When Plan B Is Not Enough: Some Lessons From The United Airlines CEO Succession(s)

In the annals of business folklore, there is an oft-used quote from the revered former CEO of GE (GE), Jack Welch: “From now on, [choosing my successor] is the most important decision I’ll make. It occupies a considerable amount of thought almost every day.” The clincher here is that he said this in 1991, a full nine years before his anticipated retirement.

Regrettably, most are not as forward-thinking about succession planning. In fact, Jack Welch and GE are known for their leadership in this arena. What they and companies like them understand is that planning for succession at the top of an organization is not only sound strategy but an important part of risk management.

If Jack Welch and GE’s endorsement of the value of succession planning is not enough, consider the fact that a lack of this premeditation can be enormously expensive for an organization. Expensive not only in terms of the cost of higher compensation that CEOs recruited from the outside tend to receive, but in terms of lost productivity and the instability that a gap in leadership inevitably causes.

To better understand the significance and implications of succession planning or the lack thereof, let’s look at a recent situation where planning for a CEO change was not as it should have been, and analyze what transpired as a result.

Leadership crisis at United Airlines

United Airlines (UAL) has captured its fair share of news these past few years, and much of it is related to what has regularly been referred to as a “leadership crisis.”

In 2010, United merged with Continental, creating the world’s largest airline. But, as the old saying goes, bigger is not necessarily better. There have been major problems with the integration, and operational issues abound. For example, in 2011, thousands of travelers were stranded after United’s computer systems shut down. In 2012, over one weekend, three United Airlines flights had to make emergency landings. Thankfully, no injuries ensued, but chaos and fear certainly did. Then 2013 and 2014 brought additional and significant computer problems as well as labor relations issues with flight attendants, mechanics and pilots. And the list goes on.