Earl Maxwell, CEO St. David’s Foundation December 3, 2010 Succession Leadership Presented to AISD Leadership Succession Institute

Introduction 1 My challenge today will be to connect my previous experience in the business sector to succession leadership in the public schools. In my previous life, I have worked with five companies to help them with succession planning discussions. Also, during the past nine years, I facilitated discussions that led to the transfer of 80% of our firm’s ownership from the three founding partners to several younger partners. Today, I’ll share some of those stories and then we’ll discuss some of the common themes in the stories and how they may relate to succession leadership in public schools. I believe the question of succession is the most important responsibility of a leader. I believe there should be a written succession plan for every key position in an organization. However, few organizations have done this. Succession will become an enormous issue over the next ten years as 75 million baby boomers turn 60.

2 Examples included five privately held companies - $12 million manufacturing company, $100,000,000 wholesaler, and three service companies with sales of $15 – $50 million. The owners of all five companies considered selling internally, but only two of the companies accomplished this. Later, I will share Maxwell Locke & Ritter’s story, a service firm where 80% of the firm was transferred from three of the founding partners to several younger partners. Succession Stories 2

3 None of the companies openly discussed succession planning and their ideas about valuation until an event forced them to begin the discussion. These events included the death of a partner, two of the companies received offers by third parties to purchase the companies, and competition from the Far East. When the founder of the company began to think of succession, three of the five companies had no one capable of replacing the founder. All of the discussions took far longer than either party expected. All were more difficult and painful than expected. The length of the discussions ranged from five months to two years. Both founders and purchasing groups were offended by the process. Even in the successful internal transfers of interests, there were scars caused by the process that took time to heal. The leader’s identity becomes the same as the organization’s. Succession planning is as difficult as estate planning is for most couples. Common Themes 3

4 Five years before I left, I shared with my partners that by the end of 2007, I planned to pass the torch of leading partner to another partner in the firm. Also, I expressed my desire to begin a third career that would not be connected to ML&R. Given my intentions, we established a muscle-building program among our partner group. Our goal was that by 2007, more than one of our partners would be capable of succeeding me as leading partner. Another goal was to have a successor for every department leader. At the beginning of 2006, we set upon a course to begin this transition. We made significant changes to the governance of the firm. In April 2007, we communicated to the entire firm the process the partners had begun with the goal of communicating the changes to the firm’s governance and the names of the in-coming leading partner and leadership team by the end of June. How have I applied what I have learned to my own situation at Maxwell Locke & Ritter? 4

5 The partners went through an extensive eight week selection process to select my successor. This included a process by which the partners prioritized the skill sets and responsibilities desired in the in-coming leading partner. From this, we developed a job description of the in-coming leading partner. Then, six partners were suggested as leaders who could perform the job description. The top three partners were rated using the skill sets and responsibilities required of the future job. Finally, my successor was announced to the 65 members of our firm, along with the new leadership team. In February 2008 we communicated, to our clients and the community, that I would be leaving the firm at the end of the year. Also, we announced the new leadership team. For the first six months of 2008, my successor shadowed me. For the second half of the year, I shadowed my successor. How have I applied what I have learned to my own situation at Maxwell Locke & Ritter? cont’d 5

6 When I became CEO of the St. David’s Foundation, I promised to hire and develop a number two person, who could succeed me. Next we began hiring or developing successors for each of five key executive positions at the Foundation (CEO, COO, CFO, Director Dental Operations and Clinical Director of Dental.) In November, we reviewed with the Executive Committee succession plans for each of the five executive positions. How have I applied these succession concepts to a non-profit? 6

7 Questions and Discussion 7 How does succession at AISD normally occur? What are barriers to succession planning at AISD? What are the advantages and disadvantages of internal succession? When is it best to hire a successor from outside the organization?