Power Sheet – December 15, 2015
The best leaders have the self-confidence to develop other excellent leaders and to acknowledge publicly, sometimes years in advance, that they will someday leave the scene. It’s remarkable how many CEOs, even those who are grandly successful and widely lauded, just cannot bring themselves to do those things. A notorious example was a long-ago boss of mine, CBS founder and CEO William S. Paley. He had five designated successors, two of whom, John Backe and Arthur Taylor, died recently, and none of whom ever succeeded him. Deeply insecure despite his huge achievements, he couldn’t bear to let go.
Today we see two excellent business leaders who are doing it right. One gets a lot of attention and one doesn’t, but they both deserve study as exemplars of how succession at the top is done.
Wells Fargo CEO John Stumpf and the board last month named Tim Sloan president and COO, positioning him as the clear favorite to succeed Stumpf. That succession may not take place for three years; Stumpf is only 62. He’s telling the world who the next boss is likely to be, while a spokeswoman also noted that “the company’s succession plan does include other viable candidates.” That’s exactly what investors, customers, and employees like to hear. In 2018, when the day comes for Stumpf to step down, no one will bat an eye.
The less visible current example is what’s happening at Exxon Mobil. It’s odd to say that it’s less visible; Exxon is one of the world’s largest companies, far bigger than Wells, with a market cap of $317 billion. But Rex Tillerson, CEO since 2006, doesn’t get much attention and doesn’t want it. Last Friday – the day of the week when you announce things that you don’t intend to attract much notice – he and the board named Darren Woods president and made him a director. Like Stumpf, Tillerson isn’t going anyplace soon; he won’t turn 65 until 2017. He, too, wants the world to know that the company’s leadership is predictable and under control as far as the eye can see.
Seamless transitions don’t just happen. They reflect decades of leadership development, including the increasingly difficult task of holding onto high-potential leaders. Both Woods, 50, and Wells’s Sloan, 55, joined their current employers at about the age of 27. Before their latest promotions, each ran a major part of the business, Woods as chief of Exxon’s refining and chemicals operations, Sloan as head of wholesale banking at Wells. They’re well prepared to take over.
Naming a likely successor well in advance carries at least a couple of advantages that may not be immediately obvious. One is that luring those guys away has suddenly become a lot more difficult or expensive for a competitor to do. Another is that internal anxiety over the identity of the next boss quiets way down. Uncertainty over an organization’s future can drain productivity almost to zero, and while gossip and speculation are eternal, clear succession minimizes them.
The latest moves at Wells Fargo and Exxon illustrate CEO succession done right. Maybe you didn’t even notice them. That’s one sign of how skillful they were.
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