The CEO Is Leaving. Now What?
A three-phase process can help your organization navigate the boss’s departure and transition smoothly into new leadership.
An increasing number of CEOs are deciding to leave their posts on their own terms in the wake of COVID-19, for factors ranging from burnout to wanting to move on to the next stage of their career and lives. Others are simply coming to the end of their agreed-upon term in office. Most want to minimize disruption to the company and preserve a positive legacy, but best practices on how to navigate the last 100 days of a CEO’s tenure are an under-researched topic. Beyond the first step of the CEO and board agreeing to an orderly transition, including timing and financial terms, how should the CEOs and boards proceed?
A CEO’s last 100 days typically can be divided into three phases: preannouncement, when only the CEO, chair, and board are aware of the planned departure; a post-announcement phase, when the departure has been announced but the business carries on much as before; and a pre-transition period, when a successor has been picked but is not yet in office.
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How an organization and individuals manage these phases is crucial to an effective transition and continued momentum for the organization. Get it wrong, and the dislocation from one leader to the next increases the risk of organizational disruption. For the departing CEO, reputation and business relationships are valuable assets to take on to the next stage of a career. But for many, the motivation is primarily emotional: a desire to make a success of the last chapter of their service to an institution, its people, and its customers.
Examining CEO transitions across numerous sectors, it is possible to identify best practices for boards, the departing CEO, and the successor alike. Here’s a guide, informed by the experiences of three senior leaders who have recently left their very different organizations in the U.K. and whose experiences apply to CEOs everywhere.
Preannouncement: Form a Common Narrative
CEO departures can be read in different ways internally and externally, and it can be difficult to achieve the optimal positioning. While the CEO might prefer to personally announce their departure at a time of their choosing, it risks making the company board look weak, given that the departing leader is preempting one of its most important prerogatives: the power to decide who is chief executive.