Changes at the Top

Business leaders spend time thinking about everything from financing to product lines and marketing. Sometimes, they overlook a key consideration regarding how their companies would proceed without them.

In a recent survey of corporate CEOs by Heidrick & Struggles and the Rock Center for Corporate Governance at Stanford University, more than half of respondents couldn’t name a CEO successor who would step in if the need arises.

“A lot of companies are getting more concerned about succession plans and they should be,” said Elizabeth Rozell, professor of management and director of the Master of Business Administration program for the College of Business Administration at Missouri State University.

Perhaps the most notable local leadership change occurred in November, when Jacquie Dowdy became the CEO of John Q. Hammons Hotels and Resorts, as founder John Q. Hammons, 91, grappled with cardiovascular, lung and pulmonary health issues.

While Hammons Hotels officials did not return calls for this story, company officials have said Dowdy’s ascension is in line with Hammons’ durable power of attorney form.

Dowdy has said her intent is to continue building Hammons’ legacy – the company owns nearly 80 hotels nationwide – though many of the company’s construction projects are on hold pending financing.

Rozell reiterates, however, that planning ahead isn’t something only large corporations should do.

“There can be real consequences in any company,” she said. “A leadership lull can be problematic.

Worst-case scenario
While company leaders may retire or change jobs, a leadership change as the result of illness or death is perhaps the most difficult situation that calls for a succession plan.

Matt Sellmeyer, president of advertising agency Schilling/Sellmeyer & Associates, learned that reality in 2009, when his business partner, Don Schilling, fell ill with cancer and died six months later, on Sept. 2.

Sellmeyer said that although Schilling did not return to work after his diagnosis, up until about a month before he died, everyone thought he would beat the disease and return to work someday.

Sellmeyer and Schilling worked together at another agency before launching their own company in 1992, and they knew what each could bring to the business, Sellmeyer said, noting that he was the creative design artist, and Schilling was the writer who initially focused on sales.

Although Sellmeyer said their roles evolved and became less defined as they built their client list to more than 30, they still brought strengths to certain areas of the business.

“A partnership is a lot like a marriage for it to work,” Sellmeyer said. “You each have different strengths and weaknesses and can bounce ideas off of each other, and then that person is suddenly missing.”

Before Schilling died, the partners had drawn up a formal agreement to ensure that the business would pass to Sellmeyer, but Sellmeyer said that even after a year, there are still some hiccups to the transfer.

“Everything is still not completely taken care of. There are no issues, but all of the i’s weren’t dotted and t’s were not crossed,” he said, adding that there is still some paperwork pending completion.

From a more day-to-day perspective, he said building relationships with clients who mostly worked with Schilling is an ongoing process.

“Don was responsible more for the face-to-face interaction, while I worked more on the back end,” Sellmeyer said. “I’ve in a way had to start from scratch, building a relationship with them I didn’t personally have before.”

As a result, Sellmeyer said he feels some clients are still testing him in the tasks formerly handled by his partner.

Another test comes in the form of the singular responsibility Sellmeyer now feels for his nine employees.

“We’ve never had to lay a person off, but I always had someone else to help bear that responsibility to provide for our employees and their families,” he said. “Now all of that weight is on my shoulders.”

Though he declined to disclose specific figures, Sellmeyer said his agency’s revenues were flat in 2010, and he’s anticipating a slight increase this year.

Identifying new leaders
Even for companies where leaders know a change is coming, planning is an integral step.
At City Utilities of Springfield, for example, General Manager John Twitty is working toward his June retirement.

The Board of Public Utilities has chosen a search committee to lead the hunt for a new general manager, and Twitty said succession planning – and working with the board on its search – is still part of his job.

Right now, the search committee is working to pinpoint desired characteristics for the next general manager and weighing whether to enlist the help of an outside consultant to find its new leader. For any company, identifying potential future leaders can be a good idea, MSU’s Rozell said.

“Companies need to be thinking about (new leaders) and looking throughout their organization (to) nurture leadership skills,” she said.

Twitty said identifying potential leaders, giving assignments out of the comfort zone, encouraging involvement in the community and letting them listen in high level conversations are keys to fostering leaders from within an organization.

 “We have an executive committee of eight people, not including myself, and I think any one of them could be successful as a general manager,” said Twitty. “I don’t expect all of them to apply, but three or four are ready to step in right away if the board asked them to.”

Rozell said formal mentoring programs, as well as leadership classes, conferences and workshops can foster leadership development.

“All companies and organizations have people in their own backyard who could be the successor,” said Rozell. “They just need to be developed.”[[In-content Ad]]