Succession Doesn’t Always Go as Planned
Nov 27, 2006
Rupert Stanchion was the founder and only CEO Stanchion Associates had ever had from its founding in 1980. Now nearly 60 years old, he was beginning to get the idea that some people thought it was time for him to name a successor.
He’d briefly pondered retirement at times, but he truly loved his work. The firm had never done better. This year’s financials were the best ever— they had enjoyed 13 years of 15% or better growth— and this year’s profits were about 20% of net service revenue. Stanchion’s minority shareholders and employees had never earned better bonuses. In good health all his life, and still in good health today, Stanchion could not understand why there was a growing sense of urgency evidenced in the firm’s annual business planning sessions that he name a successor.
Bob Lupez, Stanchion’s Springfield office manager, was the most vocal about the situation. He was 54 and, other than Rupert Stanchion himself, had been at the firm longer than any employee. Lupez was a capable engineer and office manager, no doubt. He wanted Stanchion’s job— “I’m a shoo-in for it,” he not only thought to himself, but also confided to his wife.
Lupez was even popular with the other junior partners. But the problem was Rupert Stanchion didn’t completely trust Lupez. There had been a couple situations over the years where Lupez showed Stanchion that he looked out for himself first and the firm second. This was so counter to Rupert Stanchion’s business philosophy— Stanchion just couldn’t let go of those memories. Lupez was a star employee, however— his office always made money and, in fact, was the most profitable unit in the firm. But Stanchion was determined that he would NOT, in a million years, EVER turn the keys to the company over to Lupez. That said, he didn’t have the guts to tell Lupez how he felt. He didn’t want Lupez to quit, and he didn’t want to make him CEO, either.
So what did Rupert Stanchion do? Like many other nice, non-confrontational engineers, he took the chicken way out. After tiring of hearing the ever-louder cries for his retirement and weighing all his options, he named Lupez his successor and the CEO of Stanchion Associates. He didn’t think he could afford not to.
As he started selling his stock back and went into partial retirement, it quickly became clear that his initial instincts about Lupez were right. In his first year in the job, Lupez bumped his salary way, way up, far higher than Stanchion’s ever was. This started a revolution within the ranks of the firm’s junior shareholders and defections to other companies occurred at a break-neck pace.
Two years later, the firm was in trouble for the first time in its history. Year-to-year revenues declined, cash flow was horrible, and Lupez told Stanchion the company was not in a position to make his rather sizable stock note payment. Stanchion immediately exercised his right, per their note, to take his stock back and resume control of the company. Thank goodness for Chris Georgopoulos, his long-standing legal advisor, or that clause may not have been in there. Stanchion then put Lupez back into his old office manager’s job (at reduced pay, of course), and went about the task of rebuilding the firm. At 64, Rupert Stanchion gave up on his plans to travel the world and got back to work. Six months later, Lupez quit. The truth is, Stanchion was happier working than he was retired. His few remaining employees were glad he was back.
Rupert Stanchion swore to himself that the next time he attempted a transition he would stick around for a few years and see how his successor was performing. He also decided never to ignore his instincts about people again and to weed out any leader who didn’t recognize that the company that fed them all must be protected as the first priority.
Originally published 11/27/2006
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