And you thought the HBO hit show Succession was fascinating... how about Starbucks for some boardroom succession drama?! Several days ago, we learned that Kevin Johnson has decided to step down as Starbucks CEO. In addition, the company made the surprising announcement that Howard Schultz would return for his third tenure as CEO. Starbucks announced that Johnson had informed the Board of Directors about one year ago that he intended to step down around this time. This news left many corporate governance experts scratching their heads. Why go to Schultz as interim CEO if the board had a year to plan for the succession? Did the Board stumble in an effort to replace Johnson, or is there some other reason for going back to Schultz once again? In a Forbes article by Jena McGregor, experts offered some perspective on the potential pitfalls of this decision:
Still, corporate governance experts say the move includes some potential succession pitfalls. Bringing back a CEO a second time—or a third—can impact future CEO recruitment, says Jason Schloetzer, a professor at Georgetown University’s business school who studies CEO succession.
“When you have a culture among the management team where the founder is still around and still actually pretty heavily involved, it can be difficult to recruit somebody who wants to do their own thing,” he says.
Meanwhile, CEOs who return to a job—especially those as successful as Schultz was in his second tour of duty—may try to do things that brought them success before, even as employees’ mindsets and public expectations may have changed.
Such CEOs can “essentially operate in a repeat methodology,” says Steve Mader, a strategic partner with executive search firm ON Partners who formerly ran the board practice for Korn Ferry. “But things change. [The] solutions five years ago are not necessarily good solutions now.”
Naturally, we will learn more in the coming weeks and months about Starbucks' succession plans. Perhaps the Board simply had to wait for their preferred candidate to be available. However, even if that is the case, the move to Schultz doesn't come without pitfalls as described above. The situation certainly speaks to the need for succession planning long before a leader indicates that they are thinking of stepping down. The best leaders cultivate and develop talent, including the people who can step into their shoes. That process should begin soon after the day a leader assumes a role, not when they begin to contemplate stepping away.
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