Deborah Rubin, RHR International
This is the last in a series focusing on the different stages of the CEO lifecycle—the CEO’s exit. This phase is the simplest conceptually, yet can be surprisingly challenging. Handled well, a CEO can create an enduring legacy through enabling the effective transition of his/her successor. Handled poorly, the contributions of an otherwise successful CEO can be overshadowed by missteps at the end, hampering the next leader and causing the organization to lose focus and momentum (Inside CEO Succession: The Essential Guide to Leadership Transition by RHR on the topic covers this in much more detail). There are three key elements in this phase:
Assist the board in the selection of the successor.The board is ultimately responsible for selecting the next CEO, and it is one of their most important responsibilities. However, for planned successions, the incumbent CEO can help frame the process, partnering with the board, serving as a catalyst for action when needed and providing input. The CEO typically has considerable influence when the focus is on internal candidates, but less of a voice when the likely source is external, although there are exceptions. Supporting the selection process without attempting to dictate the results is the CEO’s role at this point. The CEO also generally has the greatest insight into the individual sensitivities of the internal candidates and how best to communicate with them in order to maximize retention.
Supporting the succession with a full orientation to the organization, board and all stakeholders.Once the selection has been made, there are important aspects to consider. First is the timing regarding the hand-off of responsibilities. Staged transitions, such as creating a time-limited COO role, can signal an upcoming transition and allow the organization and the external world time to adjust, as well as allow the successor to learn parts of the organization that may be less familiar to him or her. However, business requirements, personal situations and the dynamics between the incumbent and the successor should also factor into the decision. At least three months of overlap between the two executives allows some time for the incumbent to provide insights into the senior team, the organization, competitors and the industry. Second, it is important to generate a robust and compelling communication plan that encompasses internal stakeholders as well as a proactive outreach to key external constituents such as customers, suppliers, investors, analysts and the media.
Working with the board on whether and how the departing CEO will be involved with the organization in the future.The views are mixed regarding whether or not the incumbent CEO should remain involved with the organization in a time-limited role as board chair or another role, or to make a clean break. This decision should be based on what the organization and the new CEO need to be successful, and what the outgoing CEO is willing or able to do. When the organization must make a radical shift in strategy, the presence of the prior CEO can impede the new leader’s ability to dismantle what was previously built. The dynamics between the two individuals will also impact the decision, as well as how well-defined the proposed roles and responsibilities are.
This time is fraught with emotions and a sense of loss for the departing CEO, requiring considerable balance, grace and maturity to navigate well. As demanding as the role of CEO is, it also comes with a sense of purpose, power, status, compensation and perks that begin to diminish virtually as soon as a successor is identified. Even those who believe they are prepared can be surprised by the mixed feelings this phase inevitably evokes. Ensuring the outgoing CEO has trusted sources to help him or her navigate each of the steps in this stage can help provide support and maintain a sense of perspective, focusing on building his or her legacy through leaving behind a sustainable, successful organization. A summary of RHR’s research on CEO transition is available at www.rhrinternational.com.
The Life Cycle of the CEO:
Overview | Preparation | Entry | Middle Phase | Closing | Exit
Leadership in the boardroom and the C-suite increasingly requires a balance of wisdom and mettle. This is particularly true in the age of activist investors, social media and proxy advisory firms. Leaders need wisdom to ask the right questions, recognize possible scenarios and risks, and understand the dynamics in play. However, perhaps even more than in the past, these leaders must also summon the mettle to dramatically increase the pace of decisions to fit a window of opportunity, or to intentionally forge a strategic path that involves either a battle or a setback in near-term business performance.
“get ahead of messaging and create a plan for proactively telling your story and dealing with negative press (both internal and external)." - DEborah rubin, rhr internationalHere are 4 things to consider that leverage both wisdom and mettle. 1. The need to buy time or find the right moment. If this is the go-to response, the odds are that the appeal stems from fear versus wisdom. Windows of opportunity tend to close, and storms may increase in substance. 2. Action is better than no action. However, inaction reinforces stasis and second-guessing. With no forward movement, the organization can find itself being left behind. 3. Ongoing avoidance erodes options. Earlier battles are sometimes easier to win or weather than those left too long. 4. Create a compelling message. In this age of social media, it is important to get ahead of messaging and to create a plan for proactively telling your story and dealing with negative press (both internal and external). The worthy fights are those required for the success and sustainability of the business, even if they are painful in the short-term. Click here to read RHR International Senior Partner Deborah Rubin's complete blog post on leadership in the boardroom.