Passing The Torch To A New CEO?
Successful transitions don’t just happen.
The identification of a successor for an outgoing CEO is one of the most important decisions that a board will make. The significance of this duty is typically well understood. In our experience as Executive Search and Succession Consultants, we find that board members dedicate significant time and energy to the identification and selection phase of the process. We often see a fairly well thought out onboarding process to ensure that the new CEO is properly welcomed and provided with important information and introductions to key stakeholders.
However, too often, the board’s engagement with the new CEO outside of the boardroom diminishes quickly upon arrival. After an initial period of onboarding, the CEO is left on their own to assume the role of chief executive, integrate themselves into the organization and deliver extraordinary results. This leaves the most important part of CEO succession – the true transition of leadership – to chance.
A leadership transition at the CEO level is unlike any other transition and must be treated as such. It is a process that requires an equal or even more intensive dedication of time and energy from the board, senior leadership team (SLT) and the incoming CEO as the search process. Done properly, this will extend long past the traditional onboarding period.
First, what is leadership transition, and why is it so significant?
The transition of leadership is a series of formal and informal events, activities and conversations that are specifically designed to maximize the chances of a new CEO’s success. This means addressing the more subtle issues involving emotions, egos and beliefs about the future of the company that are entangled with organizational culture and politics. Failure to think about and address these issues head on can lead to dangerous misunderstandings. Ultimately, this can prevent the CEO from making a genuine connection with their board and SLT, gaining their support and buy-in and ultimately failure to execute on a vision and plan.
The combination of players that are involved in a leadership transition varies by company but typically includes the CHRO, board of directors and, when appropriate, the outgoing CEO.
One common mistake that board members make is believing that the way to demonstrate confidence in the new CEO is to keep their distance and avoid becoming too involved. In truth, incoming CEOs routinely report that they don’t get enough transition support from directors—or that it doesn’t last as long as they might wish.
According to a 2012 study conducted by RHR International of 23 major CEO transitions, 57% of CEOs promoted from inside and 83% hired from outside said their boards were “less involved” than they should have been.
How can you ensure your new CEO is primed to succeed?
There is no one-size-fits-all. Leadership transition plans should be designed for the specific set of circumstances at play. However, a good place to start in every case is the creation of clear expectations around culture, values, communication, decision making, strategic direction and the definition of success. The board chair can begin by assembling a small transition team of key board members and SLT members to build a plan.
- Here are some sample questions to get the conversation started:-What needs to change? How will the Board support the new CEO through the change process?
- What cannot change?
- What are the most defining aspects of our culture that make us who we are and differentiate us from our competition?
- How have decisions been made at the board and organizational level?
- How does this compare to the new CEO’s preferred style of decision making?
- Who are the primary influencers among the board of directors, the SLT and in the community?
- What must the CEO do to make meaningful connections with these influencers?
- How is conflict handled here? Are there unresolved conflicts that need to be addressed?
- How will we ensure that the board and CEO maintain a healthy level of open, honest communication?
- What resources are available to the CEO for questions, guidance and help if needed?
- How are connections and trust built here?
- How can the CEO build connections and trust with the SLT and board?
- How can the CEO become a genuine champion for the organization’s purpose and vision?
- How does the board define success in the first year?
The Catapult team has conducted numerous searches for CEOs and other key executives. This experience combined with our executive coaching and consulting work with boards and leadership teams has given us a unique perspective on what makes executives and teams thrive. If you’re preparing for a key leadership transition, contact us and we’ll help you design a plan for success.Return to all posts