Steve Jobs passed away within two years of announcing his diagnosis to the public. The CEO of JPMorgan has throat cancer. Berkshire investors are worried because Warren Buffett is, well... old.
When it comes to planning for the time after company leaders are gone, it's usually only the big names that get attention. However, succession is just as much a reality for companies with executives lacking household names.
Here's Buffett's take on the matter: when tragic news strikes, the next generation of leaders should be identified and ready to take over tomorrow.
Warren Buffett-insidermonkey.com
With that in mind, let's take a look at a company that probably doesn't get that much succession scrutiny, Huntington Bancshares (HBAN +4.19%). Let's see if it can pass the Oracle of Omaha's terminal test.
Getting to today
Huntington took a beating in the financial crisis. Not only was it saddled with a couple billion dollars in bad loans, but it also entered the period immediately following a round of aggressive acquisitions.
The result: a stock price that tumbled more than 95%, billions in goodwill and loan charge-offs, and a bit of C-level reshuffling.
Since then, the company has undergone massive efforts to reorganize its balance sheet, return to responsible lending, and grow at a responsible rate.
This was largely the result of the cleanup man that Huntington brought on as CEO at the height of the financial crisis, Stephen Steinour.
Huntington CEO Stephen Steinour
Determined to turn the company around, Steinour, with over 25 years banking experience, set off on doing just about the opposite of what every other bank was doing at the time.
These against-the-grain initiatives included expanding the bank's footprint, increasing personnel, and revamping its marketing efforts at a time when common sense would say reduce and regroup.
So far these plans have paid off. The bank has been able to attract new customers, increase the profitability of its loans, and launch a highly successful cross-selling strategy.
Ready for tomorrow?
So what if (God forbid!) the worst were to happen to Huntington's top executive tomorrow?
The bank would be fine, and the reason is Huntington's culture.
Not only has Steinour instilled a culture of challenging the norm at Huntington by putting into play successful contrarian practices, but the Huntington Board of Directors has demonstrated long-term thinking by allowing him to do so in the worst financial climate since the Great Depression.
"Our board is very prepared to think longer term," confirms Steinour himself. However, if you are still skeptical, check out the real-life case study in succession planning currently taking place at the bank.
Much of Huntington's recent turnaround, especially its massive cross-selling effort, has been very dependent on technology. The man who orchestrated the whole thing was then-CIO Zahid Afzal.
Flickr // espensorvik
Notice the past tense. That's because in spring of 2012, Afzal was in an unfortunate car accident that prevented him from returning to work. Rest assured that he is making an excellent recovery, but his injuries have since forced him to leave the company.
As Huntington continues to move forward, technology will only become a larger part of its overall business strategy. To see if it can survive a sudden change in leadership, keep an eye on how well its new CIO continues and expands successful use of technology at the company.
Is your investment ready for tomorrow?
Succession planning tends to only come up when unexpected events happen to a well-known executive. The truth is that unexpected events happen to executives of all sizes and statures.
If you are investing in a successful company, find out who the people behind that success are and if the company has adequately planned contingencies if those people were out of the picture tomorrow.
It's a morbid rule, but it's necessary to make sure that your investment doesn't bite the dust when a key employee does.
