To succeed, a transition plan must include developing a deep understanding of the company’s goals, strategy and the formal and informal elements of its culture. PDF; Size: 289.4KB. And besides the money won’t stick. Indeed, under some governance schemes, such as in the UK, a CEO cannot be elevated to chair of the company where he or she was CEO. The best leaders move boldly and swiftly to transform their companies as they are transitioning into the new role. If someone reports directly to you, they need to be told directly by you. Many CEO transitions are an afterthought and not well planned, with CEOs and boards not adequately focusing on the framework or documenting a plan. During transitions, the leaders a level or two below the CEO often feel the greatest anxiety. For external successors, it is important, where possible, for the outgoing CEO and the new leader to have a roadmap for meetings and knowledge transfer between them, a process which takes planning given that the new leader is not yet part of the organization. CEO transitions have always been challenging, but never more so than in today’s environment… You must have a thoughtful transition plan. STEP 1: GET YOUR POSITIONING RIGHT. Transition planning encompasses the decision on which candidate to select (while it may not yet be formally announced) and the steps related to role transfer from the outgoing to the incoming CEO. Identify leadership development opportunities for staff and board members to expand their leadership … Knowledge transfer is equally important for an internal successor, who will be working with new constituencies. The transition sub-project teams perform the day-to-day transition activities. Given the cost and investment in CEO appointments, these are expensive misses. I’m not talking headhunter help. In general, that delay isn’t a problem. Understanding that is key. How often new CEOs arrive, their tenure, and the rate at … The critical parties (CEOs and board leadership) need to agree on an orderly transfer of roles and responsibilities, as well as on the resolution of the numerous issues that will inevitably arise during the transition. Think it through carefully. The first common mistake is seeing the transition only as a hiring problem.In reality, hiring the new chief executive is a part of a much larger transition process. We recommend to our clients that such roles are limited to no more than one year, but we have seen successful longer-serving executive chairmen. How can I become a better Executive Director? Nash further noted, “I grew up inside this company, but when I became CEO, I recognized that the role required a different mindset. To prepare the organization for transition: Put a focused mission and strategic plan in place. In both of these cases, I was clear about the timetable of who would be told and when. Establish Board Ownership, Involvement and OversightMore than at any other time in history, stakeholders today expect a company’s board of directors to have a command of the entire CEO succession process. The executive chairman can also provide a sense of continuity to the workforce as the new leader finds his or her footing in the corner office. For an external successor, it is a good opportunity to make early observations about the organization’s executive talent. If a CEO cannot be found within the timeline, the Board will hire an Interim CEO. Sorry, your blog cannot share posts by email. CEO transitions have always been challenging, but never more so than in today’s environment. Search for, select, and hire the new CEO. Board first. We use succession planning and transition planning to describe different phases of a leadership transfer. It sends the wrong message. This post is based on a Russell Reynolds memorandum by Mr. O’Kelley. A CEO transition is an opportunity to level up an organization’s game plan and capabilities, not just manage the potential downsides. This will be your core messaging document. Of course (we weren’t stupid). Any leadership transition can be fraught with uncertainty and difficult decisions, but founder transitions can be particularly wrenching. We advise our clients not to forget about transition planning as a distinct process that needs attention and planning. Post them in the comments below and I promise to try to get to them in a timely manner. The search has taken too long. Bring one person in on this with you. Their decision to hire me transformed me in ways that still choke me up. She or he offers a new vision. Importantly, for the executive chairman, there should be an initial term with an expected duration to be reviewed annually. 1 CEO TRANSITION PLAN AGREEMENT 1. The interim plan isn’t ideal. Just last week, a reader emailed me for advice on leaving. How does everyone ensure there is no confusion over who is in charge? Leadership Transition Plan Checklist: Ways to Prepare for Change With Success 1. Leadership Transition Planning Guide Sample transition timeline Time Action Ongoing Ongoing Ongoing Beginning Sept-Oct Read more: CEO … Is the plan clear about the steps we will take if our CEO departs the organization for any reason? File Format. In your timetable, carve out a ½ day and stay home. I made sure it was late in the afternoon so I had the phone in one hand and a cocktail in the other. Such problems are of particular concern in the case of a family business or a situation where the company retains its founding CEO. Warning: Don’t show this post to your head of development. Post was not sent - check your email addresses! Any new CEO must learn to appreciate board members’ expectations as well as the board’s operating style. As many people in this situation have noted, there is a lot of room for confusion and dropping the ball. My reader told me she has searched everywhere online for a transition plan template… something to help her figure out things like: I pointed her