Prudential’s Charles Lowrey on finishing strong as CEO

In this episode of theInside the Strategy Room podcast, McKinsey Senior Partner Carolyn Dewar speaks with Charles Lowrey, former executive chairman and CEO of Prudential Financial, about leadership, succession planning, and transition. He explains why he began thinking about succession from day one, how he worked with the board to develop future CEO candidates, and what it takes to hand over the reins cleanly when the time comes. He also shares his personal experience of leaving the role: questions of identity, purpose, and the one every departing CEO eventually faces—what comes next?

The following transcript has been edited for clarity and length. For more discussions on the strategy issues that matter, follow the series on your preferred podcast platform.

Carolyn Dewar: Tell us about your journey to becoming a CEO. And once you found yourself in the CEO seat, was it what you expected?

Charles Lowrey: I never expected to be a CEO. I started my career as an architect, and if you had asked me back then whether I would be CEO of Prudential Financial, I would’ve looked at you in horror. I had my own architecture firm and decided I needed more business experience, so I went back to business school. That led to a job at JP Morgan, and I was still there 13 years later. Prudential had been a client of mine for about ten years, and they asked me to come over and run the real estate investment management division. And then, as I like to say, I couldn’t keep a job at Prudential; I moved all through the company before ending up as chairman and CEO. It was a very unlikely journey, but having all those different experiences helps you prepare in terms of management, professional experience, and life experience.

You can never prepare for it. You think you know what to expect. You’ve run major divisions—I ran both the entire US for Prudential and their international side—but it’s not the same, because in previous roles you have a boss, and you have peers you can talk to within the firm. When you become CEO, you have no peers. You have the board, and they are a great resource, but you quickly learn that it’s a bit like having 12 bosses. So there’s no one you can really talk to and confide in; you have to find your own group—other CEOs, outside of the firm.

Carolyn Dewar: There’s a lot of talk about the first 100 days, hitting the ground running, and even the middle years, but not much about finishing strong. When did you start thinking about preparing the organization and your successor for when the time came to hand over the baton?

Charles Lowrey: From the day I became CEO. I was a late CEO. I came in when I was around 62, and I retired as executive chair when I was 68. I knew I had a limited amount of time, and I had a very specific goal in mind of what I wanted to do, namely the reorganization of Prudential—putting it on a different footing, making the hard decisions in terms of restructuring the organization, and preparing a very strong foundation for the next CEO.

And at Prudential, the board and management take succession incredibly seriously. I became CEO in December of 2018, and the month before that, I gave a presentation to the board on potential successors. This is something they actually look at annually, every November. So, from early on, the burden was on me to start grooming the next set of CEO candidates; to not only identify potential candidates but also articulate to the board what their career paths would be to provide them with the experiences they needed to become serious candidates.

Carolyn Dewar: How did you and the board know what the profile was you were trying to develop someone towards—were you checking in against a set of criteria?

Charles Lowrey: A CEO’s profile can differ depending on the timing of their arrival. Prudential was a very different company when I took over, in a very different competitive context, and the CEO now likely has a very different remit than when I came in. That’s a natural evolution; you do not want the criteria for a CEO to be static in any way. I could argue it’s the same leadership skill set, but a different view on strategy and context is really important. So, we didn’t have a specific set of criteria, per se. Again, at first, we were looking to give people a range of experiences so they could be considered candidates. Once I determined with the board what my exact timing would be and we had more context, we developed the specific skill set we thought was needed for the next CEO and evaluated both internal and external candidates based on that.

Carolyn Dewar: How did you see your job as CEO in terms of developing that next generation of candidates? And how did you know what it would take to round them out, or how long?

