Perspectives on AIG, part 1: Succession Planning

24. March 2009 by David Cegelski.

Okay, we can all agree we’ve heard enough about AIG and most likely we’ve all formed an opinion.  I’d ask you to put your opinion aside just for a minute and consider the following case as I think it is quite instructive not only for AIG but for all organizations struggling with issues like executive bonuses and employee retention.

Partnair Flight 394 crashed on September 8, 1989 off the coast of Denmark enroute from Oslo to Hamburg.  On board were 50 employees of Wilhelmsen Lines—including the entire executive team.  All were killed.  Read the account here.

In an instant, the entire brain trust of the company was gone.

Given the rhetoric and messages coming from so many companies about the need to retain talent, you would expect that this catastrophic event clearly closed Wilhelmsen.  No!  In fact, today the company is stronger than ever and is a leader in oceanic transport and shipping.

Was it easy for them?  Clearly no.  Besides the obvious mourning for the company, employees, and even their customers, the company learned a couple things from this experience:

1.      Management must share leadership with all levels of employees.  They must create an environment where people are motivated, empowered, and have the resources to make things happen.  Avoid placing all responsibility on a few people.

2.      Always prepare the next level of managers and leaders.  Actively develop, train, and coach people who can step-in once key people leave the organization.  This requires organizations to enact strong succession planning processes.

Does this work?  Yes.  Just look at Wilhelmsen today—they are stronger, have a greater market share, and are one of the top admired companies in their industry and worldwide.

How do you get started?

First, it takes management that is willing and eager to share responsibility for decision-making, directing the company, and that will enthusiastically listen to employee input (without stifling creativity or honesty).   

Second, it means that companies must build sustainable succession planning programs.  Such programs must start with a clear understanding of critical roles, functions and processes that must be protected to ensure normal operations.  From there, consider the following steps:

1. Determine future needs of the organization—processes, roles, products, competencies
2. Assess current jobs, employees, and departments—compare them to future needs
3. Scan the external environment—benchmark competitors, customers, and your pipeline
4. Build a robust performance management system—provides performance feedback and identifies key personnel
5. Invest long-term development in key personnel—training, coaching, job assignments, and yes—compensation
6. Periodically review your program—annually at least, more frequently during turbulent times

So what are the implications for today?  Just re-read the two lessons Wilhelmsen learned from this tragic incident.  Put aside the emotionally-charged language coming from all the pundits—corporate executives, politicians, media, etc.—and concentrate on building an organization that can withstand anything, even the loss of key staff.  It can be done.  It has been done.  It must be done!

Check back next week when we’ll look at the Partnair case study from a different angle—that of the airline.

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