How to Bring a New CEO on Board Without Causing Low Morale
CEO succession is difficult. Boards of Directors spend months vetting and negotiating candidates until a new CEO is chosen. Once the decision is made who the successor CEO is, the Board sort of steps out of the picture. They feel they have done the best they could to sustain the company and set them up for growth in the long run.
However, at that moment the actual work of CEO transition starts.
Regardless of the size of the company, CEO succession is rattling the best of organizations. Most likely none of the executive team members have been queued into the decision for fear of leaks. There are alliances and loyalties that are broken and hopes for support from the CEO are shattered. The entire team feels as if the rug has been pulled out from under them. Fear creeps in almost instantaneously.
The danger of high potential flight and/or low morale are real and palpable. So what to do?
Recently, the purchase of Twitter by Elon Musk has been in the news and it is still unfolding at the time of this writing. The fallout is not clear yet, but executives have either been dismissed or left on their own already, only a few days in.
As the sole owner of Twitter, Musk has every right to, and possibly needs to, move quickly to make sure the company gets on a path of profitability. To sustain the company, which could potentially cost him $1 billion/year in interest, he won’t have much time to waffle. Time is of the essence. Taking a company private has some unique challenges, though.
In a start-up company or a public corporation, time is also of the essence; however, the pressure comes less from the Board of Directors or the CEO and more from the investors and shareholders. There is emphasis on a smooth transition with few waves, but a trajectory toward growth and long-term viability.
Regardless of the type of company, speed is pivotal since the longer the transition takes, the messier it is. There is a need for a transition plan almost on a day-by-day basis outlining what the outgoing CEO is doing and in charge of and what the incoming CEO is privy to and/or responsible for. The shorter the time period, the better.
It requires much thought to craft concise and believable messaging about what is happening, when and why the outgoing CEO is leaving, as well as why the incoming CEO is the best person to take the baton at this time of the company’s existence. This message needs to be crafted and delivered carefully to the executive team, the rest of the company, customers, vendors, partners, the community, planet earth and future generations — basically all stakeholders.
It is the incoming CEO’s responsibility:
• to steer the ship with a sustainability mindset (the company and the planet), focusing on “we” instead of “me”
• to think systemically about looking at the bigger picture as well as the details
• to build relationships through connecting and collaborating
Stakeholders will want these items addressed at least conceptually if definitive answers are still not clear.
Addressing the elephant in the room
There are often two approaches new CEOs can take when coming on board:
1. Act quickly and decisively
2. Observe, listen, connect before acting
This typically depends on the individual’s leadership style. Either approach has its challenges.
When acting quickly and decisively, the company culture gets trampled and low morale follows. People quit outright or quietly quit, which is expensive for the organization.
When the CEO is more measured in her approach and is keen to understand alliances and cultural values, people might still resign or they might fall into a coma of sorts, where they find comfort in the way things are done around here.
Here is where an outside facilitator can help. Ideally an independent outside observer can guide the executive team from prior to the CEO leaving to the new CEO finding her stride. Having someone who can be a trusted advisor and confidant during an emotionally charged time can help navigate the fears that all involved have.
The outgoing CEO is afraid of betraying his team. The incoming CEO doesn’t know the dynamics of the team yet and is fearful if she can engage and rally the team behind her. And the executive team is fearful of job security and capped alliances. Facilitating open conversations when everyone is on guard is imperative to a successful transition. Often the unspoken truths are more powerful and impactful than any obvious timing or messaging issues.
Uncovering what each party needs and providing them with open conversation as to how to get those needs met will help in the transition.
The outside facilitator can also be useful in helping the outgoing CEO to let go and hand things off in a mindful and meaningful manner. The moment the transition is announced, the outgoing CEO is sort of a lame duck and feels quite alone and on the sideline, again a reason to move swiftly.
Bottom line: How can the necessary trust be built quickly and meaningfully? CEO successions are a time of transition and challenges. However, if everyone involved comes from a place of caring and excitement about opportunities to come, CEO transitions can catapult a company forward without causing low morale and other fallout.