How Organizations Are Changing the Way They Manage Leadership Roles In Crisis

It's not just the CEO. The pandemic has taught every organization that the definition of an 'essential worker' is much broader than they might have imagined.

In order to assure operations can continue if someone gets ill, successful enterprises are taking a deeper and more holistic look at succession plans many layers down on their org charts. Collaborative decision-making via Zoom or other options makes it easier to understand the data and reasoning behind tactical and strategic plans should key individuals become absent. In startups, where venture capitalists claim they invest in people, not ideas, expanding the number of those deemed ready to lead becomes even more important. In every case, the objective is to optimize outcomes during a period of great uncertainty, moves which may benefit the organization long after the pandemic is past. JL


Chip Cutter reports in the Wall Street Journal:

Many companies have succession plans in place, but “it’s not just an envelope in a drawer any more.” The virus has made (them) more insistent about comprehensive succession planning, asking team to identify potential replacements for staffers several levels down the corporate ladder. Some are including more people on projects to duplicate decision making, or insisting that technical staffers document their work in greater detail so others can help. (Some) senior leadership teams meet daily via video conference, ensuring no group makes decisions in isolation. That means executives can quickly step into each other’s roles.

It’s a question that the head of every business is grappling with right now: What happens if I become too sick to work?

As the coronavirus pandemic spreads, management teams are fortifying their succession plans and reviewing back-up operating procedures for when top executives or other critical employees fall ill.

Some businesses are including more people on projects to duplicate decision making, or insisting that technical staffers document their work in greater detail so others can help, if necessary. A few companies have told top executives to take it easy, in hopes the downtime will bolster their immune systems.

Jay Fulcher, the chief executive of the human-resources technology company Zenefits, convened 10 of his top executives for a management meeting in late February, where he asked them a personal question: What would happen if you got sick? He wanted to know departments would continue to function if the people running them needed to care for themselves or a loved one.

‘It’s not a comfortable conversation’

— Zenefits CEO Jay Fulcher

“It’s not a comfortable conversation,” Mr. Fulcher said, but they all arrived at a back-up plan. Should he need time away, Mr. Fulcher said the company’s senior vice president of business operations, Issac Vaughn, would become acting CEO. “We’ve got a plan.”

A number of top executives have already contracted the coronavirus, including the CEOs of Madison Square Garden Co., real-estate firm Vereit Inc. and the British telecom giant BT Group PLC. At NBCUniversal, CEO Jeff Shell sent an email to staff late last month to tell them he had tested positive, but would continue managing the company. “Although the virus has been tough to cope with, I have managed to work remotely in LA and am improving every day,” he wrote.

Three weeks ago, Cedric Francois, chief executive of Apellis Pharmaceuticals Inc., a $2 billion biotech company, had a low-grade fever, felt lethargic and had lost his sense of smell. Dr. Francois, 47, tested positive for the coronavirus, but felt well enough to continue running his 250-person company remotely, holding daily management calls. About a week after symptoms appeared, his condition worsened and Dr. Francois found himself short of breath. Though he never went to the hospital over the two-and-a-half weeks that his symptoms persisted, Dr. Francois says he needed to care for himself, and Apellis’s chief financial officer and others stepped up to fill in some of his duties.

“I had to drop everything,” he said in an interview, noting he is now fully recovered. “I haven’t even gone back to all the emails that I missed back then, so I’m sure there are a lot of people upset with me. But I’m very fortunate to have an unbelievable executive committee.”

To stay transparent while sick, Dr. Francois recorded a video message to employees and provided frequent updates on his condition and the state of the company. “People knew what was going on with the company, with myself,” he said.

The virus has forced many executives to confront personal challenges while guiding their organizations. Glenn D. Fogel, chief executive of Booking Holdings Inc., last week developed a fever and a headache, while his wife and children showed hallmark symptoms such as shortness of breath and a loss of smell. They drove to a testing site in a physician’s parking lot in Scarsdale, N.Y., to get their noses swabbed. Nearly all tested positive, including Mr. Fogel.

His case was so mild that he didn’t ever have a cough, allowing him to work 18-hour days to manage the Norwalk, Conn.-based online travel company that has roughly 27,000 employees and operates Booking.com, Priceline and OpenTable. The virus has made him all the more insistent about comprehensive succession planning. He asked his team last week to identify potential replacements for staffers several levels down the corporate ladder.

“You just don’t know who’s going to become ill,” Mr. Fogel says. “I want to make sure that we’re not scrambling if somebody calls HR and says, ‘Hi, I’m in the hospital.’”

Some public companies are adding language to securities filings, noting corporate risks that could arise if executives fall ill and disrupt operations. Altria Group Inc. had to name Billy Gifford, chief financial officer, as interim CEO of the tobacco giant on March 19 after the company’s top executive tested positive. Mr. Gifford and other members of the leadership team went into quarantine because they’d had contact with their boss, CEO Howard Willard.

“It is a true balancing act and we really said employee safety first, with an eye towards business continuity,” Mr. Gifford said.

Many companies, particularly public ones, have robust succession plans in place, but “it’s not just an envelope in a drawer any more,” says Jane Stevenson, vice chairwoman of board and CEO services at executive-recruitment firm Korn Ferry. Some companies are trying to ensure leaders stay healthy by telling them to take time for themselves and get enough sleep to help bolster their immune systems, she added.

At IAC/InterActive Corp., parent company of web sites such as Vimeo and Dotdash, executives maintain a document noting who could step into a role within 24 hours, said Chief Executive Joey Levin. If there is not a clear successor, the company notes who could take over on a temporary basis, or who may be “one to two positions away from being ready to fill in that role,” he said.

While public companies need to disclose to shareholders if a top executive tests positive for the coronavirus, whether a company names a replacement can depend on how sick someone becomes, says Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware. “If they become ill, the question is: Can they continue to function in their present roles?” Mr. Elson says.

After James K. Saccaro, chief financial officer of giant health-products company Baxter International Inc., tested positive for the coronavirus in late March, the company said he would continue his duties from home. If his condition changes and he needs to take a medical leave of absence, the company said in a regulatory filing that it has a potential replacement picked out to temporarily assume Mr. Saccaro’s responsibilities, though it did not name the person. Baxter also said an unidentified board member contracted the virus and was recovering in the hospital, and noted Chief Executive José E. Almeida had tested negative.

Plenty of CEOs say they are planning ahead. Beth Cross, chief executive of boot maker Ariat International, based near San Francisco, says the roughly dozen employees on her senior leadership team meet for a minimum of two hours daily via video conference, ensuring no group makes decisions in isolation. Some leaders have been with the company for more than 15 years, and Ms. Cross says the company has built a culture with a “bias towards listening.” That means executives can quickly step into each other’s roles, if needed, to ensure the company continues functioning. “People can back each other up and help,” she says.

The Framingham, Mass., safety technology company Rave Mobile Safety says it has been bolstering its business-continuity plans for years following events such as superstorm Sandy. CEO Todd Piett says he has pushed the company to refashion its structure so many decisions do not flow through him. He worries more about the company’s technical teams, where employees may have specialized expertise. He’s encouraging team members to carefully document their processes, and to include colleagues on Zoom calls or in Slack message threads, so “everyone understands what’s happening,” he says.

“I’m pretty confident I could disappear and things would keep on chugging.”