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Firms Seeking Out Retired Executives To Regain Footing
By ALEXANDRA MOSES
DETROIT -- When Kmart Corp. started searching for new leadership after it filed for bankruptcy protection, it looked at turnaround experts, financial gurus -- and its retired executive pool.
Ford Motor Co., in the midst of a $9-billion-US turnaround, tapped a former executive who had been retired from the automaker for seven years to become its new chief financial officer.
A growing number of companies in trouble are seeking out retired executives to help them regain their footing, especially as America ages and the talent pool shrinks.
Debra Condren, Ph.D., a business psychologist and president of HumanInvestment.com, said 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," Condren said. "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. Gilmour retired in 1995 after 34 years with the automaker and was almost its CEO twice.
Xerox Corp. recently hired Lawrence A. Zimmerman, a retired IBM executive, as chief financial officer. Zimmerman, 59, had retired in 1998 after 31 years with IBM. Xerox also is undergoing a turnaround.
Jack O. Bovender Jr. left retirement in 1997 to return to health care company HCA while it was the target of a federal fraud investigation. Bovender retired from the company in 1994 and now is CEO. Observers say HCA is healthier than it has been in years.
Jeffrey Balash, of investment bank Comstock Partners LLC, said that 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.
"Certainly after Sept. 11 and the dramatic market decline, it became very apparent that strong leadership skills and the more traditional leadership skills ... became revalued again," Condren said.
Ford chairman and CEO Bill Ford said he lured Gilmour out of retirement because "he's helped us through tough times before and helped us to record profitability before."
Among Kmart's returnees is Michael T. Macik, who returned to the retailer in April, less than two years after he retired. Macik, 55, spent 31 years with Kmart, retiring as a vice president in human resources. When he came back, he was named executive vice president of human resources, reporting directly to Kmart's CEO.
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 might be needed more than experience.
-- Associated Press
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