CEO succession is a high-stakes event that happens on average every six years. Which means most organizations will go through it regularly – but not regularly enough to get good at it. If they were better at it, they probably wouldn’t have to do it as often, and excellent communication can be a big difference-maker.
Why? Because the thoughtfulness and energy that goes into developing a successor isn’t matched when it comes time to nurture the transition. A huge success factor is how well the new CEO builds relationships and understanding early on, and communication is all about fostering both. According to Russell Reynolds, writing and sharing a transition plan and stakeholder communication are three of the five elements of a successful succession. I’ve seen the surrounding communication done well, giving the successor a great head-start, and I’ve seen it botched, tying an anchor around the newcomer’s neck.
There are three phases to communicating a leadership transition. While the overall goal is to help lay the foundation for a successful succession, each phase has a more specific objective. The three phases are:
I: Decision through announcement
II: Announcement through implementation
III: The first months of the new CEO’s tenure
I’ll describe Phase I here, and the others in my next two posts.
In Phase I (typically about four months), the objective is to create the conditions for a successful announcement. While the timing of the hand-off and the identity of the next CEO must remain a surprise to all but a very few insiders, you want those who are most important to the success of the company to feel sufficiently familiar with the successor to welcome or accept the announcement – or, at the very least, to give the benefit of any doubt.
The most critical tasks of Phase I are: for the successor to begin building new relationships with key external stakeholders, with the outgoing CEO’s help where appropriate (i.e., where he can lend added credibility because of his own); to increase the successor’s visibility and stature within the organization; and to begin redefining internal relationships that will change in important ways.
It is also critical to severely restrict and manage the circle of insiders who know the future plan in the period prior to its announcement. Not only do many companies face legal and regulatory ramifications, but loss of control over the timing, content and sequencing of the announcement is likely to cause misinformation, force a premature announcement and create avoidable problems that complicate the transition.
In general, these are the activities to be undertaken prior to the announcement of the succession plan:
- Draft a detailed, step-by-step communication plan for the announcement as well as necessary materials.
- Create a contingency plan and draft a standby statement.
- Create a matrix listing people the successor should meet or get to know better.
- Identify or create opportunities for the successor to share his or her views and insights, to demonstrate knowledge, experience, character and intellect.
- Identify and resolve any remaining open issues related to the transition (e.g., reporting structure and executive responsibilities).
- Remind informed insiders of the risk of premature, selective disclosure.
- Provide any training to help the successor be fully operational on day one (e.g., media or investor relations training)