Boards in Crisis &Governance &Risk Eleanor Bloxham on 22 Dec 2010 12:54 am
Who’s in Charge?
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Earlier today Fortune posted an article I wrote on board information and shareholder oversight.
http://management.fortune.cnn.com/2010/12/21/who-is-minding-the-j-crew-store/?section=magazines_fortune
The imperial CEO is not dead.
According to a study just released today by Korn Ferry (see http://www.kornferryinstitute.com/files/pdf1/Dec_2010_E-Quiz_results.pdf) while almost all (98%) corporate leaders think CEO succession planning is important, 2/3 (65%) say they don’t have a CEO succession plan in place. (And of course, not everyone who says they have a plan will have an effective plan.)
As I noted in my Fortune article, one of the early warning signals was a 65 year old CEO and no mention of a succession plan — or board responsibility for one.
If 2/3 don’t have a CEO succession plan but almost everyone recognizes it is important, who is in charge after all? (Answer: In 2/3 of the cases, not an effective board.)
How important is the CEO? If the CEO is worth millions, what will you do without him? (If the CEO is not worth millions, why are you paying him so much?)
I was asked today to opine on performance measures of board effectiveness. One measure: Do you have an effective, well thought out CEO succession plan? Another: What have you done to ensure that the CEO is not worth too much i.e. that the company will survive and thrive with or without him?
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One Response to “Who’s in Charge?”
on 30 Dec 2010 at 8:09 am 1.Melinda M. Sorensson said …
I read the article a while back. It is very important and wonderfully written.
My son asks me about stocks and corporate leaderships as part of his business education. It brings to mind Steve Jobs and Larry Ellison. I don’t see Steve Jobs having a clear heir apparent. The value of the stocks of his company are completely dependent on him.
This is not a very sound practice, however I assume that someone like him would have someone in mind already.
And then Larry Ellison. I am a great admirer of both Ellison and Jobs and follow their companies, because of them.
The one thing I will always consider brilliant is Ellison’s choice of Safra Katz. It is fantastic, on all levels.
By that choice alone, he has insured the long term stability of his company.