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Troubled Companies Turn To Own Retirees To Help Lead
By ALEXANDRA R. MOSES
DETROIT -- When Kmart Corp. started searching for executives to replace its pre-bankruptcy regime, it looked at turnaround experts, financial gurus and its retired executive pool.
Ford Motor Co., in the midst of a $9-billion turnaround, tapped a former executive who had been retired from the auto maker for seven years to become its new chief financial officer.
More and more companies in trouble are seeking out retired executives to help them regain footing, especially as America ages and the talent pool shrinks, experts say.
Dr. Debra Condren, a business psychologist and president of HumanInvestment.com, says companies are drawn to a formerly successful executive "who has a lot of experience in the trenches."
"It's someone with proven judgment, strategic thinking ability, leadership skills," Ms. Condren says. "They've been through not just boom times when people were riding high, but they've also had experience dealing with problems."
Ford hired 67-year-old Allan Gilmour as its new CFO in May. Mr. Gilmour retired in 1995 after 34 years with the auto maker and was almost its CEO twice.
Xerox Corp. recently hired Lawrence A. Zimmerman, a retired IBM executive, as chief financial officer. Mr. Zimmerman, 59, retired in 1998 after 31 years with IBM. Xerox also is undergoing a turnaround.
Jeffrey Balash, of investment bank Comstock Partners LLC, says when companies are struggling, they've often become separated from their core values. Former executives "understand the history of the company. They understand what makes the company great," he said.
It's also reassuring to stockholders and creditors, experts say.
"Certainly after Sept. 11 and the dramatic market decline, it became very apparent that strong leadership skills and the more traditional leadership skills . . . became re-valued again," Dr. Condren says.
Ford's chairman and CEO Bill Ford said he lured Mr. Gilmour out of retirement because "he's helped us through tough times before and helped us to record profitability before."
Among Kmart's retired executives is Michael T. Macik, who returned to the retailer in April, less than two years after he retired. Mr. Macik, 55, spent 31 years with Kmart, retiring as a vice-president in human resources. When he returned, he was named executive vice-president of human resources, reporting directly to Kmart's CEO.
Returning to Kmart, Mr. Macik said, was "an easy decision based on a time of need for Kmart."
He said there were some drawbacks, especially since the company is attempting a turnaround, something with which he has little experience.
"I assume there is a learning curve," Mr. Macik said.
But he said his transition time was less than two weeks, versus 8 to 10 months for someone brand new.
Experts say there is less risk in hiring former executives because they likely moved up through the company and already know how things run. They also tend to be reliable, they communicate well and they can motivate others.
There are drawbacks. For one, health insurance costs are higher for older workers. And some experts say that when it comes to executives, fresh ideas may be needed more than experience.
Nevertheless, some experts say the next generation doesn't have the skill to lead a struggling company.
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