The Greek philosopher Heraclitus said the only thing that endures is change—a truth that is very evident in business. While smart companies strive to offer consistent quality and service, they can’t escape the fact that the people providing those things will someday change.
As the executive vice president and general counsel of Des Moines, Iowa-based Principal Financial Group, Karen Shaff focuses on staff development and succession planning measures to ensure that her company will have a stable generation of leaders. “Forty percent of our US lawyers today are or will be eligible to retire within the next three years,” she says. “Transition planning for these retirements is critical.”
The Fortune 500 company and retirement-plan provider is addressing this in a few different ways. First, Shaff and her team focus on the development of lawyers throughout their career at Principal, positioning them to move up and be successors. Some of this is done through continuing education. “We send our lawyers to outside programs held by various organizations on topics specific to issues our businesses face,” Shaff says. “It could be topics that affect their work responsibilities today or something they may encounter in the future.”
Law firms also come into the Principal offices monthly to hold workshops on subjects related to its business. The company believes in learning from its outside counsel, Shaff says. In addition, Principal offers in-house leadership training programs and matches lawyers with mentors and coaches, both internal and external.
“We provide our lawyers with other opportunities as well,” Shaff says. “For many of our senior roles, you need a mix of experience within the company and department. We offer opportunities for our top performers, giving them a broader perspective on our company as a whole.” These opportunities include interning on executive management committees.
Sometimes this entails new roles and responsibilities, and several lawyers at Principal have moved outside of the law department. For example, the president of the company’s mutual fund business previously served in the law department, and a number of compliance officers started their careers on the legal team. Shaff says some of the lawyers come back to the law department later in their career.
Clients and partners appreciate Principal’s broad-based thinking. Jeff Grantham and Michael Mulvaney, Maynard Cooper & Gale’s insurance- and financial-services practice chairs, report that, “Karen and her legal team have done an excellent job managing the legal and compliance challenges in this current environment. They have an extraordinary sense of wisdom and timing, knowing when to be flexible and when to be tough in the face of adversity. We thoroughly enjoy partnering with them.”
To further the experience for its lawyers, Principal also provides an opportunity for those who are based at the company’s Des Moines office to work outside of the United States. Shaff says a Principal lawyer recently spent several weeks in Santiago, Chile. “She was on the ground at one of our businesses to learn even better what they do,” says Shaff, adding that another lawyer recently spent two months in Asia. “These experiences help them develop relationships, increase their understanding of the business, and get better exposure. For us, it builds a good team going forward.”
All of these steps provide evidence that Principal is proactive when it comes to succession planning. “Lawyers like to be problem solvers, but if you can prevent problems, that’s even better,” Shaff says. “We don’t want to be in a position where we haven’t planned for a team member’s departure; we never want to do this in a reactive fashion.”
Much of the succession at Principal is done from within, with groomed employees moving into the vacated role, but Shaff says another vital element of succession planning is to consider the changing times. “We never assume that because we’ve got somebody in a role that we need someone else who fits into that same role,” she says. “We are always evaluating the positions and seeing if the work we need done still fits within our organizational chart. Maybe it’s time to restructure, or maybe we have people with talent for pieces of a role but not the whole role. We want to make the best use of our employees’ time and talents. Sometimes it’s better to restructure the position. It’s a very fluid situation; it’s not about finding someone who fits into a box.”
For example, Shaff says the company’s corporate secretary is retiring after filling the role for more than 20 years. “The role has stayed the same over that period of time in how it’s organized and structured,” Shaff says. “The company has grown but the structure of the role hasn’t changed. When she decided to retire, one of the things the law department management team did was to look at her position and determine if we should find another person to fill this role as it’s been or if it was time to change. We’ve decided to restructure the function to serve the company better going forward.”
While future leaders will make their own decisions about succession planning, Shaff says she believes they will appreciate that it’s something that is important. “Having appropriate transition time for a department is critical to avoid disruption through the organization,” she says. “I wouldn’t be doing my job right if we weren’t creating seamless transitions. This involves planning and communication with those who are leaving, those who will fill their roles, and the business partners who will be impacted. If someone leaves abruptly, it puts business partners in a lurch and doesn’t reflect well on our department.”
Prinicpal’s legal team’s focus on succession planning is a reflection of the company’s commitment to the practice. “The whole company spends time focusing on this and appreciates its importance,” Shaff says. “It’s well worth the time and effort, because it helps ensure seamless transitions, which are so critical.”