Page 198 - DMGT205_SALES_MANAGEMENT

Sales Management

Notes 15. The basic premise of CRM is to offer superior value to:
(a) Clients (b) Employee
(c) Company (d) Customers

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Case Study CEOs under Fire

The five Pitfalls of CEO Succession

IT takes some effort to find CEOs who can make a difference. For a board of directors, no
decision is more momentous. Yet many boards-perhaps even most-do a dismal job of
succession planning. According to one survey, a stunning 45 per cent have no process for
grooming potential CEOs. None! That sets them up for five big pitfalls.

1. Letting the CEO play kingmaker: Though many CEOs relish the process of cultivating
a replacement, to others it's a threatening reminder of their own mortality or,
worse, dispensability. Some develop a knack for driving off any promising heirs.
Others back successors cast in the image of guess-who.
That's why boards shouldn't allow a 'choose your own successor 'approach'. Starting
a minimum of six years in advance, they should demand a list of candidates plus
regular briefings on how those candidates' skills are being tested. As the top
contenders emerge, the outside directors have a duty to meet with them alone for
open ended discussions. The larger goal is to create what former Fannie Mae CEO,
James Johnson, has called a "succession culture." A periodic census of the leadership
pools at all levels will help spot future stars earlier in their careers.

2. Using boiler plate criteria: When headhunters draw up their "specification sheet"
describing the ideal candidate, the language tends to be hopelessly generic. Consider
these passages from two actual spec sheets-one for a software firm, the other for a
manufacturer-and try to guess which is which. One company seeks a "natural leader
and mature communicator" with a "bias for action" and a "solid reputation for
integrity, maturity, and energy." The other is looking for a "proven leader" who is
"decisive, action-oriented, and personable, with the highest integrity and
authenticity." Stumped? (The manufacturer is the first one, the software firm the
second.)
Instead of wasting time with such boiler plate drivel, boards need to drill down to
specifics. If the job opening is in the PC industry, the first question to a candidate
ought to be – How are you going to cope with Michael Dell's attack on the business?
If you can't cope with it, what's plan B? Remember a board's task is to find someone
with the right skills for this job, not someone who meets central casting's idea of a
"leader."

3. Letting headhunters run the show: Executive recruiters can play a valuable role in
assembling a slate of candidates. But boards err by letting them rush the deal to a
conclusion. At one major infrastructure company, the selection committee never
even interviewed a second candidate-a blunder reflected in the company's subsequent
sagging performance.
Contd...

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