When it’s time for the CEO to move on, finding the right replacement; managing the narrative around the change; and ensuring the smooth onboarding of a new CEO are key responsibilities for the Board and the Executive leadership team.
“Any change in leadership can shape the performance and internal culture of an organisation. Depending on the circumstances, leadership changes can also affect the public perception of an organisation, and in turn, stakeholder and shareholder confidence,” explains Geoff Curran, Practice Leader with Gerard Daniels in Sydney. “But we mustn’t forget that CEOs are people, and the way in which this transition is planned, communicated and managed is equally important for the departing leader.”
“Outside of finding and onboarding a new CEO there is a very human element to moving out of this role and planning the next move. This transition can have a profound impact on the individual, having worked hard to build the brand and performance of the organisation,” Geoff continues. “There is an opportunity for Boards and CEOs to approach this in a way that elevates the performance of an organisation; sets the new CEO up for success; and positively defines the legacy of the outgoing CEO.”
Here we explore the importance of succession planning, timing and communication for successfully transitioning out of the CEO role.
Succession planning
As CEO you have a responsibility to ensure the future performance and stability of your organisation and your Executive team. If you take a longer-term view regarding a leadership change, the better the outcome will be.
“Thinking and talking about your departure may seem unnecessary when you are performing well and thriving in your role, but planning ahead is an essential part of good leadership,” says Geoff. “Long before you plan to move on from the CEO role, you should be succession planning for this eventuality and engaging openly with the Board.”
According to Geoff, the effectiveness of succession planning comes back to the strength of the relationship between the Board and the CEO. “CEOs may shy away from these conversations, but there must be an understanding that openly engaging in this process shows a commitment to the organisation, not the desire to leave,” says Geoff. “It’s really important for CEOs to feel safe and supported in succession planning so they can be honest without feeling undermined by the process.”
“If succession planning is based on the premise of a trusting relationship and honest and open communication, the CEO will feel less threatened by it. It is also more likely to result in a favourable outcome for both the individual and the organisation,” Geoff continues.
Timing your departure
Moving on from a leadership role like CEO, can happen for a variety of reasons – planned and unplanned. These may include:
- Health and/or other personal circumstances
- A desire to be challenged differently or to explore new opportunities
- A strategic direction that requires new leadership
- A strong pipeline of talent ready to step up and bring fresh thinking to this role.
With any planned leadership change, timing is critical, but finding the right timing isn’t always easy.
“Succession planning supports the departure of the CEO in ways that can benefit both the individual and the organisation, but to find the right timing there must be a willingness for a level of dialogue between the CEO and the Board,” says Geoff. “This is particularly important if the CEO believes their time with the organisation may be approaching its end.
“To inform the timing of leadership changes, high performing Boards also continuously identify and evaluate succession candidates, to foster more informed decision making when there is a change of CEO,” says Geoff. “Again, this process requires transparency and trust on all sides.”
Communicating your departure
Communication is a vital part of transitioning out of leadership role and the way in which this is managed can shape the reputation of the organisation and the outgoing CEO. Getting communication and messaging right can have a positive impact both internally and in the market.
“When an announcement is made about a departing CEO, you can often tell how well it has been planned by the timing, the degree of openness and the language that’s used to describe the departure,” says Geoff. “Announcing a change of leadership can be a great opportunity for the Board Chair to acknowledge the contribution of the CEO and to highlighting some of their key achievements.”
“The communication that supports the CEO transition also allows the organisation to reinforce its values and show continuity in the selection of the new person,” Geoff continues. “This helps to build confidence in the market and provides assurance to key leaders and other talent within the organisation.”
Although CEO departures can’t always be planned, when there in an opportunity to approach this transition in a deliberate and strategic way, the benefits are wide-reaching. To discuss growing your CEO talent pipeline or building the capability of your leadership team, connect with Geoff or reach out to your local Gerard Daniels team.