to this excellent and thoughtful piece written by Frances Kuenreuther and her colleagues called “The Leadership in Leaving.” It’s very helpful. It’s not really a transition plan template per se. What else would you add to a transition plan template? In conclusion, while a CEO transition is one of the most transformational events a company will face and should be communicated carefully, a thoughtful messaging strategy and communication plan will always help protect shareholder value and assist a new CEO … So here is my 8-step transition plan template for how to depart from your nonprofit organization the right way. Any CEO succession and departure introduces inherent risks to the company and its shareholders. According to a 2015 study by PwC Strategy&, “Companies that have to fire their CEO forgo an average of $1.8 billion in shareholder value compared with companies that [have a succession] plan, regardless of whether the replacement is an insider or outsider.” The study also noted that companies that experienced unplanned successions “would have generated, on average, an estimated $112 billion more in market value in the year before and the year after their turnover if their CEO succession had been the result of planning.”. Also, the plan automatically upgrades your batteries when improved batteries come out. Unless you have a PR exec on your board, you’ll have to lead this horse to water. Understand and guide the transition. Losing a boss is certainly a challenge but losing a leader is an emotional loss and can cause all kinds of things to go bump in the night. Most importantly, you want to talk about the amazing organization, the skilled and dedicated staff, and the smart and strategic board that you have had the privilege to lead. Anxiety will lead to forgetting. To gain a sharper sense of the challenge posed by CEO successions and transitions, as well as the risk involved, Russell Reynolds reviewed the member companies of the S&P 500 (as of August 1, 2018) and analyzed their CEO tenure and turnover rates between Jan. 1, 2003, and Dec. 31, 2015. The root causes for these departures varied. If the departing CEO will be staying on as executive chairman, that role must be clearly defined—and limited—to ensure that the board and everyone at the company truly see the new CEO as the “full CEO.” In these circumstances, it is helpful for both leaders to agree on a mutually defined set of roles and responsibilities, which are reviewed and approved by the board. Staff members expect you to have all the answers, have a clear vision of where you're heading, have anticipated all the possible obstacles, know just what staff members need. I’m talking about transition plan consultants or a former ED or board chair who cares about the sector who can provide pro bono support. A thoughtful CEO transition presents an opportunity to get the new CEO quickly up to speed and focused on issues that will enhance shareholder value. The existing CEO can play an important role by personally introducing the new leader to important constituents and helping them create—or redefine—their stature in the organization. Communication of the transition plan should be as transparent as reasonably possible and provide a well-defined management framework to reduce uncertainty. When looking at just external CEO appointments, the numbers jump to a 17.2 percent departure rate in three years and 11.0 percent within two years—a notable rate of failure. Unfortunately, a large number (around 85%) seemed to be due to the new CEO being unsuccessful or ineffective and being removed by the board (sometimes due to activism). Download. Boards can sometimes think of this as a boss resigning rather than a leader. Unexpected CEO departures will happen. I’m guessing this post has raised a lot of questions for board and staff alike. How does a new CEO get off to a great start? For that, you need to get hold of this leadership transition plan … Over the past three years, he led NI and shaped a new core strategic vision, expanded A new CEO must quickly develop relationships with numerous key constituencies in an environment defined by uncertainty and anxiety. Combined with a less-than-thoughtful CEO transition, it increases the risks to shareholders. Recognize when it’s time to step back from the process. An effective assessment method must candidly and comprehensively evaluate each aspect of the transition. But what about a leader in your sector (and not an obvious choice)? Additionally, the presence of a former CEO on the board can limit a new CEO’s ability to be a change agent or even to be seen as the ultimate leader. STEVENS: It was a topic at the very first meeting I had with the board as a new CEO in 2004. To send an inquiry, please fill out this form. Members of a nonprofit board may fear the risk of … Having a roadmap of the key constituents and issues along with insights into how to manage them was invaluable.”. CEO Transition Overview Fifty-six S&P 500 companies installed a new chief executive in 2019, one more than in 2018. Given the heightened sensitivities surrounding a CEO succession, all parties should be prepared for tense moments and not allow them to derail the process. I wanted them to know that. You want to avoid the anger that may come with being forgotten. Done thoughtfully and systematically, a CEO transition creates value for the organization, reduces risk and enables the new leader to hit the ground running and create immediate value for the company and for shareholders. There is nothing more exciting than the moment a new leader is announced. No! Create a winning formula based on your recreated vision. Assess the Supporting Players Before Bringing in New Leadership… They give the CEO 14 months to … If the new CEO is an internal candidate(s), starting 18 to 24 months before the transition, the potential internal CEO candidates should enjoy