Monday, August 16, 2010

Hit by a Buss

Any discussion of CEO succession planning has to take into account the 'hit by a bus' scenario — the sudden death or disability of the leader.

It is uncomfortable for the CEO and the board to face concerns about mortality. That's why a lot of boards don't do it. Last year the National Association of Corporate Directors reported that 44% of directors it surveyed at public companies said their boards have no succession plan in place for when the CEO leaves. To which leadership guru Marshall Goldsmith rightly reacted: "What kind of message does that send out? How about chaos, disorganization, and lack of preparedness?"

Crafting a succession scenario is especially hard to do when the leader is relatively youthful and full of energy and vitality. When he or she is at the peak of their potential, just getting underway with an organizational revival or, having done the heavy lifting of a turnaround and repositioning, ready to roll it out for greater gains to come, taking the board and shareholders along for a profitable ride.

But preparing for the unexpected must be done. The advice is familiar but that doesn't make it any less fundamental. Or timeless, going back to the Good Book: "We know not the time nor the hour. . . ."

We're obviously thinking of Mark Hurd with these comments. His sudden, shocking removal from office following ramifications of a relationship with a marketing rep for the company gives an electrifying twist to the 'hit by a bus' scenario.

Let's call it 'hit by a buss' — to distinguish moral hazards from mortality hazards.

Both concerns — as improbable as they are to ponder — must drive a new impetus to nail down a succession plan. That's the clear and compelling lesson for all boards coming out of the trouble at HP.