Starbucks made news recently when CEO Howard Schultz announced he would step aside for the company’s current COO Kevin Johnson to take his place. Schultz will remain on as chairman, leaving many to speculate that he intends to look over the new CEO’s shoulder for a while. Top-level transitions such as this can be difficult as companies adjust to new ideas, practices, and styles of leadership.
Often, executive-level seats are held for a pretty long time, which means that people up and down the ladder get used to doing things a certain way. When a big name in the C-suite leaves the company, transitioning to a replacement can get messy.
“Companies do executive transition in very different ways and there’s inherent variability in the process based on organizational size, culture, and … why and when the outgoing executive is exiting,” says Howard Seidel, senior partner for Essex Partners, a division of talent management and career transition services consulting firm Keystone Partners. “However, there is often no systematic process for bringing the new person on, and the executive is left trying to create their own ‘onboarding’ process. An onboarding process needn’t be rigid and can allow for some flexibility based on the perceived priorities of the incoming executive, but there should be at least a basic outline and plan.”
Developing a Transition Plan
Whenever possible, companies should have a plan in place to make C-suite transitions as smooth as possible. Seidel recommends that transition plans cover the following areas:
- Logistics: Make sure details like office space or login information are taken care of ahead of time so new executives can focus on being of service to the company.
- Reports: New executives need to meet one-on-one with key figures and department heads to get to know them, what they’ve been working on, and how they see the current state of affairs in the company. This is often the beginning of the assessment not only of the corporate culture, but also of whether the team has the appropriate skills and resources.
- Meetings: New executives need to sit down immediately with key internal and external constituencies. This allows the executive to get a handle not only on what’s working, but also on what needs to change. Internal meetings also provide a sense of the organizational culture and how to initiate change in the organization; external meetings are often a great source of insight about how the outside world, including customers, see the company’s strengths and weaknesses.
Perhaps most importantly, a transition plan must also include measures to make sure the company itself doesn’t suffer during the transition period.
“In C-level hiring, the board is usually involved directly in meeting candidates as well as providing input on the criteria for prospective candidates in the context of what they see as the company’s major needs,” Seidel says. “Picking high-caliber executives can do a lot to support brand and drive market optimism, but only if it’s coupled with picking the right people for the company’s strategic needs and current or desired culture.”
Seidel says he has worked with many talented executives who ended up leaving their new roles in relatively short periods of time because “what the board said they wanted wasn’t really what they wanted or they left out important caveats.”
“When managed well, a transition can benefit a company’s brand and stock, but if a bad transition leads to multiple transitions in the same role, it is natural for market confidence to erode,” Seidel warns.
That Feeling of Being Watched
When a former leader officially leaves but keeps one foot in the door, it’s often difficult for their replacement to implement any real change. The new executive may feel they are constantly being watched by their predecessor, which can lead to a form of corporate paralysis.
“It’s important that organizational leaders, and in many cases the board, establish with an executive continuing in an advisory role the parameters of what that role will be,” Seidel says. “Advisors can play different kinds of continuing roles so long as the incoming executive is aware of what the role will be before he or she takes the job.”
The problem arises when a new executive discovers that their predecessor is more actively engaged in the company’s operations than expected, Seidel says.
“Advisors typically should be just that – serving as a sounding board for the executive based on their knowledge of the company and its people,” Seidel explains. “Advisors also need to send unambiguous messages to both the new executive and the organization that it is the new executive and not the advisor that is in charge and driving decisions.”