Succession planning (or not) at Bank of America

October 8, 7:49 PMLeadership ExaminerSteve Arneson

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By now, the news that Ken Lewis will be stepping down as CEO of Bank of America at the end of the year has been probed and critiqued in just about every corner of the business press. By my count, the sentiment seems to running strongly in favor of the move, as Mr. Lewis is getting his share of barbs and criticism from the pundits. I won’t begin to assess the job he’s done at B of A… but I did find it incredibly curious that a company of this size apparently didn’t have a succession plan in place for just this scenario. It’s not as though Mr. Lewis hasn’t been under fire for at least the last 2 years – dating back to the Countrywide acquisition and the fated pick-up of Merrill Lynch in the fall of 2008.

I’m not alone, either. In most of the same articles that dissected Mr. Lewis’ contributions and/or failings, the issue of who would replace him was getting equal billing. Ah yeah - this just in… with companies of this size, it’s kind of important to have someone ready to take over if something happens to the top leader. A few years ago, McDonald’s famously made two seamless CEO transitions in a matter of months. In April, 2004, Jim Cantalupo died unexpectedly and was replaced in an orderly manner six hours later. A few weeks after that, the replacement CEO, Charlie Bell, was diagnosed with cancer, and the board again was able to make an orderly replacement. That’s textbook, and it was obviously the result of a lot of planning by McDonald’s Board of Directors.

Apparently, these lessons were lost on Bank of America. Whether Mr. Lewis just wielded too much power, the company truly lacks any senior talent capable of running the company, or the Board was running woefully behind in their succession planning process, the ship is about to run aground while they get this figured out.

In the end, I’m sure they’ll land on a suitable replacement by January, even if it’s an interim appointment. The New York Times has reported that the Board did meet a few months ago on this matter, but failed to identify any viable candidates. The source also reported that the Board will be retaining an executive search firm to help vet external candidates for the CEO role.

What’s the takeaway from this story? If this can happen to a company the size of Bank of America, it can happen in your organization. Have you groomed a replacement? Do you know who would take over if you were to leave your post? How about at the top of your company – do they have this figured out?

In my experience, succession planning often has to eat at the kid’s table of corporate governance and planning. Too bad, too – because when it’s needed, it’s kind of nice to have it all dressed up and seated at the head of the adult table. Bank of America is finding that out right now – the hard way.