Why so many companies aren't ready when the boss departs
What companies make good examples of succession planning done right?
— Robert Handfield, Raleigh, N.C.
It's sad to say, but your question would be a heck of a lot easier to answer if you had asked for examples of succession planning done wrong. That list keeps getting longer. As we know, Citigroup and Merrill Lynch recently lost their CEOs, and it quickly became obvious that neither company had a successor in the wings. What was less obvious was how such a thing could happen.
Certainly examples of outstanding succession planning exist: Just look at Johnson & Johnson, Goldman Sachs, Microsoft, and Caterpillar. Indeed, research shows that well over 50% of companies promote their CEOs from within. Such companies understand a central tenet of business—that a well-crafted succession plan vastly minimizes disruption when the CEO leaves, expected or not. Imagine what it felt like inside Citi and Merrill in recent weeks, with people, top to bottom, asking themselves, "What will happen to me in this mess?" and "What will the devil-we-don't-know be like?" So long, productivity! In-house succession has the added virtue of being cheaper: An outside hire usually requires enough money to fill a Brinks truck.
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