Charles Lowrey: My job was to test and coach, provide them with a range of experiences, and hone their skill sets as they developed, which I think any good manager would do. This is something Prudential and the board take very seriously at many levels, not just at the CEO level. Then, every year, we would check in on how they were doing and whether there were other candidates to consider, ultimately to give the board enough data so they would feel comfortable making a choice—because let’s be clear, this is the board’s choice. The board needs enough information to make its decision. They’ll never have perfect information, and I would argue there’s a fine line between gathering enough and gathering too much. You do want to think about the time frame on this, especially as it gets closer, because you could lose people. But realistically, it’s going to take a significant period for the board to become comfortable with evaluating the candidates.

Carolyn Dewar: Did people know they were potential candidates? And does that create tension in terms of people feeling like they are competing, or is it all under the umbrella of good coaching?

Charles Lowrey: It’s under the umbrella until it’s not. There will always be speculation in a company about who the next CEO could be, and that starts from the day you become CEO. People in the organization are smart; they understand there is a series of candidates who are being considered. It’s just part of the rigor of selecting a candidate. In terms of tension, it’s entirely dependent upon the individuals that are being considered; they can either be collegial about the process or they can be adversarial. At Prudential, we’ve been very lucky that in the past three choices of CEOs, the candidates have been very collegial in the run-up to the decision. I think that’s a real tribute to those people, and to the culture of the institution.

Carolyn Dewar: Alright, so you’ve been developing this pool of people and having these conversations with the board since the beginning, while excelling in your role. How did you recognize when the arc of your own tenure was coming to a close? How do you have that conversation with yourself, your spouse, or the board?

Charles Lowrey: I think you always have it with yourself first, and then you have it with your family, and finally you have it with the board. That’s the order in which I’ve lived my life: family and then work. The work the firm was doing in terms of the restructuring and the reorganization to create a firm foundation for the next generation was concluding. I had a choice to make. Do I stay on and take the firm through that to the next level, or do I let someone else come in and do that? Honestly, age was a bit of a factor. But I also thought that if I stayed on, I’d be a blocker for the next generation, who were ready at that point. I didn't want the organization to lose them. So, it seemed like a logical time to tie a bow around the whole reorganization and restructuring that we had done and hand it off to the next generation. I went to the board around 18 months beforehand and said, “This is what I'm thinking about, and this is what I think we should do.” And they accepted that.

Carolyn Dewar: When you were in the CEO seat for those last 18 months, how did you think about finishing strong? And were there things you wanted to get done to make it easier for the next person?

Charles Lowrey: First of all, there’s no rheostat with a CEO job; there’s a light switch: It’s on or it’s off. I did not want to coast. I felt I had a renewed mission to make sure that everything that we were doing was checked off and done well. The goals that we had in terms of the reorganization of the company and placing it on a very strong foundation were, in fact, completed. That provided tremendous motivation for me to work incredibly hard for the last 18 months, making sure it was as clean a package as possible to hand to the next person.

When the decision was made, there was an overlap, where discussions occurred that let me do the hard things, but in conjunction with the new CEO. So, if there were personnel decisions to be made or other difficult decisions, I was still making them on my watch. But the new CEO would be in the conversation because he was going to inherit them. Again, I wanted to tie as pretty a bow as possible around the package.

Carolyn Dewar: However short or long, that overlap period can be tricky for both. What are your reflections on what makes a smooth handover, either as the incoming or outgoing CEO? And what do people underestimate or get wrong about the transition?

Charles Lowrey: I’ll start by saying, at any given time, there is only one CEO of a company. Period. I was very fortunate that the CEO preceding me had a very strong view that when he was no longer CEO, he would leave the premises. It was a clean break. He also purposely said something to me that I greatly appreciated and respected: “I am here if you need me. I will not call you.” And he didn’t.

In my case, the board asked me to stay on as executive chairman for a period of a year. And I did, but I made it very clear to everyone that there was one CEO, and that was the new CEO. I moved off the executive floor, and I told anyone who came to talk to me: “I will listen. I will not offer an opinion. And oh, by the way, anything you say to me, I will say to the CEO.” Like my predecessor, I was very respectful of the new CEO, Andy Sullivan. I was there if he needed me, as a resource and only a resource. I would tell him what I was hearing for his consideration, but nothing more. And that was known throughout the firm.

