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When the torch is passed atop a major corporation, all eyes are on the new CEO. But leadership advisers Rebecca Slan Jerusalim and Navio Kwok, of Toronto-based Russell Reynolds Associates, decided to study the outgoing boss in 30 successions and found their emotions and actions during the search for a new leader and subsequent transfer of power can play a pivotal role influencing their successor’s – and the organization’s – future.
Transitions were more effective when CEOs began the succession process with a strong relationship with the board of directors, were actively engaged in helping choose a successor and had positive views of the process. But when the outgoing CEO experiences ambivalence or regret or feels excluded from the succession process, transitions can become tumultuous.
Their findings apply beyond corporate boardrooms to the community groups and charities where many of us may be involved in steering succession and even to athletes and their coaches when a career approaches its end. Ms. Slan Jerusalim, who has spent eight years on the volunteer board that oversees her children’s non-profit Toronto private school, says in an interview that emotions, control and identity issues are critical to successions in all organizations. “Without understanding the nuances and the impact on both the individual and the broader organization we are really missing an opportunity to experience strong, robust succession processes and to support both the board and the CEO,” she says in an interview.
They broke their findings into five psychological crossroads outgoing CEOs face:
- Initiating a succession: CEOs’ reasons for stepping down and boards’ reactions to their decision are critical as things get under way. In their research, most successions – 83 per cent – were initiated by the CEO, with the three most-often cited reasons being age, tenure or other time-based factors; the future needs of the organization; and personal reasons. “They would say ‘it felt right given age and tenure,’” notes Mr. Kwok, although the specific age or tenure varied among them. “Or they might say ‘I felt I lacked the focus or energy to continue.’” While research by others a few decades ago found CEOs reluctant to let go or feeling their skills were irreplaceable, this study found nearly the opposite: In an era of servant leadership, many CEOs felt the organization needed a different kind of leader or staying on would impede the succession pipeline.
- Relinquishing control: While most CEOs initiated the succession process, their involvement dwindled as the search took place and indeed often it was unclear what their role might be. “When they are used to controlling everything else about the organization this feels odd and uncomfortable,” says Ms. Slan Jerusalim. “It’s not for them about losing power. It’s about mattering.” Board members need to be clear about their own role in the transition and how the CEO can contribute.
- Managing emotions: Half the boards in the study were, from the outgoing leader’s perspective, unreceptive when CEOs told them they wanted to step down, with directors expressing surprise, concern about the timeline or unhappiness with the news. In some instances, the board even pushed back on the CEO’s decision to leave. Those CEOs also had to manage the doubts of their top team members, justifying why they were stepping down and alleviating concerns about new leadership. “Emotions aren’t really discussed in the board room. We’re all supposed to be stoic. But emotions are a critical learning point and barometer in successions,” says Ms. Slan Jerusalim. CEOs need to reach out for emotional support. As well, when the CEO-board relationship was strong, outgoing leaders seemed to cope better with their negative or mixed emotions.
- Planning for what’s next: Although CEOs are hired for their long-term strategic capabilities, many of them do not apply those skills to their personal life. More than half of the CEOs – 53 per cent – made no plan for what they’d do after leaving office and were too preoccupied with urgent day-to-day matters to give it solid consideration before departure. Most have extensive networks and can expect opportunities to arise, but the fact such future-oriented thinkers for their business lacked that skill for themselves is noteworthy. Boards also have to grapple with the CEOs’ involvement with the organization in the future – will he or she be a director or adviser – and achieve agreement with the CEO and successor on that score.
- Detaching from the role and the organization: There was a relatively even split between CEOs who viewed the role as their job (43 per cent) and those who saw it as their identity (47 per cent) with the remainder feeling it was a little of both. Viewing the CEO role as part of their identity was a double-edged sword. CEOs who saw it that way were more likely to have a strong relationship with the board, which positively affects succession. But they also experienced more negative emotions during their succession because moving out of the role involved a greater loss than just giving up a job title. Mr. Kwok points out this applies to all of us in job transitions: “If you singularly identify with what you do and it can no longer be the case, that transition is so much trickier.”
Overall, the study points to the importance of emotions. Mr. Kwok stresses that emotions are data. “Succession can be very clinical, very procedural, when the situation is extremely psychological and extremely emotional,” he warns.
Cannonballs
- The most challenging part of a CEO’s journey is passing the baton, according to former Harvard Business School dean Nitin Nohria. Not only must the CEO leave on time and enable an orderly succession, but he or she must also handle the run to the finish line effectively, avoiding paralysis and complacency, and determining whether to start new projects that won’t be completed before departure.
- U.S. vice-president Kamala Harris has recently highlighted the importance of being ready when a change in leadership comes and you’re second-in-command, consultant Ken Goldstein notes. There is a big difference between advising the person on top, who is making the calls, and actually making the calls yourself. Readiness for that switch is exponentially harder than most people think.
- Change expert Greg Satell says every change consultant must be able to answer three questions: What evidence is the change model based on? How will you overcome resistance? How do you intend to leverage organizational dynamics for success?
Harvey Schachter is a Kingston-based writer specializing in management issues. He, along with Sheelagh Whittaker, former CEO of both EDS Canada and Cancom, are the authors of When Harvey Didn’t Meet Sheelagh: Emails on Leadership.