Business Insight Zone

The talk of the football world this week is the murder of Sean Taylor, a Pro Bowl safety for the Washington Redskins. Although the circumstances of Taylor’s death are shocking — chilling, really — football teams at least prepare for all sorts of eventualities when they assemble their rosters: injuries, suspensions, trades, mixing different skill sets, the emergence of young players, the decline of veterans, and so on.

To help them in this, football teams prepare formal depth charts. So while the Redskins will have to grapple with all the sadness and pain surrounding Taylor’s death — not to mention enormous media attention during the homestretch of the NFL season — they already have solid ideas about who will play safety in Taylor’s place this Sunday — because they have a depth chart.

No corporation expects a CEO (or anyone else) to be a victim of murder, any more than NFL teams expect to lose players that way. But the age of CEOs and the vagaries of life leave the door open for many kinds of exits: setting aside the fact that your CEO might be hired away by a bigger company or fired, he or she might drop dead of a heart attack, fall ill from cancer, go down in a plane crash, get hit by a drunk driver. You name it — accidents happen.

If you’ve read this blog much, you’ll see where I’m headed: smart companies have an executive depth chart. They know who will step in if the CEO departs, expectedly or unexpectedly, but it goes deeper than that. They also know who will step in for the CFO, the CTO, the division chiefs, the controller, and on down the line. Sometimes this knowledge is implicit: everyone agrees without saying so that if the general counsel is struck by lightning, the deputy counsel will step in.

But for lesser companies, arrangements are unspoken not because they’re implicit but because there is no agreement on them. People don’t know where they stand. The board doesn’t know who will succeed the CEO in event of emergency. It’s not agreed upon that deputy counsel will succeed the general counsel, or that the general counsel will succeed the CFO if needed, or that the CFO will succeed the CEO if needed. If it’s the CFO who contracts cancer and retires early, the trouble is muted, because the CEO can make a forceful decision on a successor. But when the CEO departs abruptly . . . you need a depth chart.

Board members of publicly held companies have a duty, I assert, to make sure that at least the rudiments of such a depth chart are in place. Not later, but today — because no one knows when tragedy will strike, even if it’s nothing as gruesome as what happened to Sean Taylor.

After the recent flurry of CEO departures at major firms, we don’t need any more instructive examples. We need consistent good practices far and wide.

Category: Executives, Management