Where the board drives succession planning.

• Author: Carey, Dennis C.
• Position: Hercules Inc.

At Hercules Inc., the philosophy is that strong boards make for strong management teams and solid succession plans.

Our everyday work with boards and on top-level assignments naturally leads to an interest and involvement in the CEO succession planning process. We see the good and the not-as-good: companies that have institutionalized a true and reliable process for developing their own leaders and those that have failed to "grow their own," or decide they need an outsider or different sort of leader for a variety of reasons.

Until recently, CEO succession planning was something of a neglected area of responsibility at many companies. Not unlike individuals - even highly successful ones with significant assets - who procrastinate when it comes to estate planning, succession planning has traditionally been a subject CEOs have postponed confronting. Yet maintaining an uninterrupted flow of leadership remains one of the CEO's most important tasks and is certainly at the top of the board's list of essential duties.

The convergence of a number of factors have led to a growing urgency on the part of CEOs and directors to establish a systematic succession planning process, including:

* Stronger, increasingly outsider-dominated boards that are more often taking the lead in the process on behalf of shareholders.

* The vulnerability of in-the-spotlight public companies that lack a succession plan.

* Such events as the 1996 airplane crash in Bosnia which killed Commerce Secretary Ron Brown and several corporate executives who were on a business development mission; the sudden death last year of Texas Instruments CEO Jerry Junkins; and the abrupt departure of President Alex Mandl of AT&T, all of which highlight the importance, very much like having a will, of a clear succession plan.

Those companies that have overcome their initial reluctance or inertia when it comes to succession planning often don't know where to start. Since we subscribe to the philosophy that it's best to learn from the successes, as well as the mistakes, of others, we decided it might be a valuable exercise to take a look inside some prominent companies that appear to have a handle on the process to find out what has and has not worked for them.

Learning from leaders

With this agenda in mind, we invited some dozen companies - including MetLife, SmithKline Beecham, Mellon Bank, Caterpillar, Sunbeam, GTE, Hercules, Foster Wheeler, and Hewlett-Packard - to participate in our study...