Nothing Succeeds Like Succession Planning

New UPS CIO Dave Barnes is the latest product of a culture that values succession planning.

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One sticky point in succession planning is how early executives should let a likely successor know that he is the chosen one, and whether they make it public knowledge. Rothwell says companies usually don't tell successors early because they want to avoid the "crowned prince" syndrome. "Companies worry [the successor] will kick up his feet and relax," Rothwell says. Also, if a headhunter gets wind that a successor has been named, the competition "is going to go crazy trying to hire that person away, and they'll bid up his wages," he says. Executive recruiter Marino confirms that. "You're an A-player, and that makes you attractive to other companies," he says.

Yet if executives don't tell their successors, then they risk losing the star players. "The real question is, How do we tell them without making it sound like a verbal contract regardless of business conditions?" Rothwell says. He advises that companies do a preemptive strike against talent loss by giving those people plenty of reasons to stay—without promising them a promotion.

Barnes says he didn't know for certain who the other CIO candidates were or that he got the job until the Christmas Eve meeting with Eskew. "You know you are at a company where they are grooming a certain number of people for a job," Barnes says. "But there's never a person for a job."

Lacy says he gave the other candidates opportunities too. "The understanding is that you always have more than one person; you never put all your eggs in one basket," he says. Whether to tell or not to tell did concern him. "You struggle on both sides of the equation because if something caused you to feel that you made a mistake [with a successor], and you've already made it public knowledge, do you go through with it? Or do you say, I made a mistake, and back up?" Lacy asks.

When Succession Planning Doesn't Work

There are plenty of cautionary tales of companies that hired an outsider executive who couldn't fit the company culture—as Exhibit A, see Hewlett-Packard and Carly Fiorina. Tales from succession planning failures are harder to come by, but there are mistakes to avoid. The cloning syndrome is one of the most obvious. "It's a well-known bias that we tend to pick people who are like ourselves," says Rothwell. "The clone of the incumbent may be a mistake because the company needs to move in a new direction."

Barnes and Lacy, in fact, do overlap in their management skills and adherence to UPS business principles—by about 50 percent, in their mutual estimation. But that's where the comparisons end. "He's not a clone of me," Lacy says. Their personality differences are easy to spot. Lacy was a finance person first and a technologist second, and a "law and order" manager uncomfortable with public speaking. He was known for getting the job done. Barnes is more comfortable in the technology area (though he does have some finance chops). Lacy calls Barnes more of a visionary and a bit more polished. For example, he doesn't mind talking to the media.

But as Soupata points out, UPS avoids cloning primarily because it puts the most stake in what Eskew and the management committee have to say about a candidate whom they have watched for many years. "The person who is retiring should almost have the least amount of input because he's not going to be here," she says. Adds Lacy: "The crown comes because

Another famous mistake in succession planning, says Rothwell, is to assume that a good track record at one level will guarantee a good outcome at the next level. Rothwell advises that companies study the competencies and personality characteristics required of job roles at each level. But because such studies are time-consuming and expensive, they are often rushed and done incorrectly, he says.

For his part, Eskew doesn't seem concerned that Barnes won't be able to handle the CIO job. "In Dave's case, the technology piece—he's done all that. The leadership—he's done all that. It is the management committee that is new to him," Eskew says. "But you take your bets and put Dave in place."

There are cases when companies should actively venture outside for new executives, says Heidrick & Struggles' Marino. "When companies are changing their business model in a dramatic way, they may want to look to other industries," he says. For example, companies that are concerned about supply chain issues, product flow or distribution—but don't have that expertise in-house—should look outside for new hires.

UPS doesn't often feel the need to recruit elsewhere at the executive level because of its ingrained succession processes and demanding culture. "Occasionally we ask ourselves, Is there reason to go outside?" Eskew says. Soupata says that UPS has recently made more midlevel hires from outside the company, especially in IT. "We have more disciplines now, and we need more expertise," she says. But at the boardroom level, not much has changed, nor probably will. Of the top 12 executives at UPS, 11 of them have been wearing brown their entire careers, and the one who did come from outside (CFO D. Scott Davis) joined when UPS acquired his company in 1986.

A final key to UPS's succession planning success is the impression that UPS executives like to have of themselves as typical, everyday workers. "This is not a company of superstars," Eskew says. Succession planning, say UPSers, is a key element of being able to discover who the next nonsuperstar leader is going to be. As Barnes settles into his new office on the fourth floor, he doesn't have much time to sit back and appreciate his new digs. Just a month after his appointment, it was already time to start thinking about his own succession plan. "It never stops," he says.

Copyright © 2005 IDG Communications, Inc.

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