John Kahl's predecessor as chief executive officer of Manco Inc. is a legend.
He bought the Cleveland company in 1971, when it was a modest supplier of
adhesive products to industrial customers and had annual sales of $800,000. He
moved it into the retail market, where it grew to $180 million in annual sales
by the time it was acquired by Henkel Group, a German conglomerate, in 1998.
And, Mr. Kahl says, the company's profitability has been "consistent"
with the sales growth.
Beyond that, he says, the former CEO's forceful personality and
share-the-wealth style earned him fierce loyalty from customers and employees
alike.
So, Mr. Kahl had gigantic shoes to fill when his father, Jack, retired last
year. "Father was dynamic, entrepreneurial and driven," he says.
"We called him a monomaniac on a mission."
How do you replace such an icon?
Very carefully.
Jeffrey Immelt is likely to learn that as he takes on the task of replacing
Jack Welch at the top of General Electric Co. Rarely has any CEO garnered the
reverential and universal acclaim heaped on Mr. Welch, who built GE into the
role model for modern corporations. How do you follow that act? "You have
to have charisma," says executive recruiter Jeffrey Christian, CEO of
Cleveland's Christian & Timbers. "You have to be someone that people
want to follow."
Still, says fellow executive recruiter Dale Winston, chairwoman and CEO of
Battalia Winston International, the challenge is enormous. "You're almost
better off succeeding the successor," she says.
Constant Comparisons
Sports fans know that syndrome. Do you remember who succeeded John Wooden as
coach of the UCLA college basketball dynasty in the 1970s? Who followed the
legendary Vince Lombardi as coach of the Green Bay Packers, the dominant
professional football team of the 1960s?
The answers are Gene Bartow and Phil Bengtson, respectively, and neither of
them enjoyed a particularly comfortable or lengthy tenure trying to live up to
the lofty expectations created by their predecessors.
It's much easier to take over an operation that's in the dumps than one
that's riding high, particularly when you're supplanting a charismatic or
beloved leader. In the former, everyone knows that changes must be made. In the
latter, the reigning sentiment is, if it ain't broke, don't fix it. Whatever you
do will be compared with your predecessor -- would Jack (or Jill, for that
matter) have done it that way? And any slippage in performance will be seen as
proof of your inferiority.
But you can't be too timid, either. Times change, bringing on new demands. In
his waning days as CEO of Hewlett-Packard in 1999, Lewis Platt told me that his
biggest regret was not being more "rebellious" and questioning some of
the conservative traditions that the men who gave the company its name wanted
him to preserve. He felt constrained by his predecessors' aversion to debt and
layoffs. When changing industry conditions cut into H-P's dominance, the
much-criticized Mr. Platt opted for early retirement.
Besides, nobody's perfect, not even the iconic Mr. Welch. So the challenge is
to win hearts and minds without demeaning the legacy of the legend.
Preserving Company Culture
Mr. Kahl says he has tried to temper any change with a sense of reverence for
the past, blending old and new in a way that won't unsettle company veterans.
"We can make things better, but we're not going to throw out the baby with
the bath water," he says.
Mr. Kahl points to the advisory board of outside experts his father created
as an example. "It would have been crazy for me to kill the advisers,"
he says. But he did feel it needed to be changed. "We kept the core and
brought in new people. Now it's a nice mix of Manco past and Manco future,"
he says.
Initially, it's important to reassure everyone that the important issues --
the company's values and its culture -- will remain unchanged. Mr. Kahl
emphasized that he had worked side-by-side with his father for 16 years and that
their business styles were similar. In that, he felt he had an advantage over
someone arriving from the outside to replace a legendary leader. While an
outsider doesn't have any corporate baggage or history to deal with, which can
be an advantage, he also doesn't have the knowledge of the company's cultural
norms as a guiding conscience when making change. "No CEO wants to be
labeled as 'more of the same,' but when it comes to the culture, it is more
of the same," he says. "We have the same values as the day he
left."
The elder Mr. Kahl, a devout follower of Wal-Mart legend Sam Walton's
management philosophies, believed in involving employees and sharing the
company's wealth with them. "Father was very big on inclusion," he
says. "Not only for me and my brother (Bill, another company executive),
but for an extended portion of our management team."
While it's common, for example, for one or two representatives from
Wal-Mart suppliers to attend the retailing giant's annual meeting, Manco
traditionally sent more than 20 executives and managers. Mr. Kahl saw the event
as a management seminar for his team. While it's a costly tradition in this
economy, his son has continued that practice. "It's an exposure situation
to grow those people," he says.
Managing Change
It's also important for the new leader to quickly communicate his
expectations to the troops, to ease their anxieties over the transition. Mr.
Kahl has done this in a variety of ways.
For one, he has used the weekly, two-hour meetings his father conducted with
the company's middle managers as a forum to convey his expectations for the
organization, how he was similar to his father, how he wasn't, what would change
and what wouldn't.
Among the changes he outlined were the installation of management tools to
measure employee performance "so we can appropriately reward those who
really impact the business and encourage those who don't," he says.
That was something his father never did. "He always drove us with better
ideas for the business, but managing the details wasn't his forte," he
says.
Major changes must be discussed and explained. When, for example, the company
was forced to increase employees' co-payments to medical providers, the changes
were outlined in employee forums. "Many companies would just put that out
in an e-mail," he says. "We showed the folks we weren't trying to make
them pay more of the bill, that we were just staying static with cost
increases."
This way, he adds, "you can avoid a lot of the negativity around the
water cooler" about changes.
Reassuring Suppliers and Employees
Mr. Kahl says his biggest fear was that he wouldn't be able to "fill
Dad's shoes" in terms of his relationships with customers and employees,
especially the management team. He set out to strengthen his relationships by
making himself highly visible at the company and in the community. "I've
spent a lot of time with suppliers," he says. "Imagine how nervous
they are. Is the relationship going to change? I spent a lot of time telling
them we value what they do."
It's also critical that the new leader spend considerable time reassuring
employees that their contributions are valued. "You have to listen to your
people, where they think the company is going," says Mr. Christian, the
executive-search specialist. "You can't be an iron fist." He adds:
"You have to get everyone to feel their contribution is important to the
company and its vision."
Mr. Christian says you also have to ask the right questions. What do
customers and employees like or don't like about what you're doing? What are the
things you have to stop doing, what do you need to focus on? Have fiefdoms been
created within the company, are there some bad eggs that have to be sorted out?
Who are the drivers at the company?
Mr. Kahl actually started preparing for this day three years ago, when he was
chief operating officer, and instituted quarterly meetings with groups of
employees sans supervisors. The meetings were designed not for him to speak, but
to listen to their "unfiltered" views on the company and where it was
going, he says.
More recently, he has done a lot of "management by walking around"
-- visiting departments to hear what they have on their minds.
"You just have to be honest," he advises. "Get to know your
people, ask for their input and advice. Don't claim to know everything."