iCIMS Hire Expectations™

Yesterday, business sites were buzzing with the latest news about multinational technology giant Apple, and its fearless, er – cautious leader, Steve Jobs. Why the state of trepidation? The Central Laborers’ Pension Fund, which owns 11,484 shares of Apple, wants a formal (& public) succession plan in place for choosing a new chief executive.

So why is Jobs worried?

If you’re a regular reader of HR thought blogs and industry news – you’ve probably associated succession planning as a positive, strategic force in talent management. At the very least, you might agree with some of the questions in “The Strategy of Succession Planning” by M. Dana Baldwin:

• If there is no succession planning process, how would a company develop and nurture its human capital?
• How will you assure a continuing sequence of qualified people to move up and take over when the current generation of managers and key people retire or move on?
• How will you be able to plan for the future of the company without some assurance that the key posts will be filled with people able to carry on and excel?

Admittedly, succession planning for a CEO might be slightly more complicated than for the general workforce. In “A Practical Guide to CEO Succession Planning” author Clarke Murphy writes – The transition from one CEO to another is a critical moment in a company’s history. A smooth transition is essential to maintain the confidence of investors, business partners, customers and employees and provides the incoming CEO with a solid platform from which to move the company forward. A properly designed and executed succession plan is vital for any successful transition.

Okay, so if we know all the benefits for succession planning – then why is Apple discouraging its shareholders against the measure?

1. The succession plan would jeopardize their competitive advantage. According to Apple, a succession plan “would give the company’s competitors an unfair advantage [because] it would publicize the Company’s confidential objectives and plans”.
2. The succession plan would undermine the Company’s efforts to recruit and retain executives. “The Board believes that the Company’s success depends on attracting and retaining a superior executive team, including the CEO. A succession plan would require a report identifying the candidates being considered for CEO, as well as the criteria used to evaluate each candidate. By publicly naming these potential successors, the plan invites competitors to recruit high-value execs away from Apple. Furthermore, executives who are not identified as potential successors may choose to voluntarily leave the Company.”         

Hopefully, Apple is opposed only to the “public” part of the proposed plan, and not the idea of a succession strategy itself. Or perhaps they’ve blocked out their mid-nineties re-invention phase – in which haphazard CEO changes resulted in three-year record-low stock price and crippling financial losses. Either way – we hope that Apple understands the consequences of completely ignoring a succession plan (in addition to their self-proposed downsides of a public one).