Companies & Industries

The Succession Timetable


If the head of the family business is keeping plans quiet, there's probably a good reason

My problem is that my father, the superb leader of a successful family business, has no succession plan. But for the sake of the company and our kids' future, we need one. As a possible CEO candidate, how can I approach him about this without looking like I want to "get" the company for personal gain? — Anonymous, Chicago

First things first. You don't necessarily need a succession plan. You want one. And for that matter, your father—superb leader that he is—may very well have a succession plan. He's just not telling you.

Either way, you're getting a taste of what it feels like to work at a regular old public company, where succession plans are usually tightly held information until quite late in the game. And yet somehow, those companies still manage to move forward from one CEO to the next and their executives manage to plan for their kids' futures. With less information, they just end up having to use their judgment.

Yes, life would be easier for you, and for all CEO candidates, if they knew more about the future earlier. But we can think of at least three reasons why it so rarely happens that way. First, people develop at different rates. A possible successor who starts in a blaze of glory might fade away over time, and a slow starter might take off. A CEO needs several years at least to see candidates in many jobs and differing economic environments before making a final call. Second, making a succession announcement too early can throw a company into disarray if there aren't backup plans to replace the talent that inevitably leaves when a new boss is picked. Such plans take time to put in place. Finally, if a CEO is doing a terrific job and enjoying himself—like your dad, it seems—he has no interest in becoming a premature lame duck.

We suggest, then, that you give your father the benefit of the doubt. According to details of your letter that we didn't have room to print, he's quite a man. Your family business is in a brutally competitive industry, but he's led it with insight and skill for decades. He's built a deep management team and is respected by all. Surely he isn't being a fool about succession. He has a reason you should wait, and if he is the leader he seems to be, you'll understand why in due time.

Over the years, I have noticed that people with an MBA, often with less experience and less salubrious résumés than myself, land bigger jobs. What is it in an MBA that qualifies a graduate to be an automatic winner? — Jitesh Jairam, Durban, South Africa

There is no question that an MBA puts a stamp of approval on your forehead. People like credentials, and although some MBAs have more prestige than others, any MBA separates its "owner" from the pack.

But you have to understand something: The impact of an MBA is really only good for a year or so. It helps a graduate get a higher starting salary or land a better job out of the gate, or both. And it creates something of a little halo effect. MBAs are presumed to be intelligent and capable; their bosses watch them hopefully, and in many cases, give them extra opportunities to contribute and grow.

However, it's the MBA's performance that ultimately matters. In short order, the MBA excels or sinks, and the advanced degree becomes forgotten either way. In business, results are your only real credential.

So when you see those MBAs around you who appear to be "automatic winners," look beyond their diplomas. Most likely, they are overdelivering on performance and buying into the values of the company, demonstrating them with their everyday behavior. On top of that, they are very probably exuding a positive, can-do attitude, taking on tough challenges with a healthy mixture of optimism and realism. Finally, they are almost certainly making the people around them look good, too, by sharing credit and building the team. In other words, we would bet they're moving the company forward in some meaningful way or another.

Don't get us wrong. We're definitely not discouraging anyone from getting an MBA. It's a qualification with heft, and it does help critical thinking and introduce you to important managerial concepts best taught in a classroom by a smart professor and debated by high-powered peers. It does get you a better starting salary and more early visibility. But an MBA's leg-up only lasts for a finite period, after which performance takes precedent.

So look again. The automatic winners you see around you probably aren't automatic at all. They're successful not just because of a diploma they received on graduation day but because of their performance ever since.

Jack and Suzy Welch look forward to your questions. You can e-mail them and view their new website at www.welchway.com For their podcast, go to www.businessweek.com/search/podcasting.htm.

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