Ingrams September 2023

Thought Leader Insights: Succession Planning

Q&A ... W ith M ike H eitmann

The retiring CEO of Garney Construction walks through the process of succession planning that had led to new leadership of the $1.5 billion water-infrastructure company.

Q: Now that your retirement has been announced, can you take us back thro- ugh the process that led to it, and the drafting of the original succession plan? A: Succession planning is a continuous process, so we are always working on it as it applies to all levels of the organization. Parallel to our succession-planning process is our leadership development program, which essentially prepares our people to lead teams and organizations. Our goal is to have a bench of leaders capable of stepping up when needed. Q: But there is one seat on that bench that differs a bit from the others with the CEO. A: Specifically regarding my position, we began looking at who on our bench would be a good fit for the CEO role about three years ago. Several people were identified and targeted with additional leadership development work. It was about 18 months ago that David (Burkhart) was identified as the next CEO. He moved to Kansas City last summer, and we have been transitioning my role since that time. The hand-off is essentially complete, and he will assume the CEO role on October 1. Q: Tell us about the decision to oper ate on a three-year time frame. Why was that key? A: We wanted to have a solid 18 months of overlap and be able to ramp the transition from zero percent to 100 percent over 12 months, then have a six-month period where ethe new CEO has the reins 100 percent. The three-year process gave us 18 months to evaluate the bench of executive leaders, look at their strengths and determine who would be the best person to be CEO. Q: But it doesn’t stop with that dec ision, does it? A: You don’t want to look at the CEO position solely. You need to look at the overall

Q: Was there anything specific to the Garney organization plan that required a different approach, as opposed to what we might call off-the-shelf succession planning guidance that could apply to any company? A: Nothing in particular other than being a 100 percent employee-owned company. Our level of communication with our employee-owners was higher than typical. Our people have a vested interest in knowing, and having confidence in, our leadership. A: We have weekly internal emails that go to the entire company, as well as quarterly shutdowns in he field where we stop work and meet with our field crews about what’s going on within our company. Our communication level is much greater because our employee owners’ retirement and financial security are dependent on this company being successful. They deserve to know. So we’re very transparent about when people are retiring. Several years ago, I began telling the company “I’m retiring in 2024,” so we started the process to identify the next team to lead this next chapter of Garney. We didn’t communicate the CEO shortlist, or anything like that, but we made it clear that we were going through the process, developing our leaders, working through succession and as soon as a decision was made, we made sure it was communicated. Q: And what form did that take? A: I t’s hard to get everybody together because we’re so spread out around the country, so we sent an email to the entire company announcing that David would be CEO and Matt (Reaves) and Matt (Foster) would be the new presidents. We did that internally, a good eight months before we did the news release a couple of weeks ago. Q: What specific tools help create that level of transparency?

executive leadership in terms of CEO, CFO, COO, president, and other key people who oversee significant operations. They all have different strengths. We wanted a team that’s very complementary to one another, whose strengths combined to provide effective leadership. So no, you don’t just look at one pers on, you’re looking at the whole team . A: There are always going to be adjustments based on the team strengths. In the current leadership team, there are things I’m good at that I handle currently, there are certain things our president is good at. In the new team, several things shifted: This is one better at this, this one is better at that, so let’s switch that up. We developed a very detailed list of roles and responsibilities, showing who did what and how that might look different in the next leadership team. Q: Does that mean tinkering with roles structures? Q: Was there a commitment for an internal hire from the get-go? A: There was a strong preference for that. We were very confident that we had internal candidates well-suited for the CEO role. It doesn’t mean that going outside is not an option, but that would have been a last resort. So we never had doubt. Q: So it’s important to be building your bench along the way, long before change at this level is going to happen? A: That’s why I say it’s continuous. When you’re planning succession, you don’t ever really develop a plan and be done with it. Succession planning is a process that is never-ending. Just like strategy and financial management, it’s continuously going on. It parallels leadership development, basically creating a deep bench of executive-ready leaders, and identifying their strengths. When the time comes to replace key positions, you have the bench ready to step into those roles.

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September 2023

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