With Steve Jobs widely believed to have turned Apple round, one would think
investors cared about who replaces him. A total return of 400 per cent on
the share over the past five years might suggest the company knows what it
is doing but then again such past performance might make the case for an
open succession plan even stronger.
But just what would such a published plan really accomplish? Boards’ best-laid
succession arrangements – which usually focus on internal candidates who get
along with the current chief executive – can work well if the boss leaves
when a company is on a high.
Should a crisis cause the chief executive’s departure, however, an outside,
untarnished candidate may suddenly be preferred. Those cannot be chosen in
advance.
Corporate governance groups like internal shuffles as they are cheaper. Boards
do not; only a quarter of them actively developed internal candidates for
future positions according to a 2005 Mercer survey. That is surprising,
since a clean succession reflects well on the board.
But constant monitoring and supervising internal rivalry is a pain for
directors. And succession planning is anathema to CEO personality types. In
a PwC survey, two-thirds of American bosses had no successor in mind, in
spite of 42 per cent of them saying they planned to leave their organisation
in less than five years.
If anyone has more trouble than investors imagining Apple without Mr Jobs, it
is the man in black turtlenecks himself.
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