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McSuccession Planning

The restaurant giant’s succession planning helped the company overcome a potential crisis.

For Andrew McKenna, the 79-year-old, non executive chairman of the Oak Brook, IL based Mc Donald’s Corporation, the company’s methodical succession plan helped the $61 billion restaurant giant avoid what could have been a management disaster.  In a short span of six months in 2004, the company had to replace two CEOs exposing the company to functional jeopardy.

Chairman McKenna believes an effective succession plan and a swift decision making process helped the company through the predicament. In 2004, after Jim Cantalupo’s sudden death, Charlie Bell, the then President and COO of the company took control as the new CEO. As he steered the company through a set of innovative strategies and a revamped menu structure, he was diagnosed of colon cancer and had to step down as the CEO. Soon after, the current CEO James Skinner, who was a director and the COO in the company by then, was chosen to succeed Bell.

McKenna says the company board always focused on having an effective succession plan in place. “After the sudden demise of Jim [Cantalupo], the company was left leaderless and we had to act soon to keep the stakeholder confidence intact. We assembled the board very quickly and the very next moment, we had Charlie Bell as the new CEO,” says McKenna recollecting the sudden events in the company’s recent history.

Recalling the events, McKenna says, as the news of the Cantalupo’s sudden demise spread, company’s stock traded down on heavy volume. However, Charlie Bell’s quick appointment as the new CEO with in two and a half hours of announcing Cantalupo’s death helped the company’s stock recover.

Factual and forward looking media coverage got the company the distinction of being the ‘new paragon of effective crisis response.’

McKenna believes had the board delayed naming a successor, the company would have been subject to continued stock volatility as well as speculation about its future strategies. According to him, the swift decision making capabilities of the board gave immediate reassurance to employees, the franchisees, and investors that the company had a knowledgeable leader in place who can provide continuity and carry out company’s strategies.

Similarly, when Charlie Bell was diagnosed of colon cancer and had to quit just seven months after he was named the CEO in April 2004, McDonald’s had the next man ready for the job. Vice-chairman James A. Skinner, a 33-year veteran and effectively the company’s COO, was moved up to the CEO position in November 2004.

Continuing with its practice, company insiders believe McDonald’s is already grooming the company’s incumbent COO to take on the top job in due course of time. COO Ralph Alvarez is stated to be the second in command after Skinner and he is reportedly the front runner for the top post after Skinner’s retirement.

McKenna owns Schwarz Supply Source, a Morton Grove, IL based $450 million international distributor of paper packaging and allied products. Started as a local paper supplier, this 100 year-old company evolved into a global supply chain management services provider under McKenna’s leadership. He is currently the chairman of the company, a position he is holding for the past 45 years. His politician son Andrew McKenna Jr is the President of the company.

McKenna has earned great respect for his strong board leadership through turbulent times, especially for his strong guidance through two difficult CEO changes and several boardroom adjustments in the early 2000s. As lead director on the board of Aon Corporation and as chairman of Schwarz Supply Source, he continues to lead the charge in board peer evaluations and management succession planning.

A graduate of the University of Notre Dame with a bachelor of science degree in business administration and marketing, McKenna was chosen to receive the 2008 Public Company Director of the Year award by National Association of Corporate Directors (NACD) for his continued development of corporate governance as non-executive chairman of the board of McDonald’s and as lead director at Aon.

About fayazuddin a. shirazi