Confront change with solid succession planning. In September, United Holdings Inc. named a new CEO, Oscar Munoz, after its previous CEO resigned, according to the New York Times.
Just over a month later, in mid-October, Munoz suffered a heart attack.
After a few days, United said its general counsel would temporarily fill the position while Munoz, 56, was on medical leave for an undetermined amount of time. (Munoz has since announced plans to return in the first quarter of this year.)
The situation initially triggered a number of questions. Should companies release details about a CEO’s health, or withhold the information due to privacy concerns? (According to the Washington Post, the U.S. Securities and Exchange Commission doesn’t have specific CEO health issue suggestions.) Also: Should organizations’ succession plans include such unexpected scenarios?
United had not ignored succession planning. Its Corporate Governance Guidelines include a section on its succession planning process; the company’s Nominating/Governance Committee is responsible for reviewing corporate succession planning with the CEO and the Chairman of the Board on a periodic basis.
The succession plan guidelines even specifically mention addressing emergency situations “in which the CEO becomes unavailable to serve.” Recommendations for successors are to be provided on an annual basis.
United, however, had a lot on its plate. In July, the airline had to delay nearly 5,000 flights for almost two hours, due to a computer glitch, affecting roughly 400,000 passengers. The company was also still trying to establish joint contracts for flight attendants and mechanics in September 2015, after a lengthy negotiation process. And, according to the New York Times, it was conducting its own investigation in regard to the airline’s relationship to the former Port Authority of New York and New Jersey chairman.
Given Munoz’s relatively recent appointment, according to the Washington Post, the company may not have had a successor/specific succession plan in mind yet.
It’s unlikely most organizations would experience a need for two CEOs in two-month period. That’s not to say, however, that all organizations have a succession plan in place to help them fill key leadership roles, such as the CEO position, even once, if they suddenly need to.
Roughly one-half of business leaders say their organizations do not have a strong pipeline of candidates who’d be ready to assume critical leadership roles. Just 32 percent feel their organizations are doing a good job cultivating leaders.
No matter how calm things seem, ignoring the need for a succession plan is a dangerous proposition.
If you have a succession plan, it’s time to revisit and reinforce it. If you don’t, implementing one can prevent a crisis.
A few succession planning pointers to keep in mind:
- Cultivate internal talent: Less than half of companies that participated in a recent survey conducted by Stanford University and the Institute of Executive Development agreed or strongly agreed that they have a formal process for grooming successors for key leadership roles. Identifying potential C-level candidates years before they’re needed lets you include training and specific experiences in your succession plan to help prepare them for the role.
- Promoting from within can provide a positive retention effect: Succession plans show employees at all levels that with hard work and dedication, they, too, have a chance of rising to the organization’s top positions.
- Build integrated external and internal talent succession pools: Encourage current employees and recruit top candidates at the same time by utilizing a talent program based on ongoing recruitment and development efforts. By reaching out to potential candidates, you’ll be able to gain valuable industry knowledge about salaries, benefits and other information that will help your organization stay competitive in the market. Ongoing efforts to foster internal talent can boost retention and help you offer specific training and mentoring opportunities to develop skill sets your organization needs.
- Make your succession plan public knowledge: Knowing you have a robust succession plan in place—one that includes multiple candidates for key leadership roles for additional safety—can help calm investors’ fears. Forty percent of large corporations disclose their succession plan in their annual report, according to a Conference Board report, which lets investors and others know they’re prepared.
For tips on strengthening your succession planning practices, check out our recent blog posts on building the best mentoring program, addressing generational changes and solving your most critical internal and external talent pool issues.