Crash Shows Need For Business To Safeguard Top Executives Most Firms Do Not Have Plans For Dealing With Disaster
The crash of Commerce Secretary Ronald H. Brown’s plane Wednesday in Croatia represents the nation’s largest ever loss of top-level executive talent in a single tragedy, leaving a void at several companies.
A dozen executives from the telecommunications, banking and construction sectors were among those traveling with Brown to offer expertise, products and services to help the war-ravaged former Yugoslavia begin rebuilding. Their presumed loss cast a pall over the business world and especially over employees at the affected companies, many of which a day earlier had been giddy at the prospect of landing business in the struggling region.
At Parsons Corp. in Pasadena, Calif., employees were in shock as they awaited news about their chief executive, Leonard J. Pieroni, 57. Officials of Guardian Industries Corp. in Auburn Hills, Mich., were behind closed doors much of the day as they absorbed the potential loss of David Ford, a senior executive who had planned to donate 23 metric tons of glass to Sarajevo for windows in new office and apartment buildings.
The tragedy spotlights the need for succession planning and the risks inherent in executives’ traveling into remote and politically unstable corners of the world as they reach for business in the global marketplace.
“The reality is, executives do have to fly together, and sometimes these things happen,” said Jack Groban, managing director of A.T. Kearney, an executive search firm in Los Angeles. Most corporations, he and other experts said, do not do a good job of succession planning to cope with such loss.
As in past cases of such corporate loss there will undoubtedly be a flurry of activity as companies attempt to prepare for tragic eventualities. But once the shock phase has passed, Groban said, companies will return to their old ways.
Bechtel, the big San Francisco engineering firm, confirmed that one of its executives was scheduled to be on the plane. P. Stuart Tholan, 59, was president of Bechtel Europe, Africa, Middle East, Southwest Asia, a unit with oversight of company markets throughout the region. Based in London, the Philadelphia native had been with Bechtel 33 years. He oversaw the company’s monumental work in reconstructing Kuwait’s oil production facilities after the Gulf War.
Another California executive on board was Ian Donald Terner, 56, founder and president of Bridge Housing Corp., a nonprofit builder of low-income housing based in San Francisco.
One executive reacted to the news with an awkward mix of relief and sadness. Told of the crash at a gathering in Fairfax, Va., which he had chosen to attend in lieu of accompanying Brown, Daniel R. Bannister became ashen. He pulled out a dog-eared itinerary for the trip that still happened to be in his breast pocket and fingered it nervously.
Bannister, the chief executive of DynCorp, a high-technology services company, was among 15 U.S. executives Brown had invited to accompany him on the trade mission to Bosnia and Croatia, but Bannister canceled at the last minute. Three other executives, including Alfred Checchi, co-chairman of Northwest Airlines, did not board the ill-fated plane.
“I am obviously grateful I didn’t make the trip,” Bannister, 67, said in a stunned monotone. “I deeply regret what has happened.”
Of course, it doesn’t take a headline-grabbing plane crash to drive home the need for corporate succession planning. A heart attack, a traffic accident or an act of violence can rob an organization of its leaders.
Among large companies, a startling 37 percent do not have a succession plan, according to a 1994 study by Korn/Ferry International, a leading executive search firm. Twothirds of those that do have a plan have not identified a successor.
“It’s just very difficult for some senior managers to face the reality that other people will be moving forward in the company,” said Caroline W. Nahas, managing vice president of Korn/Ferry in Los Angeles.
Eric G. Flamholtz, a UCLA business professor and president of Management Systems Consulting, a Los Angeles firm that helps companies with succession planning, said, “the only thing companies tend to do to minimize … this situation is to avoid having a number of senior executives flying on the same plane.”
Runzheimer International, a benefits consulting firm in Rochester, Wis., reports that 26 percent of companies surveyed limit traveling together by senior management and 15 percent limit such travel at all levels. But that leaves nearly 60 percent of companies that do not address the issue.
Security consultants geared to preventing kidnappings or terrorist attacks agreed that little can be done when it comes to a foul-weather plane crash like the one that claimed Brown’s entourage.