Succession Planning a Must
Should the unthinkable happen to its top executive, AmeriSource Bergen is ready. The $2 billion firm has prepared for what it calls the "train wreck" scenario, in which its CEO is killed or incapacitated. It even has the press release ready.
While planning for one's own demise is a task that no one is likely to enjoy, an organization's top officials owe it to their stakeholders to do just that.
"We want to give the financial community and our 1,400 employees the comfort that everything is under control, we have a plan, and now we simply have to execute," AmeriSource CEO R. David Yost (pictured at right) said while appearing at LeBow College of Business' Feb. 22 Inside the Boardroom panel discussion: Who's on First? Corporate Succession for Directors.
More than 100 business leaders came to the Union League in Philadelphia for the third event in the exclusive series for C-level executives or board members organized by Drexel University's LeBow College of Business.
“Effective governance involves much more than operating within the law,” said LeBow College Dean George P. Tsetsekos. “It requires that a comprehensive system be set up to protect the interests of an organization’s many stakeholders. Today’s event focuses on a vital element in any well structured organization – a succession plan for key executives that considers every scenario.”
Appearing alongside Yost were Jon A. Boscia, CEO and chairman of Lincoln National Corporation, a $125 billion company; Kevin P. Dowd, CEO and chairman of privately held Sonitrol, Inc.; and Theodore L. Dysart, managing partner of the Americas for Heidrick & Struggles.
While serving as moderator, Dysart cited a 2004 survey by his firm that indicated succession planning is an area in which many companies can greatly improve. Forty-seven percent of board members surveyed said they had insufficient "bench strength" and just 27 percent thought they had the right leaders positioned for succession.
Regardless of whether an organization is for-profit or nonprofit, public or private, succession planning raises a host of issues, including whether to go with an inside or outside candidate, and how to keep a former leader from impeding the effectiveness of their successor.
Some best practices for succession planning suggested by the panelists:
• Institute a mandatory retirement age and try not to have a CEO serve more than 10 years
• Do not allow former CEOs to sit on the board after retiring
• Have term limits for the chair positions of board committees, and do not allow former chairs to continue to serve in the same committee
• Start succession planning well in advance
• Identify and cultivate talented employees who have the potential to take top positions
