Waiting In The Wings
He loves me. He loves me not. He loves me. Ah, forget it.
General Motors Corp. CEO John F. Smith Jr. might as well have been ripping petals off a daisy in hopes of retaining his controversial purchasing czar, J. Ignacio Lopez de Arriortua. He finally lost the executive, after a couple of flip-flops, to Volkswagen. IBM director James E. Burke, overseeing the search for the next chief executive of Big Blue, could well sympathize, as one top executive after another publicly disavows any interest in heading the computer giant.
While the Lopez episode may have been the most public and mystifying recent tug-of-war over a second-tier executive, it's merely a sign of how high the stakes have risen. Hiring the right executive can be worth a king's ransom to some companies. Just ask Eastman Kodak Co. Even before Christopher J. Steffen could move into his office as chief financial officer earlier this year, the news that the turnaround artist from Chrysler Corp. and Honeywell Inc. would join Kodak boosted the company's market value by more than $2 billion.
These days, moreover, executives who boast the right stuff are a rare breed. Despite years of executive layoffs, corporate stars are still hard to find--and just as hard to keep. The best of the bunch are the virtuosos-in-waiting, a level or two behind the top boss.
Simply listen to the folks who go headhunting for a living. BUSINESS WEEK invited corporate recruiters to name executives who have had a dramatic impact. We also asked security analysts and corporate executives to compile lists of Corporate America's most talented understudies (table).
Some of them, such as Apple Computer's Michael H. Spindler, Merck's Richard J. Markham, and PepsiCo's Roger A. Enrico, are already virtual crowned princes being groomed for the top job. Others, such as General Electric's John M. Trani, Hewlett-Packard's Richard A. Hackborn, or Fidelity Investment's Roger Servison, are valued for key performances behind the scenes. From Craig R. Barrett, who helps Andrew S. Grove run Intel Corp., to Mike J. Maples, the whiz who directs software development for Microsoft Corp.'s Bill Gates, many work for legendary bosses who steal the limelight.
ON THE LINE. What they share is an ability to deliver results--and a prominent spot on the Rolodexes of a who's who of headhunters. In nearly all cases, they are leaders with proven track records, most often in line rather than staff jobs. Some have played crucial roles in restructuring their companies, turning around troubled operations, creating and capturing new markets, articulating a vision for employees, and negotiating strategic alliances with global partners.
Indeed, many boast international experience--an attribute that helped make Lopez so valuable to GM and Volkswagen. As headhunter Paul R. Ray Jr. puts it: "Almost every company I speak with, no matter how big or small, puts it on or near the top of the list today."
Small wonder, then, that Richard Markham was lifted from relative obscurity last December to become president and heir apparent of pharmaceutical powerhouse Merck & Co. Markham, 42, first distinguished himself by running European operations, where he got a taste of what the government-dominated world of drugs would look like--an instructive view for the Rx world to come.
Neither is it an accident that both of the contenders to succeed Coca-Cola Co. Chairman Roberto C. Goizueta boast international expertise. M. Douglas Ivester, 45, ran the company's European Community group for a year before returning to headquarters in 1990 to take charge of Coca-Cola USA. John Hunter, 55, is a native of Australia and cut his business teeth working for Asian advertising agencies. He joined Coke in Japan in 1967 as an advertising manager and made stops in Indonesia, Hong Kong, and Sydney before coming to Atlanta in 1989 to head the Pacific Group.
For all of the publicity IBM's executive search is attracting, Big Blue maintains a slew of in-house talent. Among the best is William E. McCracken, 49, general manager for personal systems at IBM Europe. After arriving at Paris headquarters in April, 1991, he was cut loose to turn the personal-computer unit into a stand-alone business--the first of IBM's operations to do so. With a massive reorganization and product relaunch last October, McCracken has made good headway in turning around the European PC business, which has now surpassed the U.S. unit's revenues.
Results speak volumes for who's hot and who's not. At Intel, Craig Barrett directed the company's massive investments in manufacturing operations, making it one of the world's top-quality chipmakers. Now, he's chief operating officer. And at United Airlines Inc., John C. Pope's financial acumen has made him right-hand man to CEO Stephen M. Wolf. Pope, now president of UAL Corp., was the first to tap the Japanese credit markets for aircraft leases, and now, a la Lopez, he's clamping down on suppliers and demanding double-digit cost cuts to slash costs by $400 million this year.
But like many of these superb executives, Pope is much more than a cost-cutter. He balances a bottom-line mentality with an appreciation for such soft skills as teamwork and empowerment, believing that military-like orders have no place in today's corporate environment. "You have to have teamwork," he says. "I can dictate from above and nothing will happen. You need buy-in."
Hewlett-Packard Co.'s Richard Hackborn caught the eye of headhunters by building HP's printer business into a $3 billion leader of the industry. And Mike Maples, a former IBMer who joined Microsoft in 1988, is widely credited with bringing stability and structure to the often chaotic and unpredictable process of software development. He's now part of a four-man team that runs Microsoft--and he plans to stay there. "I'm pretty well happy--and overpaid," says Maples.
One reason that top talent such as Maples and Pope is scarce today, headhunters say, is that Corporate America no longer boasts the bench strength it once had. Years of cost-cutting have thinned the ranks of management talent at many companies. Those remaining are shouldering far greater responsibilities, giving them less room to maneuver.
A major exception is GE, practically a factory for future CEOs. Consultants and rivals heap praise on a cadre of John F. Welch Jr. clones that include John Trani, who heads GE's highly successful Medical Systems division, and Gary L. Rogers, who leads GE Plastics. But having so many strong players often results in unanticipated conflicts when a new chief is chosen. That's why some search consultants are hoping to pry loose Judy C. Lewent, Merck's financial dynamo, now that Markham appears to be the heir apparent.
Every CEO likes to think his top people would never leave. "Spindler wouldn't walk out on me. And I wouldn't walk out on Spindler," says Apple Chairman John Sculley. But, like Lopez, these savvy execs are actively pursued. Cinda A. Hallman, 48, DuPont's chief information officer, gets at least a call a day from headhunters. "I haven't had a week go by in the last few months where I haven't had several calls," she says, adding that she turns queries away because she's happy where she is. Hallman oversees a 5,000-person staff that's wringing major costs out of DuPont's worldwide information-services operations. "If I didn't feel I was having an impact, I would probably be answering some of those calls," she says.
Translation: Hotshot execs have plenty of chances to move on. So GM's Smith isn't likely to remain alone for long in lamenting the loss of one of his best and brightest to a headhunting rival.