organization. When applied correctly, strategic management activities...
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...Question #1 The purpose of developing and maintaining a succession management process is to have a safety net for the company to fall back on, in situations similar to the one faced by Stonewall Industries. The succession management process is cultivated by the HR department and consists of qualified, trained candidates seeking a position within the company. The degree to which the risk management of the succession pool embodies is determined by the sufficient funds used to maintain it. Since the talent is being drawn from groups of individuals who are being sent on call in a moment’s notice, monetary compensation is expected. The overall ideal of having a succession management system in place is to enable a faster response to the impending need for an executive staff member. Benefits of implementing a succession management process are: 1. Improve internal candidate pools. 2. Assure business continuity. 3. Reduce skill gaps. 4. Retain employees. 5. Help individuals realize their career plans within the organization. 6. Develop leaders more quickly. 7. Encourage the advancement of diverse groups. 8. Improve employees’ ability to respond to changing environmental demands. Question #2 Creation of elite corps of employees: * Managers fear that publicly identifying those who will be promoted, a cadre of “crown princes” will be created. * They may coast through their job, they know that their contributions have already been recognized and the reward is in the...
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...APPLE, Inc. What is Strategic Management, and why is it critical to the success of an organization in meeting its goals and mission? What is Strategic Management? The concept of "strategy" is based in a war scenario, the constant fights and battles over the centuries have caused the military to start thinking before you act- the battles are analyzed and planned in advance. In General Sun Tzu’s words: “The general who wins a battle makes many calculations in his temple ere the battle is fought.” When translating it to today’s Strategic Management’s words, it means: “Those companies and individuals who win in the business world make much calculation, planning and deliberations on their strategy and plans. Those who plan less have lower chance of success, much less those who don’t plan anything at all.” (Soo, 2011). Developing a Strategic Planning increases the likelihood that in the future, the organization will be in the right place at the right time. Strategic Management collects all activities and processes utilized by an organization in order to align resources and actions with mission, vision and strategy throughout the organization. When applied correctly, strategic management activities transform the vision into performance and enable the plan to evolve and grow as requirements and other circumstances change. Apple – Both sides of the fruit The right side In researching the Apple’s success, we can find a myriad of reports appreciating this fact....
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...on Strategic Vision • Favored Modes of Successor Preparation by CEOs of Family and Nonfamily Firms by Mark K. Fiegener, Bonnie M. Brown, Russ Alan Prince, and Karen Made File Abstract How do CEOs of small businesses help their successors develop the strategic knowledge and insight needed to run the company? This study compared the ratings of 236 family-firm CEOs with those of 121 nonfamilyfirm CEOs regarding the relative importance of different modes of successor preparation. The results show significant differences between the family and non-family sub-samples in 15 of the 19 forms of preparation studied. In general, CEOs of non-family firms tend to favor successor preparations that are "outsourced" rather than internalized within the company. CEOs of family firms take a more direct approach to preparing successors — one that places a premium on developing personal relationships between CEO and successor, and between the successor and the stakeholders ofthe business. Perhaps no recurring event in the life of an organization is more critical than the transfer of power and authority from the incumbent CEO to a successor. Organizations are especially susceptible to loss of vision and purpose during periods of CEO transition, as the leaders who helped shape the vision are replaced by others who may not share the same values and abilities. Although the timing of a transition may be a surprise (as when the CEO suffers an unexpected illness or injury), the fact that it is inevitable...
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...Integer Components Executive Development Final Paper Christopher E. Flores Management Principles December 14, 2013 Table of Contents: Launching Integer Components Management Training Program…………………3 Grooming Candidate CEOs……………………………………………………………7 Choosing a Successor CEO………………………………………………………….11 Launching Integer Components Management Training Program This group of fifteen cohorts should have strong conceptual skills to move to the ranks of senior management. These are different from technical skills and human skills and include creativity, formulating abstractions, analyzing complex situations, understanding issues and solving problems. The individuals in this cohort must have excellent cognitive abilities that allow them to examine complex issues to devise specific and effective courses of action. They should have the ability to develop creative strategies by effectively seeing the organization as a whole, understanding the relationships among the various subunits, and view the organization in relation to its environment. He or she should be adept at articulating the goals of Integer Components into words and expressing the economic principles that affect the company. Comfort with talking about the ideas that shape the company and the intricacies involved is something they will be doing on a regular basis. Working with abstractions and hypothetical/what-if scenarios are aspects of this skill set. Without strong conceptual skills, they could potentially...
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