Sometimes, during the course of our careers, we outgrow our roles and feel compelled to move on. At other times, our roles outgrow us. That’s when it’s time to focus on what’s best for the company. If you’ve served as the owner/CEO for a significant period, you might not have considered some of the elements of a successful CEO transition.
It’s important that business leaders lay the groundwork for a transition before a transition is needed. The steps outlined below can help support a successful transition of leadership.
Build a strong foundation. Every CEO should take lay the groundwork years before a transition ever needs to occur in order to benefit the company long term.
Grow your leadership. Rather than focusing on grooming one person for the next CEO, shift to emphasizing executive development overall. A strong team will offer up a number of qualified candidates for leadership when the time comes.
Designate strong committee chairs. Recruit a strong and diverse pool of talent to chair each committee, knowing that their combined wisdom and experience will create the right environment for leaders to flourish.
Keep an eye on external candidates. In many situations, the new CEO will come from the existing board. But don’t close off all of your options. Maintain contact with strong candidates from outside the board as well.
Avoid a strict timeline. Harsh deadlines can put too much pressure on a crucial decision. Allow your transition to happen gradually. The right candidates and timeline will naturally emerge.
Appoint a transition committee, then hire outside help. The ultimate decision to appoint a new CEO will lie with the committee you form. But consider hiring a succession management firm to handle the details.
Formally assess the candidates. Even with a strong prior relationship, (or perhaps because of it), each candidate should be evaluated by a formal, impartial method to ensure fairness. After all, humans are prone to bias.
Invite candidates to share their views with the transition committee. Allow them to share their vision for the company’s future. This helps the committee to evaluate each candidate’s leadership potential, rather than simply evaluating and interviewing them like typical job candidates.
Communicate the final decision with an eye on retention. Disappointment is to be expected of those not chosen for the position. Effectively communicating the board’s decision can help the company to retain key talent that might otherwise leave in search of greater opportunity elsewhere.
Strategize the announcement. Change, even positive change, can trigger anxiety in employees, investors, and the public. Analyze the potential for both internal and external disruptions, and craft the transition announcement accordingly.
Create an onboarding process for the new CEO. As the existing CEO, you might remain in the background for some predetermined period of time, to assist the new CEO in their shift to leadership. The committee should also evaluate other factors relative to the transition, such as filling the new CEO’s old role and any support that might be needed, and plan accordingly.
As you plan for your CEO transition, contact our office. We can answer pertinent questions, help guide the process from a legal perspective, and assist you in planning for the future of your company.