August 2, 2000 1:30 PM PDT
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Christian believes that recent executive swaps set up a chain of command that could help companies ensure a solid succession plan for the years ahead.
Recently, Big Blue named the frequently sought-after Palmisano to the No. 2 post in an apparent move to groom the executive for greater things down the line.
Other executive shuffles point to this growing trend. Marimba founder Kim Polese took the role of chairman, relinquishing her CEO title in hopes of luring high-caliber talent who wouldn't be interested in the No. 2 slot of operating chief.
Christian recently discussed technology's red-hot and ever-changing job market with CNET News.com.
CNET News.com: What do you make of the Palmisano promotion?
Christian: I think his promotion was part of a succession-planning scenario, and it certainly works to retain Sam, who has been on everybody's list for big CEO searches. But it also sets in motion a whole bunch of other things that will be interesting to watch.
It'll be interesting to see who are the 20 people within IBM that now perceive themselves as candidates for the CEO position after Sam. If you assume Sam will be the CEO in two years when CEO Lou Gerstner turns 60, he'll likely be CEO until he's 60. So, 12 years or so from now, there will be a new CEO. So who will be in their mid-40s 12 years from now and is currently a flying star?
These are the people that IBM doesn't want to lose. But now with Sam's promotion, there's probably six or seven people within IBM who know they won't be CEO and thought maybe they were on the short list. They'll fall out--either voluntary or involuntary--in the changing of the guard.
Christian on consolidation effect
I think the problem we saw six months ago is now not quite as bad. It's back to crazy, as opposed to insane. The competition for talent is still bad, but it has gotten a little better in that some companies' stock prices are underwater and some companies are running out of money.
An average CEO can stay around longer when their stock price is high, even though their operations are not that good. When the realities of the marketplace set in like they have lately, you need to show real revenues and profits. When they're not there, the board becomes impatient and says we need to replace the CEO, so you have more firings and hirings. The dust has not settled yet.
Does promoting the No. 2 executive to CEO make a difference in retention?
Many times today you see that a CEO moves to chairman and the chief operating officer moves to CEO. But in reality, they're doing the same things they were doing before. It gives them a little bit better title and allows them to maybe define their jobs a little better and helps in succession planning. A lot of companies also do that for retention purposes.
Does the current market make it difficult to find someone to play second-in-command?
I met with a company today that wanted to bring in a strong chief operating officer. What's happening these days is anyone who is good enough to be a chief operating officer doesn't have to be. In most cases, a chief operating officer is expected to have P&L (profit and loss management) experience. Anyone who's had P&L experience and works in the Valley and understands technology has many, many opportunities to be CEO. These people won't return calls for a chief operating officer position.
As a number of Internet companies consolidate because of hard times, will more executives enter the tight labor pool?
A lot of people talk about the fact that when they buy companies, they're really buying talent and willing to pay so much per person for the company...They are creating retention packages that say you can't leave, except under great financial pain. And so you'd think consolidation would allow for new candidates to float into the marketplace, but it isn't as much as people would anticipate.
Average executives--the ones that a company doesn't want to keep--will go back out into the market when a consolidation occurs. But that's not much use to people who want to hire.
Does dangling a large amount of options give a big boost to recruiting
At the very high
Christian on promoting the No. 2 executive