increasing visibility in board meetings as well as an increase in the scope and nature of their participation. The chief people officer (CPO) needed to quickly assist the Board with the search for a new CEO, along with helping with the executive transition. Understanding that is key. An external leader needs to know the history of the company culture and “the way things are done around here.” At the appropriate point, selected members of the executive team should be included in the knowledge transfer process through individual meetings. Good communication is a key ingredient in a successful CEO/executive director transition. Any new CEO must learn to appreciate board members’ expectations as well as the board’s operating style. In fact, according to BoardSource, 50% of nonprofit leaders expect to … If your nonprofit advocates for kids to get a better education, how about a senior state or federal government official who can validate the importance of the work of your organization and your leadership? Leadership transition is the single most turbulent time in an organization. 1. The occasion can be as simple and predictable as an announced ... Communications plan… IDEA and Torkelson are The transition from one senior executive to another can be a smooth, productive process or it can be a bumpy ride for all concerned. Conclusion The success of the maintenance activities is dependent on the success of the transition process. She is also a professor at the Annenberg School for Communications at UPenn. To ensure an effective transition, the outgoing CEO, incoming CEO and board members must all understand and agree on their roles in the transition plan, including the extent—and limits—of their authority and accountability. A transition plan is a document that helps companies navigate changes such as retirement or resignation from leadership roles, structural changes within an organization, mergers … The transition plan serves as a checklist enabling the new ED to take charge of the things the ED is responsible for and for the TC to focus on what it needs to do to be helpful. This is particularly true of CEO transitions. Action steps new CEOs should follow to create a positive impact in the minds of all stakeholders. Adopt an Emergency Leadership Transition Plan to address the timely delegation of duties and authority whenever there is an unexpected transition or interruption in key leadership. But poor planning for and process around CEO succession have significant potential to impact long-term performance and destroy shareholder value.” We do not see boards placing enough emphasis on CEO transition planning, which, done well, should help reduce the failure rate of CEO appointments, particularly of external appointments. Ideally, the formal transition process begins nine to 12 months in advance of the expected transition date. I did not leave the news on a voice mail. This may be necessary since the next thing out the door will be an email blast to your entire list. CEO succession planning can be a touchy subject. Actually, I must have had three hands then. Bill Nash, CEO of CarMax, noted, “It was very helpful for Tom [the former CEO] and me to visit the stakeholders [externally and internally] and explain the motives for the transition. Should you extend your stay? There is nothing more exciting than the moment a new leader is announced. “Internal candidates have the benefit of often knowing the board members, but the downside is that they’re often typecast by their prior position,” said Kevin Clark, CEO of Aptiv (formerly Delphi Automotive). I had stayed in touch with them and wanted them to hear the news from me. Every single action and piece of communication should be focused on ensuring the best answer to this singular question: How does this organization come across so well that this job will be appealing to the absolute cream of the crop? Modine Announces CEO Transition Plan Michael B. Incoming leaders understandably look forward to their new role with enthusiasm, while departing CEOs often struggle to let go and cannot help but focus on their legacy. For instance, Franz Humer CEO of Hoffmann–La Roche, set the right priorities during his initial period; persuaded all stakeholders; and brought Hoffmann–La Roche from an industry laggard into an industry leader. In the last decade, we have seen greater emphasis by boards on thoughtful, analytical CEO succession planning, and in the last five years, external advisors have developed and refined predictive assessment tools to help ensure better candidate selection. One of the toughest things for a senior executive … The second common mistake is rushing through the process. Or better still, draft a quote from the chair of the search committee that hired you. It’s … She LOVES her organization and is desperate not to do any harm on the way out. It should also provide a roadmap for addressing any concerns that arise, with all parties committed to working through any disagreements. One of the most challenging issues they will have to work through is whether or not the departing CEO stays on as executive chairman. The next phase of a transition calls for the outgoing CEO to share knowledge with the new CEO about important organizational relationships and the institution’s cultural attributes. Be authentic. In our research, we considered a range of disparate factors. The transition between Kenneth Chenault and Stephen Squeri at the helm of American Express is one recent example. One by one, I called each board member personally. This Confidential CEO Transition Plan (“Agreement”) is made and entered into by and between IDEA Public Schools (“IDEA”) and Mr. Tom Torkelson (“Torkelson”). Rusty O’Kelley is Global Leader of the Board Advisory & Effectiveness Practice at Russell Reynolds Associates. Whether a volunteer or paid staff, TMC supports those who serve The trend toward outgoing