Comprehensive plan should be in place before position becomes available.
In a perfect world, when one professional retires or moves on, there’s an equally successful and seasoned individual waiting to take his or her place. In reality, however, this is not always the case.
This year, the oldest baby boomers – those born in 1946 – will turn 65. As an entire generation moves toward retirement age, many businesses are starting to spend more time thinking about hiring, talent pools and succession planning.
Depending on the size of the organization, legal departments tend to have a corporate secretary who also serves as general counsel. In many cases, that professional has been trained for many years and is equipped with the necessary knowledge and skills to make sure the board is updated on all regulatory developments and requirements.
When it’s time to replace a corporate secretary, a company’s needs tend to be specific, as the nature of the position is so sensitive.
‘Boards of directors want a top-notch general counsel who will be their trusted business advisor,’ says Cary McMillan, chief executive officer of True Partners Consulting, a global tax and business advisory firm. ‘But that takes work on the company’s part, as attorneys are in the minority at most corporations.’
This is what makes it particularly difficult to fill the corporate secretary position. Companies are looking for specialized talent and experience – and in large doses. Furthermore, the long careers of some corporate secretaries result in substantial amounts of accumulated legal and company knowledge, which ultimately makes replacement (and succession) a greater challenge.
‘Those who do become corporate secretaries tend to do so in their mid to late thirties,’ notes John McGuire, a partner focusing on corporate law matters at Ohio-based law firm Calfee Halter & Griswold. ‘They often retire from the position along with their early retirement from main employment – say, late fifties or early sixties.’
Plan ahead
As with any key executive position, your company should have a succession plan for corporate secretaries. When yours retires – or, for that matter, when you retire – will your company be ready to continue moving forward?
‘I believe that succession planning for senior positions in any organization plays a vital role in achieving consistent, long-term success,’ says Fred Krebs, president of the Association of Corporate Counsel. ‘Succession planning requires careful thought and deliberation about what the organization needs and how to fulfill those needs.’
McGuire, who specializes in succession planning, agrees with this sentiment, strongly believing that a comprehensive plan of action should be in place by the time a corporate secretary is ready to leave the firm.
‘Succession remains a critical issue at any firm,’ McGuire explains. ‘The folks remaining behind need to know what is expected of them. Things can change abruptly, and you need to be prepared.’ Adding to the problem is the uncertainty that many firms face when it comes to succession planning – as evidenced by the mushrooming collections of analyses on this issue.
A recent study by American Management Association (AMA) Corporate Learning Solutions, for example, finds that only about one third (34 percent) of organizations remain committed to succession planning. Roughly two in five (43 percent) said such planning was intermittent.
‘The findings point to a looming management succession crisis among North American companies,’ says Sandi Edwards, senior vice president of AMA Corporate Learning Solutions, which offers advisory services and tailored learning programs to organizations. ‘Just a small minority of organizations seem ready to manage a top-level succession in an emergency, which means most companies are taking a huge risk by failing to address their bench strength issues.’
Despite succession planning being a strategic pillar in overall business performance, it remains in a sad state of disarray. In fact, an analysis conducted by the Institute for Corporate Productivity on behalf of the American Society for Training & Development reveals that only 14 percent of 1,247 respondents rated their exit plan procedure as effective to a large or very large extent.
When it comes time to replace a corporate secretary, the issues encapsulated in these numbers will become all too real. The best advice for companies is to get ahead of the issue and start planning for the future today.
In your opinion, how prepared is your organization to deal with a sudden loss of key members of the senior management team?
Well prepared 14%
Somewhat prepared 61%
Not at all prepared 22%
Don’t know 3%
Source: AMA Corporate Learning Solutions survey
Finding the right person
When considering corporate secretary succession planning, the first question that arises is: how do you find the right person?
Companies have started to promote internally, McMillan points out, and this is a successful strategy to use when looking to fill a corporate secretary position.
Larry Garrett, general counsel and assistant corporate secretary at Farmer Bros, may have only recently started out in the profession, but he’s managed to build the company’s legal department from the ground up.
‘The company hired me as general counsel and assistant secretary with a view toward establishing in-house legal support and creating a succession path for the corporate secretary function,’ says Garrett. ‘As assistant secretary, by working closely with the current secretary, I can ensure that the vital role of corporate secretary is transitioned seamlessly in the years to come.’
Farmer Bros, a publicly traded firm that’s almost 100 years old and is best known for its ground and brewed coffees, is one of the few companies around that believes in having the right succession plan in place.‘We never had an in-house legal function until I was hired last year,’ notes Garrett. ‘Instead, the company relied, and continues to rely, on very close and long-standing relationships with outside counsel.’
Prior to becoming the firm’s assistant corporate secretary, Garrett worked as the company’s outside counsel for several years, handling employment, employee benefits and labor matters. Farmer Bros’ current corporate secretary, the company’s senior outside counsel, continues to oversee corporate and real estate matters and has been part of its regulatory function for over 25 years.
‘Each company is different, and even with the most experienced lawyer coming fresh to the position, the company will experience disruption and distraction as he or she becomes integrated,’ McGuire stresses. ‘I always urge my clients to be clear in their communication of the plan, and I advise that they provide counseling, or mentoring for the younger generation – having an assistant secretary in place is always a good start.’
Nothing but a number
McMillan, who serves as an independent director and currently sits on the board of directors for McDonald’s as a member of the finance committee and American Eagle Outfitters as the chair of the compensation committee, claims he never sees a corporate secretary as ‘too young.’
‘When we look at senior lawyers, we look to see talent – their age doesn’t matter,’ says McMillan. ‘Companies need to create opportunities for the board to see potential candidates in action – there need to be roles in which they can show their abilities. If they are not kept in the ivory tower, they become better advisers.’
McMillan says there are three key qualities companies need to look for in a corporate secretary. ‘These lawyers will be your trusted advisors in the future, so you want to make sure they have outstanding technical, communication and legal knowledge,’ he explains. ‘This will take your company’s legal function from good to great.’
‘The current generation is training the next one,’ says McGuire. ‘I find that when you teach the next generation, it often improves your own performance. While a succession plan will of course help tomorrow, it’s important to keep in mind that it can also help today.’
