In 2019, executive consultants Challenger, Gray & Christmas recorded 1,640 CEO exits in the U.S. alone.
Leadership change can create momentum: positive or negative, internally and externally. Depending on where a company is starting from, the move can be perceived as the driving force for continued, positive momentum, a new direction, or a continuation of what was before.
One thing is certain – a new CEO attracts attention. Suddenly, everyone is interested in the company. Stakeholders may ask, perhaps for the first time in a while, “How is the company doing?” “Where is it headed?”
The “honeymoon” or first 100 days of a new leader becomes a unique window to define the company’s future while establishing a distinct leadership style and approach.
During this time, a cogent plan is needed to re-emphasize or re-define the company’s relevance.
The irony is that it really all begins with the outgoing CEO.
Companies are faced with a delicate balancing act – providing a positive retrospective on the departing leader’s tenure, specifically for an iconic CEO – while emphasizing the new leader’s strengths and fit with the organization. Even in the case of a planned retirement, companies must be prepared to communicate both proactively and reactively to key constituents starting with employees. In looking at recent examples of leadership transitions at leading organizations, communications professionals can better understand how to prepare and communicate this type of change in a way that will minimize the negative impact while leveraging maximum momentum while key audiences are paying attention.
Navigating the Transition from Multiple Angles
Most successful CEOs begin their tenure by focusing inward. Establishing a relationship and new dialogue with employees and then ensuring the right senior management team is in place typically takes on priority status – as it should. Dealing with Wall Street or the media during the early stages is also important, of course, but should be tightly orchestrated with an emphasis on gaining external understanding of newly defined messaging and goals.
How will the external world respond?
When a corporate leader steps down, the media typically responds in several ways. First, they will examine the departing leader’s tenure, scrutinizing it for successes, major milestones, key errors and a legacy. When it’s an iconic figure, media analysis and Wall Street will place the new CEO in the context of needed changes or reforms, continuation of a successful agenda, or a complete overhaul of the business.
The incoming leader should be prepared to face the media’s scrutiny head on. When considering the arrival of a new CEO, the media and financial community tend to look at both skills and persona – and, specifically, how they are linked to the company’s current needs. For instance, when Tim Cook replaced the larger than life Steve Jobs at Apple following Jobs’ death, initial media reports and Street analysis called into question the wisdom of replacing a visionary with an operations expert.
Preparing for Scrutiny
The main question that audiences ask when faced with a new leader is, “Are they up to the job?”
During the first year of the new leader’s term, people will be watching closely, assessing effectiveness, looking for shortcomings, and trying to find the answer to that key question. During this “probationary period,” the media will be quick to link blame for problems to the change in leadership. For example, when Amazon founder and CEO Jeff Bezos announced he is stepping down and turning the company over to Andy Jassy, the media and analyst communities were quick to point out the great shape the company is in as a threshold for measuring future actions.
Prior to the arrival of a new leader, the company must assess the critical issues that could arise during this probationary period. Perhaps the most effective way to protect a new leader from undue blame is to ensure a relentless focus on the business and an avoidance of extensive media attention. Companies also must avoid allowing the new leader to become “the face” of the organization but rather an element of a much larger picture. While the tactic sometimes works, a company does not want its future inextricably linked to a single person, particularly during this sensitive period when the new leader is under the media’s microscope.
Today, corporate leadership is more important than ever. When introducing a new leader, companies must be prepared to respond to the concerns of employees, media, customers and analysts. These stakeholders will be looking to the company for an explanation and clues as to what lies ahead. A major change in leadership will undoubtedly attract attention. But how that attention is leveraged can have a lasting impact on the company and its leaders for years to come.
Leadership Transitions: Situations and Implications for New CEOs
The incoming CEO is faced with myriad opportunities and challenges as he/she must quickly articulate a point of view, establish an agenda, prioritize initiatives, craft a vision and strategy, and steady expectations from Wall Street to Main Street. Of course, the playing field will chart the course needed but, whatever path taken, the most important tenet is to be authentic and transparent. In reviewing CEO transitions over the last decade, the following components reign supreme:
- Discover vs. sell – Don’t overpromise and never sell your agenda. Rather, allow stakeholders to configure your moves through actions.
- Never compete with the past – Acknowledge your predecessor and his/her accomplishments but always point ahead.
- Convey the future – Paint a picture of what’s ahead: good; bad; ugly.
- Focus. Focus. – Core themes, imperatives, metrics.
- Always point outside – Bring the marketplace and customer/patient inside.
Communications Guideposts for Announcing a Change in Leadership
Organizations should consider the following when announcing a change in leadership:
Leverage the opportunity to clarify the company’s business priorities, direction and value proposition. The departure of one leader and the arrival of a new one attracts the attention of various constituents, including employees, media, investors and analysts. Even if the incoming leader does not plan to make major changes to the company’s business strategy, he/she can use the opportunity of people listening to reiterate where the company is headed and how it will get there.
Link the new leader’s skills to the current needs of the company. When introducing a new leader, the company should highlight the types of experience that are relevant to the company’s current situation. It should also stress the aspects of his/her personality that make him/her particularly appropriate. The outgoing leader must also articulate and praise the skills and qualities of the new leader that are different from his/her own style.