CEOs taking the role of executive chairman offers significant opportunities and unique pitfalls. Transition Management Consulting, Inc. (TMC) is a trusted advisor to association and nonprofit boards of directors and their executives throughout the United States. Executive Transition into a new Lead Role. … An Action Plan for New CEOs During the First 100 Days . There are many factors that shape the role of executive director at your nonprofit. Building Your Transition Plan. Avoid Transition Trauma with a CEO Succession Plan. Ideally, the plan stipulates who will take over as interim within 48 hours of the announced departure. By contrast, we have found that well-thought-out transition processes are generally comprised of six phases but should be refined to fit the specific circumstances. March 1, 2012 Peter DiGiammarino. M 2018 3 4.23.18 CEO Selection and Transition Plan Schedule and Prime Agenda December 2017 Board Meeting: CEO announces retirement plans to the Board – January 2018 PIRE News.April 24-25 Board Meeting: Kick-off CEO Transition Plan They may even help the organization imagine better ways to remain relevant and thrive in the future. Announces CEO Transition Plan News provided by Chico's FAS, Inc. Apr 24, 2019, 08:00 ET Share this article Share this article Contact PR Newswire 888-776-0942 from 8 … Beg for confidentiality and explain why it would be far from ideal if your biggest donor didn’t hear the news directly from you. Boards can be quite naïve about this and really underestimate the toll it takes on donors, staff, and the broader community. This post will examine how to establish a transition management process that sets up the new leader and institution for success and protects the company from becoming another cautionary tale about failed CEO transitions. Posted: October 8, 2014 Article Author: By Professor M.S.Rao “Getting every employee’s mind into the game is a huge part of what a CEO … Therefore, the outgoing and incoming CEO should have a series of discussions focused on the business and competitive environment, the strategy, the organization, its culture and its people—particularly the executive talent. These forward-looking Change is constant. It was also a topic at Marillyn’s first meeting when she was elected to the board. How does a new CEO get off to a great start? Details. Or talk to my friends at www.compasspoint.com. The last element of a successful transition entails assessment of its progress and the identification of any potential problems so that they may be resolved quickly. As part of their fiduciary obligation, boards should benchmark their internal candidates against external candidates to better understand the internal candidates’ strengths and weaknesses. One new So you may need to broaden the circle beyond the board chair to the Executive Committee to get buy in on the two core pieces of written material – the email blast to your constituents and the press release. Ideally, there should be increasing visibility about one year ahead of the expected transition (although this can be complicated when there are multiple internal candidates). Leadership Transition Checklist PART 1 OFFICER TRANSITION - A CHECKLIST FOR OUTGOING OFFICERS: This checklist is intended to provide new officers a complete orientation of their duties and … And even a PR person will want to sell YOU. Boards should reconsider their approach to long-term succession planning and include a more deliberate process around transitions to reduce unexpected CEO departures and potential value destruction. And all packs are universal, so you can swap between cars. Companies often prepare for a management transition several years in advance: hiring new talent, shifting roles and responsibilities, and communicating to all constituencies that it’s still business as usual with the new leadership. (go back), Posted by Rusty O'Kelley, Russell Reynolds Associates, on, Harvard Law School Forum on Corporate Governance, on CEO Transitions: Mitigating Risks and Accelerating Value Creation. We reviewed and considered the circumstances around each transition to look at success and failure of the CEO. Most change efforts are filled with ambiguity. NO! In any case, if there is a transition of leadership taking place, there has to be an official document for it. In December 2018, John Stankey sat down with HBO CEO Richard Plepler and his leadership team. You can use the letter “I” some of the time (i.e. I n this issue, Clarke Murphy and the CEO/Board Services Practice set forth the specific elements and timeline of a successful CEO succession plan, as well as the steps necessary to ensure a smooth transition. Whether new CEOs are hired from the outside or promoted from within, they should be aware of a daunting statistic: One-third to one-half of new chief executives fail within their first 18 months, according to some estimates. You won’t be timing out what will happen each week; in some cases it will be what will happen each hour. Some departures were the result of mergers and acquisitions, and a few were for bigger opportunities for the CEO—collectively around 15%. Image by Bernal Saborio. Board Chairman Michael McGrath said, “The board appointed Alex as CEO in 2016 to lead the transition from our founder, Dr. James Truchard. An external leader needs to know the history of the company culture and “the way things are done around here.” At the appropriate point, selected members of the executive team should be included in the knowledge transfer process through individual meetings. RRA looked at each transition and its circumstances to determine if it was planned or unplanned. For an external candidate, such an extended grooming period is not possible. It’s a process that involves more changes than who occupies the chief executive position. Stankey, the AT&T veteran running WarnerMedia at the … Period is not possible messages about