A 'Smooth' Succession at the Fed
November 28, 2017
It is the tale of two cities in Washington D.C. While a messy succession battle plays out in the media at one agency, the Federal Reserve appears to be getting it just right.
It's still unclear who will is the new head of the Consumer Financial Protection Bureau, as the president and acting director clash. But in remarks before the Senate Banking Committee Tuesday, Jerome Powell, President Trump’s nominee to succeed Janet Yellen as Fed chair, struck the perfect balance of crediting the strong performance of his predecessor while also laying out a vision for how to build on that success.
Contrary though it may seem, Powell is actually stepping into a difficult leadership role. Yellen is leaving the Fed with a track record of strong economic growth, low inflation, tough oversight of bank rules, and fair and balanced policy decisions. If it isn’t broke, as the saying goes, why fix it? Moreover, Yellen’s departure is notable for two other reasons: She was the Fed’s first-ever female leader, and she is the only Fed chair not offered a second term in almost 40 years.
According to Jane Stevenson, global leader for Korn Ferry's CEO Succession practice and vice chairman for its Board & CEO Services practice, replacing a popular and successful leader is sometimes more challenging than taking over for a poor performing and unpopular one. “The continuum between change and stability is very important,” Stevenson says. “It requires a leader who is secure in their own skin and really looking to chart a path forward that creates opportunities for the organization and its employees, as opposed to competing with their predecessor to prove they deserve the role.”
In the annals of corporate history, the latter category of leader outnumbers the former by a wide margin. That’s why, according to Janet Feldman, a Korn Ferry senior client partner in the firm's CEO Succession practice, it is crucial for incoming leaders to posses the patience to develop “followership” and understand the importance of earning credibility without being insecure or thin-skinned.
“You have to earn the right to shape the future,” Feldman says.
Stevenson says incoming leaders can help get alignment by understanding who the influence leaders are in the organization and putting them in place to help set the new strategy. She cited as an example the 120-day operational review and “Manifesto for Change” Neville Isdell issued as Chairman and CEO of Coca-Cola in 2004. “Refusing to set the strategy for 120 days was unheard of in the analyst community. But [Neville] wanted the strategy to be created with him by the leaders who would need to deliver it, and that was pivotal to its success,” Stevenson says.
It’s not about competing with the past. For new leaders to get buy-in and keep the momentum going, it’s about setting the right goals and carrying them out in an authentic manner.