News Flash: No CEO lasts Forever

There’s more than one lesson to be learned from the Mark Hurd/HP fiasco. In addition to sending Mr. Hurd packing with a dump truck full of cash, the company also started scrambling to find a new CEO.

Over at Johnson and Johnson there’s a slightly different situation. In an article titled “J and J Chief Tends Corporate Wounds,” the Wall Street Journal described it this way.

“So far, it doesn’t appear that the recalls will shorten Mr. Weldon’s tenure as CEO, said a person familiar with the situation. J&J board members will probably ask Mr. Weldon “to stick around and fix” the problems that have triggered the recalls, the informed individual said.

Another person close to the situation said Mr. Weldon wouldn’t want to leave J&J in the lurch. ‘There is a kind of competitive streak in him, and he feels he needs to fix’ the situation, this person said.

Mr. Weldon also repeatedly has told fellow directors that his potential internal successors weren’t ready to take over the corner office, according to this second person.”

Read that last sentence again. No one is ready? Even worse, no one is holding either Mr. Weldon or the board responsible for that shocking fact.

There’s no excuse for not having a successor or two or three available. And yet the situation at HP and Johnson and Johnson is not rare.

In 2008, there were 80 new CEOs at Fortune 1000 companies. Forty-four of them were promoted from inside the company. The rest, almost half of the total, came from outside. The Institute for Corporate Productivity found that less than half of the 275 companies they polled had a formal succession plan.

This is crazy. Every CEO leaves the job. Some fail. Some retire. Some die. Some leave to “spend more time with the family” or to “pursue other interests.” Someday you have to fill the job.

Doesn’t it just make good business sense to prepare for that day? It’s not impossible. Companies like GE, Proctor and Gamble, Xerox, Wal-Mart, and DuPont have all managed the feat.

Creating a succession plan that works is a bit like planting a tree. It takes a while to bear fruit.

A good succession plan should include hiring people you think may turn out to be capable of running the company one day. They should receive training and development opportunities. Top management should be ferociously involved in the evaluation and development of future senior executives.

It’s not easy. It’s also not quick. But it does seem to be the way great companies are grown.

Wally Bock

Wally Bock is a coach, a writer and President of Three Star Leadership.