Founders Find Succession Tricky

CHICAGO At 52, Howard Draft says he's too young to be thinking about retirement. Still, the CEO of Draft last week tapped Laurence Boschetto to become president and chief operating officer of the global network. "I'm not planning on going anywhere," Draft said. "I love this job, and as long as Interpublic Group plans to keep me, I'll be employed." But he did concede, "If I got hit by a bus tomorrow, he would be the CEO."Draft, unlike some of his contemporaries, and even a handful of older agency chiefs, is ahead of the curve on succession planning.For a host of agencies that were founded and built around strong personalities in the '80s and '90s, the issue of succession remains a difficult and sometimes sensitive topic. Whether they fear such a decision would spark office infighting or signal that their usefulness is waning, or they simply don't want to stop working, some CEOs are hesitant to identify the next leader. Jack Connors is 63. Cliff Freeman will turn 63 in March. Pat Fallon is 60. Dan Wieden is 60. Some of these agency leaders have only just begun the process of putting successors in place, underscoring just how touchy the topic is in agency circles.Take Fallon, for instance. Agency founder Pat Fallon and Publicis Groupe CEO Maurice Lévy are believed to be in the early stages of a search for a successor for the $700 million network, but both parties would only say that they are discussing the future and would not confirm that an active search is under way. "Since we signed our [acquisition] agreement with Pat, we saw that we would need to have a succession plan in place, but we never put a date on it," Lévy said. "We are reevaluating it, discussing it on a regular basis."In a statement, Fallon wrote that he is "100 percent committed" to the agency, but added that he "would not like to be working at this pace five years from now.""I understand the need for an orderly succession plan and am currently exploring many different options, people and structures," Fallon wrote. He did not give a specific timetable. (When Fallon sold his agency to Publicis Groupe in February 2000, Fallon was signed to a five-year contract, Lévy said. That deal has now expired, but Fallon continues to work under the same contract without the term, Lévy said.)"Human-capital planning is the premier part of our business," said Miles Nadal, CEO of MDC Partners. "We're always looking at generation B and generation C to make sure the next generation of management will be our partner emotionally and financially."At MDC-backed Cliff Freeman and Partners, the founder brought in Jeff McClelland, 43, as CEO of the agency, but both Freeman and McClelland stop short of describing McClelland as Freeman's successor."I think Jeff [McClelland] is going to be a leader of the agency for many years to come," said Freeman, who added that he had another 10 years in him. "I certainly think he has the ability to lead an agency."For the holding companies, the issue is of increasing importance. Draft said establishing a line of succession was in part fueled by IPG, where first-year CEO Michael Roth has made succession a priority. Over the past year, Roth charged the heads of his operating units with creating profiles of the 15 to 20 top people in each company. That process yielded profiles of 350 people, whose names have been forwarded to Roth and the board for succession evaluation, sources said.In the agency world, which is more personality-driven than many other industries, succession can be tricky. "Agency [succession] planning is more challenging, risky and complex than any other category," said Chris Colbert, chief marketing officer of Pile and Co. in Boston. "When all the eggs are in the basket of the leader, that's tricky."It is particularly difficult to find a successor to a leader whose name is on the door because of the ego inherently involved in establishing a successful agency, Colbert said. "The truly charismatic, agency-defining leaders, they want to perpetuate [the star] model," he said.Take Interpublic Group's Deutsch, for instance. Between 1989 and 2003, the agency grew from a small New York-based agency to a national powerhouse winning almost every pitch it entered. But as the shop's charismatic chairman, Donny Deutsch, stepped back from running the agency's day-to-day operations, the shop faltered, losing accounts and failing to win new business pitches. Though it was Donny's father, David Deutsch, who launched the shop, it became wholly identified with his high-profile, high-octane son. Last year, he tapped COO Linda Sawyer to replace him as CEO. "Founders are unique and not necessarily replaceable," Nadal said. "You have to create a different kind of structure, but maintain the essence of the agency brand."Giving a new leader time to work beside and around an agency founder is one way to establish ties from the past to the future. "Having the right group of talent in place, making sure they're growing the business without the founder's help, is an important part of sustaining an agency," said Dave Beals, CEO at Jones Lundin Beals in Chicago.Beals cited Stan Richards, the 74-year-old founder of The Richards Group, as an example of someone who has set up up a cohesive succession strategy.In 2001, Stan Richards devised a plan to maintain the Dallas agency's independence by setting up an arrangement whereby 100 percent equity stake in the agency goes to an undisclosed charity when he dies. (Richards, 74, who runs several miles a day, says he has no plans to retire.) A sealed letter names one of three members of the agency's leadership council—creative directors Glenn Dady, Gary Gibson and Mike Malone—as Richards' successor.Though difficult, finding successors for namesake agencies is obviously not impossible.Agencies like JWT, Ogilvy & Mather and Leo Burnett have not only survived after finding successors for their founders, but those successors' successors."The personalities that realize they've got to grow a group around them will win out," Beals said. "Those who want to keep it close to the vest will have a harder time."

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Founders Find Succession Tricky

Aaron Baar

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