Search
Close this search box.
Search
Close this search box.

A Playbook For The Next CEO Transition

Nobody enjoys planning for their own untimely departure—but the reality is, turnover in the top spot has never been higher. Consider these six suggestions to be prepared for anything.

Times are uncertain for CEOs, judging from the record turnover in 2019. Experts chalk up the turbulence and turnover to fears of an oncoming recession, boards’ lack of patience, pressure from activist investors and more. There has also been an inordinate amount of scandal and even bad CEO behavior—the #metoo movement and today’s “cancel culture” have spilled over into the C-suite, meaning boards are less forgiving of CEOs who deliver bottom-line results but make front-page headlines for the wrong reasons.

I think it is a positive trend that CEOs are being held to higher standards. Although I also agree with Yale Professor Jeffrey Sonnenfeld that sometimes it takes courage for boards to stick by controversial chief executives.

The point is, even for companies blessed with great CEOs who seem set for the long haul, now is a good time to ask: What would we do? In the event of a CEO scandal, or illness, or sudden departure, are we equipped to deal with the ensuing uncertainty?

After witnessing many great leaders and transitions over 25 years in the executive search industry, and having made the transition into the CEO position myself, the following is advice that I can offer to boards and management:

1. Be cohesive and clear in messaging about the outgoing CEO. Whether the exiting chief executive is leaving on good terms or not, the board and leadership must have a clear, consensus-driven message that it will share with the rest of the organization and the public. Craft an official message and determine exactly who will deliver it. Be explicit that other key stakeholders (i.e., the board, leadership) should refrain at all costs from making public or private statements about the transition. Any leak or chatter surrounding a CEO’s exit muddies the message and complicates matters.

In addition, make the official statement about the transition as positive as it can be without sounding disingenuous. Employees and the media may focus on the negative and may speculate as to the circumstances around the CEO’s departure, but this, too, shall pass.

2. Stick to your succession plan. It goes without saying that an organization should have a CEO succession plan in place. Ideally, the plan stipulates who will take over as interim within 48 hours of the announced departure. If someone internally (e.g., the board chair or a senior leadership team member) will fill the role, terrific. If external, be sure to have one or more outside placement firms vetted and on speed dial so that an experienced, reputable interim CEO can be brought in to steady the ship.

3. Be specific about the outgoing CEO’s role. It can be a godsend for a new CEO to have clarity about the outgoing CEO’s exact role and timeline for eventual departure. If the situation calls for a clean break with the prior chief executive, then problem solved. If, however, a period of overlap is required and the predecessor will stay on in an advisory capacity, be sure to detail the scope and duration of that role.

4. Let the interim be just an interim. In other words, the interim CEO should not be a candidate for the permanent role. It is too hard for an executive to try to get the CEO job while doing the CEO job. Their loyalties and attention will be divided between current, pressing issues and wanting to display a vision for the future. There is definitely a case to be made for bringing in an objective outsider who can provide a nonpartisan viewpoint on the state of the organization and its needs going forward.

5. Take a deep breath—and pause. As difficult as a CEO transition can be, it does present a watershed opportunity. The whole organization can take a step back, survey the situation and formulate a new vision for the future: What do we want to be and who is going to get us there? A CEO’s departure is a chance for reflection, recalibration and reimagining the road ahead. A board should not let the “tyranny of the now,” as my colleague Paul Bohne has written, dictate rash and rushed decisions.

6. Let the next CEO drive the strategic vision. It is tempting for a board, in anticipation of a new CEO taking office, to rush to provide strategic clarity for the future—to make the next leader’s job easy, they reason. As an executive search professional, I know this to be exactly the wrong move. It will drive away the best candidates for the job. Candidates with ambition and vision will want to play a lead role in setting the course for the future, in collaboration with the board. I’ve witnessed situations in which the strategic plan was locked down before a new CEO was recruited—inevitably, it diminished the caliber of executives who aggressively pursued the position. Trust that the next CEO you hire will be savvy enough to take the company where it needs to go.


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process

    Executives expressed frustration with their current strategic planning process. Issues include:

    1. Lack of systematic approach (70%)
    2. Laundry lists without prioritization (68%)
    3. Decisions based on personalities rather than facts and information (65%)

     

    Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns.  They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning.  Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process.  This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented.  If you are ready for a Strategic Planning tune-up, select this workshop in your registration form.  The additional fee of $695 will be added to your total.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.