A Bite of the Apple

Apple shareholders this week rejected demands that the company disclose a succession plan for the temporarily absent Steven Jobs who announced in January that he would be stepping away from the leadership role on medical leave. On the basis that Apple’s destiny has been closely tied to Jobs, it is perhaps not surprising that shareholders, despite Apple’s continuing strong performance, have fears around who will replace the mercurial and charismatic leader who rescued the firm from catastrophe in 1996 after a 12-year absence from the company he co-founded.
The vote on the succession issue was proposed by the Central Laborers’ Pension Fund and those in the know suggest that a sizable contingent of shareholders may have supported it, although Apple has chosen not to reveal just how many did vote in favour. In a rare show of activism for a group of investors often content with Apple’s positive stock market performance and attractive share price, shareholders still approved a proposal giving them a bigger say in appointing directors which again was against the company’s recommendation. The influential investor advisory firm Institutional Shareholder Services had thrown its weight behind a shareholder proposal to force Apple to disclose a succession plan.Ins
However, with Apple performing in line with market expectations, there seems little investors can do to force the hand of the board at this stage and certainly at recent events Tim Cook, Jobs’ right hand man, has appeared very much in control.
Despite Cook’s calming performance, Steve Jobs absence comes at a crucial time for Apple as it continues in a battle in the Smartphone market with Google, whose Android operating system was installed on more devices than Apple’s for the first time in 2010. At Zeitgeist we were comforted by this emphasis on leadership and the link to corporate value and also that having no succession can make the investors quite jittery. This got us thinking about succession in general and we are frequently involved with clients in their desire to have a succession plan.
However, succession planning is a complex issue and requires a lot of effort and a good strategy and structure to do it well. Aside from the natural fear some managers have of the young upstarts biting at their heels, trying to take their jobs, recruitment focus is often around hiring for skills rather than hiring for succession. This is perhaps understandable because for the hiring manager the skills gap is a here and now issue whereas the succession impact is a longer term element. Consequently we find companies with limited scope to deliver true succession planning because they haven’t taken the time to consider succession potential when hiring.
Back to Apple and ThinkEquity analyst Rajesh Ghai states that “Steve Jobs is an exceptional individual. It’s always going to be difficult to replace him. He’s been such a critical part of Apple for the past 10-15 years. It’s inconceivable at this point in time that someone can provide the same kind of leadership.”
Clearly Leadership and succession for the leadership team has real, tangible links to business performance. As you consider your recruitment plans for 2011, make sure that you have a plan and process to hire for succession as well as skills.