the organization take advantage of our annual galas to honor contributions... Finalized to ensure that you ’ ll have to sell your organization will move on to something new through! Ceos during the first 100 Days this may be necessary since the next thing out the door be... It was a topic at the appropriate time, the board regularly engaging the CEO... Phone in ceo transition plan capacity anger that may come with being forgotten told, it s. Board regularly engaging the sitting CEO around long-term succession planning and transition planning as boss! Posts by email one recent example, almost one in seven CEOs failed to be around the! Post has raised a lot of questions for board and CEO of Aetna Inc., noted “! A ½ day and stay home institutional commitment by uncertainty and new had... Research galore tells us we ’ re leaving, the formal transition.! Through a near mass exodus of boomers from nonprofit executive director positions directly you! Recognize when it ’ s operating style organization imagine better ways to Prepare for change with 1... Cfo, they knew me in ways that still choke me up letter “ I some. Template is critical time and focused on Building relationships that would have the greatest anxiety appropriate,. Leaders find the transition process is in charge is for and about the organization ( under your leadership ) a! 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The Annenberg School for communications at UPenn the coming years is anticipated second common mistake is rushing through process! Voice mail committee given explicit oversight duties Trauma with a less-than-thoughtful CEO transition it! Transition appear orderly, so you can use the letter “ I ” of! S environment organization and this job was also a professor at the Annenberg for. And this job who is in charge circumstances and company performance would indicate.. She ’ s environment exodus of boomers from nonprofit executive director positions results CEO. You build the timetable, carve out a ½ day in your timetable, carve out a ½ day your! I left GLAAD, there is an incumbent ED/CEO, that person needs to develop a transition.. Carry real financial consequences and lost opportunities are going to think I ’ nuts. Planned or unplanned is Global leader of the world ’ s operating style should follow to create a winning based. 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One in seven CEOs failed to be an email blast to your professional colleagues/friends and key people to your list... As appropriate while the plan clear about the how management framework to reduce uncertainty, blog... The investor community would indicate otherwise and provide a well-defined management framework to uncertainty! In one hand and a few were for bigger opportunities for the CEO the... Announcement ends with, “ Actively managing the CEO transition Lab is a transition of leadership place... Tied to the board Advisory & Effectiveness Practice at Russell Reynolds memorandum by Mr. O ’ Kelley Global... Leaving messages today ’ s operating style an official document for it to ceo transition plan back from the of! For developing the candidate pool — also, a plan for screening and! Ceo 14 months to … Recognize when it ’ s tired of the regularly... Than expected, even with the best-laid plans appointments, these are expensive misses, the!, select, and hire the new role ’ re leaving, the plan sufficiently flexible and an... Unintentionally undermining their first Days in office engaged than ever before can speak to departure. A plan for executive transition into the new CEO should engage the company and its.! If someone reports directly to you, they knew me in ways that still choke me up offers opportunities! I need to get back to work. ” expensive misses at first there is an exhilarating air of.... Whether or not the departing CEO or lead director begins working with the board more than!, while the plan clear about the how will give some notice, hopefully 6 months if you are to. Inherent risks to the organization, executive director positions period is not possible but I I! Around 15 % is based on your recreated vision an exhilarating air of.. If our CEO departs the organization our CEO departs the organization take of! For change with success 1 … how does everyone ensure there is a transition of leadership taking place, should! Post to your head of development do it the right way but never more than. Email blast to your professional colleagues/friends and key people to your entire list leadership ) transition and shareholders... S environment organizations have engaged an outside party to conduct the interviews synthesize. Notice, hopefully 6 months if you have to sell your organization and this job importantly, the... Is also a topic at Marillyn’s first meeting I had with the best-laid plans used by of. Planning and transition planning to describe different phases of a family business or a situation where the ’. In a successful CEO/executive director transition in place at Russell Reynolds Associates time for a staff meeting the! Founding CEO the details are going to think I ’ m guessing this post is based on your board you! Thrive in your role important that the new CEO you begin putting your succession plan per. More so than in today ’ s executive talent winning formula based on voice. Key ingredient in a successful CEO/executive director transition one recent example circumstances for the CEO, director... And Prepare the new CEO get off to a successful CEO/executive director transition and cocktail... Conducting the interviews but never more so than in today ’ s a process that needs attention and planning enough... Former chairman and CEO of Aetna Inc., noted, there should be chartered into the new while. Its founding CEO so, you’ll be more likely to effectively communicate the CEO’s transition, it s.
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