During the seamless transition phase, it will be business as usual. The outgoing and incoming leaders must share a consistent understanding of the organization’s current situation and the appropriate strategy moving forward. This shared understanding signals to others that there will be minimal noticeable impact on the business. The company should also stress consistency in the overall leadership team.
Listen to the landscape. Social and digital channels/platforms for comments, misinformation, opinions, etc. Be ready to address where appropriate.
Set realistic goals and time frames for the transition to occur. A leadership transition must be perceived as smooth and deliberate. The company must clarify how long the departing leader will continue working with the organization to provide guidance and counsel and predict when internal and external audiences will begin to see the results of the new leader’s efforts.
The company must stress that the new leader has the ability and commitment to continue the efforts made by the outgoing leader. The outgoing leader must send a message to employees, customers, investors and the media that “I’m leaving the company in good hands.” The board members should reiterate that message.
The transition is taking place at a time when the business is stable or growing. The company should clarify that the change in leadership does not signal a problem. Instead, it’s coming at a highly appropriate time when the organization has begun heading in the right direction under the departing leader’s guidance and will continue to move forward with the momentum of a new leader.
Pick an appropriate forum to introduce the new leader. Companies must think strategically about when and where to formally introduce a new leader – whether an industry forum, product roadshow, employee town hall meeting, or luncheon with media and analysts.
Regardless of the specific situation, a handful of critical, penetrating questions can enable the professional communicator to map out the most effective strategy to support the new CEO – and even give them some previously unconsidered food-for-thought.
In theory, there is no end to the logical questions to ask a new CEO. But, with time likely being of the essence, following are 12 key questions that will help you counsel the new CEO through the first 100 days…and beyond.
“How did you get here? or “Why the change?”
Given the short tenure of CEO’s today, the first question on people’s minds is the reason for the change. Was it a mandatory retirement? Board initiated based on performance or a clash over strategy? Was it a personal decision? The basis for the move is important to establish the foundation of your communications.
“What are your short- and long-term priorities?”
You can’t support what you don’t understand – so first, find out what the CEO has in mind for the near term and down the road.
“Why did you take the job?”
It’s easy to assume that all CEOs have always wanted to be a CEO. CEOs have numerous reasons for taking the top spot. Maybe it was a lifelong dream. Maybe they have a burning vision and passion that can only be acted on from a senior platform. Or, maybe they simply felt obligated to say yes. Knowing the answer to this question will help you much better understand the psyche of the CEO.
“How will you define success?” or “What’s your agenda?”
A critical component to a new CEO achieving initial credibility and being heard is the ability to convey a common understanding and definition of what success looks like. You can’t draw a roadmap without knowing the end destination. To that end, the new CEO needs to have an agenda that guides not only what he/she does but how people should follow progress.
“What employee behavior do you expect?”
A new CEO’s prescription for the future is going to ultimately rest in the hands of the company’s employees. They need to know what behavior is expected of them to carry out the organization’s agenda.
“How is that behavior different from how they act today?”
Transforming employee behavior isn’t like turning on and off a light switch. To get employees to where you need them to be, you need to better understand where they are today.
“What do employees, customers and other key constituencies think and believe right now? When is the last time you asked them?”
It’s a common mistake: companies and their CEOs “know” what key audiences are thinking, only to find out later that they didn’t. Assumptions can be lethal, derailing the new CEO’s strategy before it’s even initiated. The lesson learned: if you haven’t asked key audiences what they think since the new CEO appointment was announced, your information might be woefully out of date. This is where analytics is a must to properly frame the new CEO’s reality on Day 1.
“What is the biggest market opportunity you see right now?”
One of the best ways to gain concrete insight into a new CEO’s vision and market perspective is to ask for clarification on the most significant market opportunity as of this moment. It will also help you frame your most immediate recommendations.
“What will be the biggest obstacle to success?”
This question can be interpreted two intertwined ways: the biggest obstacle to the company, or the biggest obstacle to the CEO. You should find out the answer to both. Understanding the obstacle (or obstacles) in your way will help you make preemptive recommendations.
“What keeps you up at night?”
All CEOs – especially new ones – have the proverbial challenges that keep them up at night. Sometimes they’re not even the most pressing issues; they’re simply the ones that get under the CEO’s skin. Successfully tackle one of these issues and you have immediately endeared yourself to the new CEO – and done a tremendous favor for him/ her.
“What do you picture your first day looking like?”
When you have the good fortune of counseling new CEOs before they take office, it’s worth asking what they envision their first day looking like. By encouraging the CEO to talk anecdotally – really, by asking them to tell a story – you’ll gain an even better sense of how they will really act and talk once the planning documents are put away and the real job begins.
“How would you describe your style?”
There are a couple of reasons to ask this question. For one, you’ll want to structure your communications differently for a cerebral type than for a vocal leader. Secondly, as you talk to employees and other important groups over time, you’ll find out if the CEO’s take on his/her style matches what the rest of the world thinks.