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Office Depot last summer replaced its longtime chief executive with its international division president. The University of Miami in November capped a nine-month executive search with a recruitment coup: U.S. Secretary of Health and Human Services Donna Shalala. And Ryder System in the fall implemented a chief executive officer change so under-the-radar that even some of the company’s employees were surprised by the 18-year CEO’s retirement. With so many CEOs handing over the reins — voluntarily or involuntarily — South Florida companies find that succession planning is more important than ever to a successful operation. The stakes have never been higher. Succession planning, even when it comes about simply because of retirement, has become all the more critical. That’s because expectations are higher than ever and prospective CEOs have to have just the right combination of management skills and knowledge, not to mention political correctness and personal sensibility. What’s more, they’ve got to deliver in an increasingly shortened time span. Considering the expectations, even the new CEOs are nervous. While in Tokyo on a business trip in July, Bruce Nelson was in his hotel room one day, talking on the phone with Office Depot board members and accepting the CEO job at the Delray Beach, Fla.-based office-supply retailer. Soon after he hung up the phone, he felt the shock of not one, but two earthquakes. “Is there another message here?” Nelson recalls wondering. Not an unlikely association, considering that Nelson, 55, had just agreed to become the next public face of a company under immense pressure to improve its performance fast and noticeably. Office Depot is in the midst of a turnaround to overcome stunted growth and a sunken stock price. “The questions I asked myself were, ‘Do I want ultimate responsibility and accountability for the success or failure of this company? Am I willing to make the personal sacrifices necessary for the CEO of a company the size of Office Depot?’ ” says Nelson, who stepped into the job on July 19, replacing former CEO David Fuente. And well that he asked those questions. Nationwide, the corporate stage is packed with revolving-door scenes of sudden CEO departures and resignations, as impatient boards seek quicker and better results. South Florida isn’t lacking its share. This month, for example, ANC Rental’s board ousted CEO Michael Karsner, who’d been on the job just a little over a year. His departure followed an announcement that the company’s losses would be worse than anticipated. And just this week, Sunglass Hut International, also against a backdrop of disappointing results, announced the resignation of CEO John Watson, who’d been on the job three years. Add to that the number of organizations whose leaders simply are retiring, and you’ll see plenty of South Florida boards in search of new leaders. Within the past 24 months, at least eight major local companies or organizations, not including ANC and Sunglass Hut, have replaced their chief executives. That’s not counting the shakeouts in the more entrepreneurial and unstable sector of dot-coms and Internet startups. These new CEOs face expectations that are “neither fair nor realistic” and have led to “an almost impossible situation for the modern CEO,” says independent executive development consultant John Sauer, recently retired to Seattle. “They must respond quickly and publicly but they are also supposed to be thoughtful strategists,” Sauer says. “They are forced to give concrete immediate answers to challenges that have always been hard to predict, manage and execute.” True, they’re being paid plenty to do it. But success for the leader and the organization doesn’t depend as much on paying the best salary as it does on finding the best match, experts say. How does a company go about finding an effective new leader? It’s a matter of a lot of self-analysis. “Companies and boards must honestly assess their own strengths and weaknesses and what they seek in a new leader,” said Veronica Biggins, a succession specialist with Heidrick and Struggles’ Atlanta office. “Honesty is especially important.” Outgoing CEOs and board members who haven’t been honest about the company’s needs may inadvertently seek new leadership in the likeness of the old. “A lot of people say they want change, but they really don’t,” said Biggins. Some companies find it easier to recruit from the outside than to develop a candidate internally. That was the approach taken by the University of Miami, where in June Donna Shalala, the U.S. secretary of Health and Human Services for the past eight years, will take over the top job from Edward T. Foote II, who is retiring after leading the university for the past 20 years. It takes five to 10 years to grow a good CEO internally, some experts say, while it only takes about two years to recruit, install and evaluate a CEO from the outside. However, “companies that do a good job of growing people internally usually end up with candidates who are more likely to initially understand the company and to build on its successes while respecting its culture,” says Sauer. At Ryder System, former CEO M. Anthony Burns followed a combination approach to succession: He deliberately set out to recruit from the outside, in order to then groom from within. In 1997, after 18 years in the transportation systems company’s top spot, he planned his retirement to coincide with his 58th birthday. And he quietly hired executive search firms to find an entirely new senior management team, many of whom were considered possible replacements, says company spokesman David Bruce. Gregory Swienton, formerly a senior vice president at railroad company Burlington Northern Santa Fe, was one of Burns’ hires, joining Ryder in mid-1999. Burns made Swienton Ryder’s president and chief operating officer. But within a few months, Ryder executives considered Swienton the top candidate for Burns’ spot. Swienton turned out to be a “perfect mix of personality, capability and leadership,” Bruce says. Feeding that sentiment, Burns, over the course of a year, gave Swienton additional authority in company matters. “Tony’s master plan was to look at him over a period of more than a year to see how he fit into the company, and how he handled different situations. It worked out very well,” Bruce says. He proved highly adept at delegating effectively and developing the roles of other executives. For example, he expanded the duties of chief financial officer C.J. Nelson. Upon Burns’ retirement in October, Ryder named Swienton the new CEO. Nutritional supplement retailer Rexall Sundown went with a groom-from-within model. Damon DeSantis, the company president, was ready to accede to greater leadership, said former Rexall president and CEO Christian Nast. DeSantis, who’d been with the company since 1983, served as president for about a year before being named CEO. Because he already was holding the president’s job, he wasn’t overwhelmed by the new CEO responsibilities. The board, for its part, allowed him to step up and take complete control of the company with no interference from anyone else, Nast says. No one doubted the match. “He ran the company, period,” says Nast, now retired. “He’s a quick learner. He had grown up in this business and had a feel for it, which is important. Not all decision-making is predicated on research or overanalysis. A lot of it has to do with gut feeling.” The final, and most difficult, step in the succession cycle is for a newly appointed leader to begin preparations for a successor. Although it’s “natural for everyone to breathe a sigh of relief when the new CEO is installed,” Sauer says, the new CEO should immediately set the stage to find a replacement. But not all new CEOs will agree. Office Depot’s Nelson, for one, said it might send the wrong message. The most important thing for a new CEO is to evaluate the current staff, think about the company’s future, Nelson said, and then, at some later date, have some beginning discussions with the board about succession. “If succession is an early priority, that’s a bit like saying ‘I’m preparing myself to get out of here,’ ” he says.

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