Regardless of what necessitated the change, arguably the most tumultuous time for a company is when there’s a significant change to the executive leadership team. Employees at all levels in the organization analyzing the situation may ask: Will the company change as a result? Will they agree with any new strategy change as a result? Will they like the new leader or executive replacement? What will it mean for their careers?
According to research, planned CEO departures, often due to retirement, result in just 3.53 days of a transitional period to a new leader. Comparably, unplanned CEO departures can take up to 75.7 days before a replacement CEO is in place. Seventy-five days of ambiguity can create concerns and questions regarding the company direction and its leadership.
Any company that wants to minimize the risk of disruption and diminished employee motivation, as well as keep the business focused in the days and weeks that follow, needs to consider planning ahead with these three strategies:
Always have a replacement in mind
One way the board can be prepared for an abruptly departing C-suite executive is to always have an internal candidate in mind, at least to take the role(s) in the interim and steady any perceptions of instability. The chosen executive will preferably be someone who has already worked alongside the outgoing executive for a period, conveying the view to the company that business continues as usual.
Finding an internal replacement might not always be possible, but the board or the CEO should at least have an interim outside executive in mind who can quickly step into the role if needed.
Stay as transparent as possible to mitigate employee unease
Once a replacement becomes clear, the board should have a series of conversations with the staff, knowing that not every detail of the change needs to be necessarily shared. Any information that might raise worries around the reason(s) the last executive left or is leaving has potentially the greatest ramifications on the morale of the employees, especially if this leader was favored by them and their departure was a result of a disagreement with the board or CEO.
If the CEO and board can manage a measured, staggered change it will help the employees maintain trust in the remaining leadership, knowing that the incoming executive or internal promote will be well prepared to take over and continue acting in the company’s best interests rather than spending months getting up to speed.
Have the incoming leader set the tone
Provided the transition process was handled with care, it is now up to the incoming executive to make themselves immediately visible.
An incoming member of the senior leadership team should set a positive vision and tone for their new business unit or the organization by outlining actionable goals and making clear what their contribution will be to the wider firm.
This helps to diminish the constant threat of ambiguity, and the effect this can have on morale. After all, no ship can sail without a captain at its helm. For example, to successfully assert their leadership position, a new executive could get out of HQ as soon as possible, and conduct town hall meetings with as many employees as possible.
The new leader should then take some immediate actions after having set out their mission, regardless if that is making unpleasant changes or actions that reinforce the new vision and direction. We have experienced multiple situations where CEOs or C-suite leaders make great initial public statements but fail to follow through with tangible actions, creating the perception of hot air. Employees quickly get cynical if there is fanfare around a new vision that isn’t quickly backed by actions that demonstrate a material sense of purpose.
One thing is clear: However the leadership change takes place, replacing one smoothly, without damaging your employees’ commitment and perhaps your share price, is a complex process. It requires a number of judgment calls to make, and has no guaranteed outcome of success. That’s why no board or executive team should underestimate the importance of giving it the time and consideration it deserves.
Tim Robson is a global managing partner at H.I. Executive Consulting.