Career Development and Succession Planning-Write a 1,050- to 1,400-word organizational plan written in the third person voice.

VIDEO TRANSCRIPT

Page 1© University of Phoenix 2010 Success In Succession

Successful succession planning is fundamental in any business, so a leader must groom candidates whose strengths will complement areas of future growth, not those whose strengths match their own.

ID: 50V101231001140527 Success In Succession

RECORDED ON

Feb 14, 2006

SOURCE

2004-2010, 50 Lessons Ltd.

CATEGORY

Human Resource Management

SPEAKER

Ken Freeman

SPEAKER TITLE

Managing Director

ORGANIZATION

KKR

TAGS

sob

I was Chairman and CEO of Quest Diagnostics for almost 10 years. When I arrived on the scene, I made a pledge to myself that I wouldn’t stay beyond my welcome, beyond my level of being able to make an exceptional contribution in my own mind.

We went through the five stages of our turnaround. We became the undisputed leader in our industry. In 1999 I also had one other very important event happen in the history of our company. Not only did we more than double the size of our company, we, at the very same time, brought in a person who ultimately became my successor. His name was Surya Mohapatra.

I brought him in, and he wasn’t the only person we considered to become my successor. But I brought him in because I had been driving succession planning with my Board of Directors since the first year we were spun off from Corning as Quest Diagnostics, which was 1997.

I’ll never forget that first succession planning discussion I had with my Board at the end of '97. We were one year into the mission as a public company, and they said "Ken, what are you talking to us about this for? You’re in your mid-40s. You’ve only been here a year. My gosh, there’s a lot of runway out there we’ve got to run down before we’ll even think about replacing you."

And I recounted for them two stories. I said "The first story is very clear. In my first experience in work, the CEO of the company I was at had been in the job for almost 18 years, and senior-level people in the company were walking the halls saying 'When is he going to leave? He’s been in the job too long.' And fast forwarding about 15 years, I was in a situation where the CEO of the company - this was Corning - got hit, literally, by a car and almost passed away, and succession planning had to come into play on an interim basis for Corning to survive and to get through that crisis without destruction."

So, I brought in Surya in 1999. He became the COO of our company, and two people couldn’t be more different. I think it’s important in succession to think about differences not similarities. We often like to surround ourselves with people who are just like we are, and two people couldn’t be more different. I’m a musician; I wanted to be a musician when I grew up. And Surya is a scientist; he’s a medical person. He has one of the core patents with others for MRI imaging technology. He has a Ph.D. in Molecular Physics. We were able to compliment each other’s skills. Over a five-year period, I worked very diligently to help prepare Surya to potentially become the next CEO of Quest Diagnostics.

We’d meet virtually every Sunday, for at least an hour to an hour and a half, with telephone calls at four o’clock in the afternoon. I’ll never forget. We’d review what was going on in the business and our families, and whatever else was happening in the business that needed to be dialogued, with either short-term decisions or strategic dialogue for the future, and people moves and customer situations, and we’d cover the landscape. And I used those opportunities, 52 times a year through five years, to help Surya develop to become the next CEO.

We’d gone through the turnaround; we’d become the industry leader; we were growing nicely; we were driving organic growth. But we’d gone from being viewed as a turnaround situation by people to being, now, a real healthcare company, touching 140 million patients a year. Surya brings the focus on the patient. He brings the science and medical technology, which are the sources of future growth for Quest Diagnostics. The industry can’t consolidate much further in a traditional sense. The growth must come through science and technology.

Surya became the person in charge as Chairman and CEO of Quest Diagnostics through an orderly, well-planned transition, one in which there were no hiccups, and there was no

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Page 2© University of Phoenix 2010 Success In Succession

disruption whatsoever for our employees, customers, and shareholders. The company continues to move ahead boldly and very well into the future.

The lessons from this story? Well, it starts with the fact that being a CEO is not a birthright. So many of us fall in that trap. But being a CEO is a real privilege; it’s not a birthright. And, it’s important for us to remember that our legacy in the end is at least as much, and even more so, how our successor performs in the job, than how we do.

We also need to realize that perhaps the biggest and most important job we have, particularly for a CEO, is to drive development plans in our organization and succession planning for our people. So often in companies, we put human resource kinds of activities in a corner, and we say "We’ll get to that if we have time." And the fact of the matter is all companies are, is perhaps a little bit of technology and some financial resources that are, hopefully, aiding and abetting a team of people who are working together to create value.

So we need to put our money where our mouth is and spend our time as leaders, a disproportionate amount of our time, driving succession planning, whether it’s for the CEO position or throughout the organization as we build talent to move the organization forward.