Leadership transitions can serve as an inflection point for an emerging growth business—and they can be turbulent. During a time of rapid growth, changes at the top are common, as companies plan for the next stages in their development. Even the largest businesses can have trouble navigating them.
I’ve had the opportunity to participate directly in CEO transitions…and have witnessed how such a circumstance can be executed well, despite the potential for pitfalls. To do it right, the board of directors and executives involved in the transition of power should consider the following actions.
Put in place a succession plan, and be prepared for the inevitable
You never know when a transition might be required—based on a personal issue, professional issue, retirement, etc. The only constant is change. As such, organizations need to be proactive and have succession plans in place.
Further, it’s important to recognize that each situation is different. You may have a large, publicly-traded company whose CEO is stepping down, and the board announces this a year before it will take effect. However, not every organization requires this sort of public announcement. Other transitions happen at a more rapid rate.
With any transition, the board must ensure that the current/outgoing CEO has put in place a strong leadership team. Competent, experienced departmental heads and board members can step in at a moment’s notice. Proper leaders-in-waiting know how to run the company, as they’ve bought into the same corporate philosophy.
Consider what’s required of the next candidate
What had been required of one CEO can be much different from what’s required of the next one. For example, one CEO presides over the company’s rounds of private funding, and the next oversees its expansion into broader markets.
As such, the board needs to understand the short- and long-term vision for the company, and the ideal profile of the person who can drive this vision. Every leadership transition requires an honest analysis of what’s needed for the company to take the next step.
Establish trust with the board and existing management
Once the new CEO is confirmed, this person needs to embrace open, two-way communication with the board, other company leaders and even the outgoing CEO, if the opportunity presents itself. You don’t necessarily get hired and begin immediately.
Honest, transparent dialogue about expectations, approaches and communication fosters a productive relationship between the board, the CEO and senior management — from the start. There is nothing more important than trust…and staying guarded in communication erodes trust. A new leader has a responsibility to get to know and work closely with those at the highest levels of the organization, while being authentic in style and vision. After all, we are all partners and stewards of the company.
Be transparent with entire employee base
Transparency, of course, shouldn’t just reside in the C-Suite. A CEO change can be unsettling for employees, which is why CEO communications need to consider employee perspectives and be genuine.
The incoming CEO, board and senior leaders need to strategize about how best to communicate the change in a manner that is not overly alarming. Bringing the entire employee base together—whether physically or virtually—is the first step. Ideally, the outgoing CEO can start by giving a company-wide speech about the business, sharing their decision to step down from day-to-operations and introducing the incoming CEO. A new CEO from an external organization can be intimidating to some, which is why a company-wide introduction and open forum for questions and discussion can mitigate concern.
Transparency opens the conversation and sets the incoming CEO on the path toward building employee trust.
Begin the day-to-day
The CEO transition has been announced; now the real work begins. The new CEO must put in place a leadership framework, operational team and organizational expectations—while communicating what these are.
It’s essential to recognize that the new leader doesn’t define the culture; the people do. But the CEO can lay out the corporate tenets, set the tone and foster an environment of curiosity and care. People are any organization’s most important asset; without them, it doesn’t matter how good the product is.
Perhaps most importantly, a new leader should establish a framework of consistency, encompassing communication style and staff retention. Each employee needs to believe that the vision of the new CEO includes them—and the onus is on the CEO to articulate that.
Time is the best judge
At every phase of the company life cycle, there will be different experts necessary to help the organization progress to the next level. Understanding that is key. With a united front, transparency and a succinct transition plan, the CEO transition can mitigate what can otherwise be a painful and challenging process, while assuring employees that they’re still core to the corporate mission.