CEO Transitions: The Role of the Predecessor12.02.14
There is no denying that the lingering shadow of the predecessor affects every freshly appointed CEO. In some cases, this is a legacy left behind by a beloved founder. In others it is the very real presence of a former chief executive who has left the office but not the building. Research published by RHR International indicates that 50% of previous CEOs stay involved with the company as a member of the board. On average, those who stayed as a director did so for eight months—three quarters of the first critical year of the transition process.
Will new leaders have an easier time transitioning without them, or is it healthier for former CEOs to stay on? Clear-cut answers to this conundrum are hard to find. There are times where a clean break is best and others where an overlap is valuable. Often, contractual agreements spell out the terms of departure. The ideal scenario would be if the outgoing and incoming leaders could sit down with the board and make a determination of the exit strategy based on the leaders’ respective skillsets, the organization’s business needs, and the chemistry between the two executives. But in reality, the CEO-select rarely has a say in the matter.
According to our study, sitting chief executives’ perceptions of whether the previous officeholders were helpful or not during their transition into the role were almost evenly split, regardless of the planned departure dates.
Even if he/she leaves immediately after the changeover, the exiting executive can provide valuable support prior to the exchange of power, especially to an internal successor. Our study cited examples such as seeking opportunities to connect the CEO-select with board members on a deeper level; introducing him/her to key external stakeholders; and showing visible support for (and confidence in) the new leader by thoughtfully shifting key decisions and accountabilities to them prior to the role change. Making decisions on poor performers (but leaving the selection of replacements to the incoming CEO) was also deemed very helpful.
Whether the prior CEO leaves immediately or remains on the board, the best practice is to literally and symbolically let go at the changeover, providing the new chief executive with the freedom and autonomy to lead as the singular source of authority.
Warning indicators that the ex-CEO is not letting go include: a) being too involved in business and key decisions, b) exerting undue influence on the board behind the scenes, and c) allowing their opinions to the board to continue to outweigh those of the incumbent. These dangerous actions can impede the incoming CEO’s growth and development in the role and inhibit members of the board from building a trusting relationship with him/her.
Additional problems center on the new CEO's inheriting a senior team that identifies too closely with its old boss and his/her leadership style. This can cause confusion and make it difficult for the team to shift alliance to the new leader and his/her agenda, especially if the predecessor is sitting right down the hall. An incumbent may even face resistance from the ex-CEO while attempting to reshape the team to match the company’s current business needs.
All board members should be aware of these negative situations and take immediate action to neutralize them. If allowed to continue, this situation can cause contradictory communications, conflicting loyalties, and confusion as to who is in command. The final result is a new leader with limited effectiveness, severe damage to the organization, and a revolving door of successive CEOs.
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