Bud Selig’s Potential Retirement Signifies Importance of Succession Planning

Posted by Kenneth N. Winkler on

Major League Baseball Commissioner Bud Selig recently stated that he intends to retire when his current contract expires on January 15, 2015.  Selig has served as Commissioner since 1992. Selig has hinted that he would retire on several prior occasions, but he never followed through.   This time, however, people are taking him more seriously, because he will be 80 years old when his contract runs out.

During his 21-year run, Selig has helped increase league revenue, increased the value of team ownership, and maintained labor peace with the player’s union.   The owners have prospered with Selig at the helm, and they love him for it. Finding the right successor to Selig will be a priority for the owners. 

One might think that, given the importance of the Commissioner’s role and Selig’s age, the owners have a succession plan in place or, at least, have identified a candidate.  However, the media has reported that there are no known candidates at this time.  This is not surprising as many organizations fail to develop a succession plan.  They may recognize the need for more planning but are too busy with day-to-day operations, unsure how to begin, and/or afraid to confront the realty that change is inevitable.

Selig’s eventual retirement highlights the importance of engaging in succession planning.  Change in leadership is inevitable.   Sometimes the change in control is anticipated and known, such as a planned retirement.  Other times, a change in leadership occurs unexpectedly because of illness, death, or unanticipated resignation.   Whatever the reason, being prepared for a change in management is important to ensure a smooth transition of leadership and foster continued successes.

Succession planning is especially important for family-owned businesses. According to the Family Firm Institute, only one-third of family-owned businesses survive the transition to the second generation of a family. And of these businesses, again only one-third will survive to the third generation. In short, the likelihood that a grandchild will take over a family business is about 1 in 10.  For a business to have any real chance of survival through the generations, serious planning must take place. Here are some components and considerations of planning for succession:
  1. Evaluate the Roster:  Many teams promote from within the organization.  The pitching coach may be tapped, for example, to become the manager.  Other times, the right person may come from outside the organization. Thus, an initial step is to assess the skills and experience of people from within your organization and determine if anyone internally has the potential to lead the organization.
  2. Recruit:  Like a good scout or recruiter trying to sign a promising prospect, you need to sell the candidate on the opportunity to lead your team.  Spend time explaining the strength of the organization and the opportunity the candidate will have to succeed and prosper.
  3. Develop a Game Plan.  Successful transitions seldom happen by chance.  Having a plan and executing a plan is critical.  A thoughtfully written succession plan that identifies the needed skills, experience, and qualities of the future leader will help guide the selection process.   Much like a strategic plan, a succession plan keeps the organization stay focused on the real mission.
  4. Conduct Spring Training:  No matter how well-groomed the candidate is, even all-stars need some warm-up.  Provide the successor with an opportunity to learn the ropes and transition into the position.
  5. Retain Outside Help: Athletes and sports teams often hire consultants to provide additional training and expert advice to gain an extra edge.   Don’t be afraid to seek advisors who have experience in succession planning.  Sometimes you have to admit that you don’t have all the answers, something Yogi Berra had some trouble accepting–  “I never blame myself when I am not hitting. I just blame the bat and if it keps up, I change bats.  After all, if I know it isn’t my fault that I’m not hitting, how can I get mad at myself?”
  6. Clear  Waivers: The organization should also consider how it is going to transition the departing owner, CEO, or  manager.  For example, thought should be given as to whether to retain the employee as a consultant after the employment ends, whether the company will provide severance payments to the employee, whether a release will be sought in exchange for the severance payments, and whether the severance will be conditioned in part on the employee’s agreement to be bound by restrictive covenants if none are in place.