8/13/2019 The Executive-Succession Train Wreck

1/2

The Executive-Succession Train Wreck

Jim Johnston has been a C-suite adviser and an interim CFO for 25 years, and he agreed topresent on succession planning at this weeks CFO !laybook for !rivate Companiesconference here" #ut hes not comfortable with the term succession planning"

$t implies that you have an organi%ed approach, great foresight, well-groomed internal

candidates, and a time line like &eneral 'lectric does for its high-profile C'O succession,(Johnston said in his speech" #ut many companies, especially the small and midsi%e ones thatwere represented in the packed conference room at the J) *arriott, have none of thosetraits"

CFOs, he said, are well positioned to observe the +slow-motion train wreck( caused by pooreecutive-succession management and bad hirings"

e listed the most common types of train wrecks.

/elay in replacing an ineffective key eecutive, sometimes for years"

iring an eecutive who fits the past needs of the business, not the future ones, or whofits in the wrong future"

0electing from a pool of candidates thats tiny because its limited to people who arefamiliar and have been loyal, or who 1ust happened to be on the radar at themoment"

aunching a person into a key 1ob without a clear understanding of what he or she coulddeliver"

iring the wrong eecutive can be a catastrophically wasted opportunity" +3ecogni%e thateach time your company fills a spot on the senior team, its a moment for creating the futureof your company,( Johnston said" Comparing such wastefulness to a chess game, he recalled

a friend who was a super chess player telling him, +4here are people in the world who canbeat me, but $ can beat absolutely anyone who puts two moves to waste"

4he need or opportunity to hire could arise from a retirement, resignation, or firing" #ut it ismuch more likely to arise from changes in the business"

Johnston related an eperience in which he was hired to find a CFO for a company that didntyet eist 6five independent mattress manufacturers were rolling their businesses together7"+4hey didnt agree on centrali%ed versus decentrali%ed purchasing, accounting, orproduction scheduling" 4hey didnt agree on financing strategy or eit" 0o they necessarilyhad many conflicting ideas of the CFO role,( he said" $t was a good thing Johnston spoke tothe five C'Os before finding candidates" 8nd, he noted, similar scenarios are not uni9ue tobrand-new companies" 4here is often a lack of clarity among company leadership on the

type of CFO needed"

4here are four common symptoms displayed by eecutives who are not the right fit" Oneincludes avoidance, denial, and delay" 8voidance is a coping strategy for staying inside yourcomfort %one while your world is crashing down,( Johnston said"

8nother symptom. a failure to delegate" +)atch out for the eecutive whos alwaysoverworked, always has his head down, and is lost in the weeds,( he said" 8mong CFOs, thisis probably the most common symptom of being in over ones head"

8/13/2019 The Executive-Succession Train Wreck

2/2

Once, Johnston was hired to assess the performance of a CFO whom the C'O was frustratedwith and who also was insisting on a big pay hike" Johnston discovered that the finance chiefwas completely buried in controller work most of the time" +$t was by design" eintentionally had a weak team" 4his CFO was candid with me. he was afraid a morecompetent staff would make him redundant"

4he third symptom. being always reactive and never proactive" $ts not good enough to 1ustreact to what lands on your desk,( Johnson said" +8fter all, that stuff comes from thebusinesss past and present" 4o build a future, an eecutive must go actively looking for it"

4his is true for every senior role"(

!erhaps the most obvious symptom is that the eecutive has simply checked out" !erhapshe or she was very capable but has become nonresponsive: absent physically or mentally: orotherwise distracted, disabled, or in decline"

)hen these symptoms crop up with regard to a key role, there are usually badconse9uences. competitors will pass you by: youll fail to enter growing markets and rideshrinking markets downward: while technology and methodologies move on, youll remainstuck: and your best people at all levels will start to bail out"

$gnoring these symptoms is disastrous,( Johnston says" +8re they debits or credits; re9uires eactly the strengths a CFO should have in moreabundance than any other eecutive"

Source: CFO.com