Succession Planning: It’s Good to Do, So Why Do So Many Do it So Badly?

Succession planning is one of those activities that lots of organizations talk about but few seem to do very well.

I was thinking about this last week when reading a press release about how the Board of Directors of the Men’s Wearhouse had just “approved a succession plan which will bring about an orderly transition of executive leadership during fiscal 2011.”

You probably know the Men’s Wearhouse – you may have seen CEO George Zimmer in the TV commercials promising that “you’re gonna like the way you look; I guarantee it” – but the company is more than that. It was named one of Fortune’s Top 100 companies to work for in 2010, and Zimmer, his executive team, and the Board all took pay cuts last year, sending a strong message to both employees and shareholders alike that they aren’t immune from what is going on in the world.

What Men’s Wearhouse said that makes sense

Here’s what the Men’s Wearhouse press release said that got my attention:

The Men’s Wearhouse (NYSE: MW)… board of directors has approved a succession plan which will bring about an orderly transition of executive leadership during fiscal 2011. The board emphasized that the executive leadership team, which has successfully managed the 37 year-old company through multiple economic cycles, will remain intact and will continue to exemplify the unique culture of Men’s Wearhouse.

The succession plan envisions that Douglas S. Ewert, the president and chief operating officer …will succeed George Zimmer, Men’s Wearhouse’s founder and chairman of the board and chief executive officer, as president and chief executive officer of the Company. Under the plan, Ewert, age 47, will become the president and chief executive officer in mid 2011, and Zimmer, age 62, will continue as executive chairman of the board of directors. Zimmer will assist Ewert in matters related to the strategic direction of the Company and he will continue to be involved in the Company’s marketing activities. Zimmer will remain a pivotal architect of the Company’s customer and employee oriented culture. After Ewert’s transition to president and chief executive officer, the chief operating officer position will not be filled…

When Ewert joined Men’s Wearhouse in 1995, the company operated 278 stores. In 1999, Ewert became vice president of merchandising and, in 2000, senior vice president of merchandising. He was promoted again in 2001 to become executive vice president and general merchandise manager of all retail brands. He was named executive vice president and chief operating officer in 2005, and advanced to president and chief operating officer of the Company in 2008.”

Three things to remember

Let’s deconstruct that for a moment, shall we?

The founder and CEO of Men’s Wearhouse is stepping down voluntarily after 37 years and handing over reins of the company to his veteran No. 2 executive. No one is forcing him out, but by doing this Zimmer helps to ensure that the company’s longtime executive leadership team and unique employee-oriented culture will remain intact. This is what separates Men’s Wearhouse from, say, Viacom or Egypt, where long-time leaders who have hung around for way too long don’t seem to know when it’s time to go.
The new CEO is the current president and COO, jobs he has held for the last three of his 16 years with the company. He’s also run merchandising, served as executive VP and general merchandise manager for all of the company’s retail brands, and is fully immersed in the inner workings of the organization. Seems like a good guy to have waiting in the wings, no?
The transition will take place soon, but not too soon – by the middle of 2011. Founder/current CEO Zimmer will stick around as executive chairman and continue to work with new CEO Ewert on the strategic direction of Men’s Wearhouse, and, will continue to be involved in marketing (more TV commercials I imagine, keeping a familiar face out front). Plus, everyone who works for or deals with the company has a handful of months to get used to the idea. It’s not happening slam-bam next week or next month, but it won’t be dragged out until 2012 or later, either.

So, what’s wrong with this picture?

How about … nothing. It seems to be a business school-example of how to do succession planning right.

That again raises the logical question: if Men’s Wearhouse can do it so well, why can’t many other companies and organizations follow suit?

Marshall Goldsmith blogged about the dangers of poor succession planning last year over at the Harvard Business Review when he wrote:

Many of the CEOs we talk with these days express concern about the lack of bench strength in their companies. They are very worried that they lack sufficient “ready now” candidates to replace planned & unplanned losses of key leaders. As a result, the future continuity and performance of the business is at risk. These same executives also tell us that their companies have been doing succession planning for years. On average, the executives we meet give their succession planning process a grade of C+ and they give their execution of succession plans a grade of D. If you are among the companies who are not happy with the impact of your succession planning process, you have plenty of company.”

Succession planning usually sucks — even at SHRM

Wow; it’s a terribly telling statement about the state of succession planning in American business today when executives only give their succession planning process a C+ grade — and the execution of such plans a D. Do I need to say it? Yes, succession planning in America really sucks.

SHRM — the Society for Human Resource Management — is going through this right now as they look for their second CEO in a three-year period. Why the largest human resource organization in the world, as they proudly and frequently tout themselves, doesn’t have a successor CEO waiting in the wings is beyond me — sort of like Egypt not having a vice president until last weekend, I suppose.

Of course, SHRM did have a COO waiting in the wings — China Gorman — when longtime SHRM executive and CEO Sue Meisinger retired back in mid 2008. China might have made a fine CEO for SHRM (she even served as acting CEO), but we’ll never know for sure because she got passed over when Lon O’Neil was hired from Kaiser Permanente to replace Meisinger.

Gorman then bounced into a different position during the last SHRM reorganization, and she left the organization some months later. SHRM was then left with no successor CEO waiting in the wings, and of course, that became painfully apparent when short-timer CEO O’Neil hit the door and departed less than three months after Gorman (and after only two years on the job).

The SHRM CEO search goes on, of course, but the SHRM Board should be terribly embarrassed (unless they are beyond embarrassment) for showing for the second time in three years just how wretched succession planning is at the world’s largest HR organization. But of course, in that regard SHRM operates just as badly as the rest of the business world that Marshall Goldsmith writes about.

Yes, SHRM could learn a lot from the Men’s Wearhouse, but so could most of the American business community. It’s like columnist Scott Herold of the San Jose Mercury News put it last week when the San Jose city manager opted to promote the acting chief of police into the top job rather than go outside to bring in the current Oakland chief instead.

Herold wrote: “Let’s repeat this slowly. When you have a qualified candidate already, forget the national search. Sure, you can pay a few thousand bucks for political solace. But in any police department worth its salt, the best candidate often occupies an office down the hall.”

Yes, if you are really doing succession planning right, the best candidate SHOULD occupy an office just down the hall. So, let’s repeat this slowly: Men’s Wearhouse and smart, forward-thinking organizations get that. SHRM and most of our business community don’t.

http://www.youtube.com/watch?v=w0J80ppIGWo