After the sudden announcement that Thomas Staggs, Disney’s chief operating officer and the putative heir to CEO Bob Iger, would be leaving the company this year, Disney’s board now has to scramble to find a new successor. Jena McGregor at the Washington Post explains just what a tricky situation they’re facing:
While Disney may have plenty of talented people on its management team, some say an obvious next-in-line for the CEO job is missing from the lineup now that Staggs is leaving. Jay Rasulo, Disney’s former chief financial officer, departed the company after Staggs was given the COO job last year, which followed a five-year bake-off that included the two executives switching roles. “If anything unexpected happens to Bob Iger, there’s a leadership vacuum at the top of this company,” said Laura Martin, an analyst at Needham Securities who has a “hold” on the company. “There is no plan B.”
A lack of obvious internal candidates, says Noel Tichy, a professor at the University of Michigan’s business school who authored a recent book about succession, makes things particularly challenging for any board. Two years isn’t long enough to groom an internal CEO, he says, while outside candidates typically face long odds. While there are exceptions, such as Alan Mulally’s recent success at Ford or Lou Gerstner at IBM in the early 1990s, “it’s very hard to go outside and get it right.”
This dilemma has raised the possibility that Iger will not retire when his current contract expires in 2018, as he had been expected to do, but stay on until Disney can find and train a new CEO. According to the Wall Street Journal, the board is looking for someone to continue Iger’s strategy rather than take the company in a new direction. Nonetheless, with its top two internal candidates out, Disney’s next CEO may come from outside the organization. Christopher Palmeri at Bloomberg looks at some of the names being mentioned:
Among the possible candidates are Facebook Inc. Chief Operating Officer Sheryl Sandberg, who’s also a Disney board member, and Steve Burke, a former Disney and ABC executive who now runs Comcast Corp.’s NBCUniversal division. Among internal candidates, ABC head Ben Sherwood is drawing notice. … Sandberg may have to recuse herself from board deliberations if she were to be considered and Disney would also risk losing her insights as a director if she was passed over as CEO. And while Sandberg brings advertising chops and experience running large operations, she lacks a background in entertainment. …
Iger has shown a command of various facets of the business that will be hard to replace. During his decade-long tenure, he’s acquired popular franchises like Marvel Entertainment’s superheroes and Star Wars creator Lucasfilm. He’s also helped build and maintain ESPN’s status as the juggernaut of sports broadcasting. His next milestone will be in June, when when the new Disney park in Shanghai is scheduled to open — a moment that was once viewed as a big step in Staggs’s career, too.
One interesting question that the press coverage of this succession hasn’t yet addressed is what role Disney’s chief human resources officer Jayne Parker will play (or is already playing) in the CEO succession process. Heads of HR can participate in this process in several different ways. Not only are they “process consultants” to the board, in situations like this, they are also engagement coaches. In this role, the head of HR has to maintain the fine balance between the expectations of stakeholders (the current CEO, CEO successors, potential successor candidates, and other senior leaders) and reality to prevent disengaging or even losing key talent that gets passed over in the highly competitive competition to be the next CEO. It’s hard to do.
In general, the CHRO’s most important job in building a CEO candidate slate is to be an honest broker and negate any potential biases in identifying potential candidates, such as internal candidate bias. CEB Corporate Leadership Council members can read more about the CHRO’s role in CEO succession here.