Boyden's Tom Flannery, Jeff Hodge and John McCrea share expert opinion on C-suite recruitment amidst the pandemic with Bloomberg
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Like all aspects of society, the rules of the C-suite are being rewritten under the pressure of a deadly pandemic.
Professionals who help companies ensure leadership continuity say the coronavirus crisis has added a new urgency to their work. Some say clients are mulling whether to further isolate key executives; other clients have made private jets a given for top leaders who still travel; some have scattered top lieutenants across the globe as an added precaution. At least one is poised to hire a new chief executive officer largely by video interviews.
“Just as the virus cascades deeper into a population, so now too does your succession plan have to cascade into the population, into the hierarchy,” said Davia Temin, founder of New York crisis consultancy Temin & Co. And while bosses like JPMorgan Chase & Co.’s Jamie Dimon -- a cancer survivor who just had emergency heart surgery -- have a good plan in place, today’s coronavirus crisis means “you have to think of the succession to the succession.”
The death of Jefferies Financial Group Inc. Chief Financial Officer Peg Broadbent from complications tied to the coronavirus, disclosed Sunday, highlights the risk. Top executives at Altria Group, U.K. telcom company BT Group PLc, and NBCUniversal have been sickened by the virus. The chairman of the Portuguese unit of Santander, Spain’s largest bank, died from it earlier this month.
As of Sunday evening in the U.S., there have been at least 702,000 cases of Covid-19 globally, with deaths surpassing 33,000.
Based on the pervasiveness of the virus, it’s likely there are other executives who are ill but haven’t yet disclosed their status, said Temin, who brought aboard a medical doctor to consult with her firm. Companies are very aware of where executives are and when they have to be in public, she said. The idea of appointing a “designee” for more extensive isolation has been discussed, Temin said, without identifying any clients.
Boards are now working around the clock to react to the virus and the very definition of a key role has changed, said Jane Stevenson, global leader for CEO succession at recruiter Korn Ferry. The firm has developed a special set of recommendations for continuity in the time of Covid-19.
The CEO and CFO positions, of course, remain the top priority. But increasingly important are roles such as supply-chain managers, who might not have been as front-and-center in earlier plans. Also getting extra consideration are executives who are central to a company’s morale and culture, Stevenson said.
One corporation that normally concentrates leaders at the U.S. headquarters now has dispersed the top three executives between the U.S., Europe and Asia, Stevenson said. Many clients are mandating down time for top executives, to ensure they are taking time to recharge and ensure the needs of their own families.
“We are very much in a back-to-basics environment right now,” she said.
Even the way executives are being selected is having to adapt to the new rules of the pandemic. Two weeks ago, when the virus was just starting to hit the U.S., the board of one company flew together on a private jet, along with one of two candidates for CEO, so that none of them would have to fly commercial, said Tom Flannery, the managing partner who leads the U.S. CEO and Board Services practice at executive recruiter Boyden.
Some companies are now even taking the highly unusual step of relying solely on video interviews for new leaders, said Jeff Hodge, a recruiter for Boyden in San Francisco. A CEO search he is coordinating will possibly go to an offer with some board members only meeting virtually with the candidate. In a sign of the urgency, the chairman of a large company called him on Sunday -- a rarity -- with a request Hodge talk to his board Monday about emergency succession.
And not all the crisis planning is about an executive getting ill, said John McCrea, another recruiter in Boyden’s San Francisco office. An alcohol company that is shifting to making hand sanitizer during the outbreak is using Boyden to find an executive on a temporary basis who has expertise in sanitizers, he said.
Examples will probably keep coming as the virus nears a peak. Altria Group said March 19 that CEO Howard Willard III was taking a leave of absence for treatment from the virus and that his CFO will assume Willard’s duties in the interim. BT Group CEO Philip Jansen went into self-isolation earlier in March with what he described at the time as relatively mild symptoms. More than two weeks on, he’s set to return to the office soon.
Broadband company WOW! Internet, Cable & Phone said Sunday that CEO Teresa Elder was hospitalized in Denver on Friday after testing positive for Covid-19. The company’s chief information officer will serve as acting CEO and the non-executive board chairman will take on an executive chairman role.
The death of 56-year-old Broadbent at Jefferies Group was particularly noteworthy because it marked one of the first deaths among senior Wall Street executives from the pandemic. Jefferies is one of the largest independent investment banking firms headquartered in the U.S. and the parent company’s main subsidiary. His death struck a chord on Wall Street, where thousands of traders deemed essential are still heading into work every day as the pandemic ravages New York City.
“We know Peg would want his passing to serve as a reminder to all of us of how much he cared for all of his friends at Jefferies and that our priority must be the health and happiness of our loved ones,” CEO Rich Handler and President Brian Friedman said in a statement Sunday.
There are many reminders that the coronavirus can strike at any level. England’s Prince Charles, heir to the throne, and British Prime Minister Boris Johnson have contracted the virus. In the entertainment world, actor Tom Hanks and his wife Rita Wilson, along with British actor Idris Elba are key examples of Covid-19’s reach. Top government officials in France, Spain, Poland, Israel, Iran and Brazil are among those confirmed to have contracted the illness.
Many companies do have emergency succession plans, where they have identified an executive or board member they would tap at least as a stop-gap solution, said Blair Jones, managing director at consultant Semler Brossy in New York. Now the board has to consider that even the emergency candidate needs an emergency candidate, she said. All the while, leaders also have to ensure they are keeping employees safe, maintaining financial liquidity and adapting their business technology, she said.
“Prince Charles. Boris Johnson. This disease is not discriminating at all,” Jones said. “For public company executives, who by nature of their position have to be out and about, the risk can be quite high.”