My goal in the succession plan was for the market to greet it with a huge yawn—that there would be no reaction to this whatsoever. And that’s what happened. This is Prudential at its best in terms of succession planning. Now, there is a tremendous amount of work that goes into it, and I think people underestimate the number of decisions that need to be made to effect a smooth transition. We had a very experienced head of HR and consultants who helped with everything from how long between the announcement and when it’s actually turned over, to whom to call, and how to execute. It was highly orchestrated behind the scenes over many months. But the market, the world saw none of that; all you saw was a very smooth transition.

Carolyn Dewar: And while all this is going on, I assume you’re thinking about what’s next for you. How did you approach that, and what would you share with people who might have some fear or trepidation around it?

Charles Lowrey: Oh, I had lots of trepidation around this. You’re going from “who’s who” to “who’s that?”—that in itself was one of my biggest fears. A great privilege of being a CEO is the access you have to extraordinary people, and I knew my access was because of the title; it was not because of my name. In another life, would I still have access to super interesting people and be stimulated?

The work that I did with a coach, who helped tremendously, was to frame out exactly the kinds of things I wanted to do and then very intentionally pursue those things. I almost scientifically created three buckets. One is nonprofits. I’m still chairman of the board of the New Jersey Performing Arts Center, and I’ve joined the board of the American Academy in Rome, which gets me back to my art and architecture roots. The second is what I’ll call “giving back.” When I became CEO, I called up a lot of other CEOs and asked: “Could I come talk to you about what it’s like?” People were so generous with their time and went out of their way to meet with me. They helped me think about the opportunities and consider the pitfalls of being in the role. I’m now working with three different organizations, sharing the achievements, the mistakes, and the feelings I experienced being a CEO with other CEOs who might benefit from hearing about it. The third bucket is corporate board service. I just joined the board of the Bank of New York, which I’m thrilled about, as I rotated off Prudential’s board. And so those are the three major buckets; I’m excited to see them filling up and relieved with the new portfolio I have.

Carolyn Dewar: For anyone who is in the last third of their CEO tenure and perhaps hasn’t been talking to their board about this, what would you say are the two or three most important things to start doing?

Charles Lowrey: First, talk to the board soon about your plans because they might say, “Can you extend for a little while? Can you do something different?” In my case, they asked me to stay on as executive chairman for a year. So, I’d urge you to begin to have that conversation in a very transparent way. The second point is that it takes a village. As I’ve mentioned, the head of HR was unbelievably helpful and became a huge resource. But then we also had to put together a whole communications team and think about investor relations, you name it. Again, don’t underestimate the amount of work it takes. And the third point is, remember this is a difficult process for those being considered. Have empathy and grace for those people, because they will be going through what you went through.

Carolyn Dewar: Many people look at the CEO role and say, “These are impossible jobs. Who would ever want that role?” If you were talking to someone earlier in their career, why might they aspire to this one day, and what advice do you have?

Charles Lowrey: It is not for everyone. People look at the glory and the glamour of it, but there is the other side of the equation as well. It is all-consuming. It is 24/7. My advice is to make sure that you’re not completely consumed by the job. Recognizing what’s important to you—family, friends, exercise, whatever keeps you grounded—is the counterbalance to the pressure and the responsibility of work. I believe that’s what is most important and what will make you a better CEO.

But what I’d also say is that it is an absolute privilege to be CEO, for two reasons. The first is that it gives you the chance to put your imprint on a company, however large or small the company is, and create a legacy for that company going forward. That’s an extraordinary opportunity. The second point is one I raised earlier, which is that it also affords you the opportunity to meet and interact with extraordinary people, both inside and outside the company. And that is an incredible privilege as well. So those two aspects of the job are irreplaceable and almost indescribable. And for that reason, I wouldn’t trade my experience for the world.