President Aquino and the hit-by-the-bus test

Commentary by Coco Alcuaz, ANC

Posted at Aug 15 2014 12:28 PM | Updated as of Aug 16 2014 12:35 AM

MANILA, Philippines - In 2012, I asked President Aquino what he was doing to make sure there would be one or a few strong candidates who would continue his policies and programs.

I asked the same question of Budget Secretary Butch Abad, probably his chief political adviser and operator, after last year's midterm election. This is what they said:

"It will be incumbent upon me to make sure that there will be a lot of them (people who can succeed him and continue his programs) because that is a measure of success, but more importantly that is a guarantee that i can be allowed to retire already by that time." -- President Aquino, 2012

"We will make sure that the president becomes hugely successful to a point that whoever it is that the president anoints as his successor will have an excellent chance of succeeding him." -- Secretary Abad, 2013

I think most of us believe the President wants to leave in 2016: he never aimed for this job till the groundswell after his mother's death. Most of us believe he doesn't want to amend the constitution to relax foreign investment restrictions because he doesn't want others trying to change other parts, including term limits.

Now he may have to do all three -- amend the constitution, remove term limits, and run -- because he isn't confident political and economic conditions will be good enough that we'll elect "whoever" he anoints, or his potential candidate(s) may be too weak to take advantage of them. So the next president may not cement and build on his programs, policies and projects. (Or, some say, protect administration members from DAP-related prosecution.)

He's in good company: Many CEOs don't plan succession either, at least not well enough.

In business, this is what's called the hit-by-a-bus test: having potential successors ready for when your CEO leaves, whether suddenly or on schedule. (Of course the government has an actual hit-by-a-bullet, heart attack or stroke mechanism in the vice president, but that doesn’t mean parties shouldn’t plan for the next election.)

It took a company like Microsoft almost half a year to replace Steve Ballmer. It flirted with outsiders like Ford's Alan Mulally before going with insider Satya Nadella anyway earlier this year. Last year, Stanford interviewed directors from 20 big companies and only 54 percent said their companies were grooming a CEO, 39 percent said they had no internal candidate would be ready to take over "now" if needed.

It’s probably worse in Asia, where many companies are family-controlled and the CEO may think, rightly or wrongly, that he should run the business indefinitely, and his relatives don't want to offend him by planning for life after him.

In the recently released ADB-backed ASEAN Corporate Governance Scorecard, only two out of 209 questions seem related to succession planning, and even then only tangentially.

Which may be why, if the President wasn't taking the lead in succession planning, or had a wishful-thinking one, his lieutenants didn't push him hard enough to do so, or expand it: they didn’t want to cause offense. Even if some of them are alumni of organizations where they were presumably trained and tested for leadership, and later became the leaders responsible for training and testing younger executives.

Or planning in general may not be the government’s strong suit. As Doris Magsaysay-Ho exclaimed at this week's Senate hearing on port congestion and the Manila truck ban, when a someone said we should plan to expand the Subic and Batangas ports, we should already be planning now.

The 30 companies in the PSE Index fall into 13 groups: Ayala, Aboitiz, Andrew Tan, Sy, Razon, Consunji, Lopez, Ty, Tan Caktiong, Gokongwei, Lucio Tan, PLDT-Metro Pacific-Philex (First Pacific/Pangilinan), San Miguel (Ramon Ang).

How many of them would pass the bus test? Except possibly for the last two groups, the rest are family-controlled. How many of them have a family member or other respected figure ready to take over the top spot? How many have several family members or partners who may fight it out? How many of them have strong executives who are already running the business or its units, and won't be paralyzed by an interregnum or change at the top? How many of them may have a secret plan that's ready to go, as 83-year-old Warren Buffett claims at Berkshire Hathaway?

Ayala is probably in the best shape there because the brothers JAZA and Fernando get along and their other siblings aren't competing with them -- which as all families know takes a lot of work, including good parenting and training and mutual respect. Even if one decided to hop on his bike and speed off, the other will probably be around long enough to pass the chairmanship -- if not the CEO post -- to a member of the next generation. And they have strong professional managers who can run the units if they both decide to hop on their bikes.

Still, when they decided to replace Ayala Land's president in 2009, they had no ready successor and had to pull back an executive who was getting ready to retire. Good for them, and their stockholders, he did such a good job.

His name is Tony Aquino.

What is it with that name?

Coco Alcuaz is business news head at ANC. He's @cocoalcuaz on Twitter.