The CEO must adjust as she walks the line between continuing to run the business that has her stamp on it and laying the groundwork for her successor to take over, ensuring that thoughts of her legacy do not impinge on either.
The CHRO must adjust as he carries out the coordinating responsibility of the person in the middle. He must be helpful to the new leader in preparing and onboarding, to the CEO as he directs the process, and to the senior leaders as they prepare the organization for the transition and the operational changes it will bring.
The senior managers must adjust to the entry of a new person who will be their new boss. In doing so, they will no doubt have to adjust the operational plans for which they have carefully geared their departments' processes, systems, and people.
Each major player must be ready to adjust and adapt to the changing demands of this dynamic process that touches on the strategic, operational, political, cultural, and personal realms of any company. Denying its complexity is the surest way to open the door that leads to errors. These errors fall into two categories: errors in thinking and errors in execution.
Thinking Errors
In the same way that major players ignore or remain unaware of the complexity they face in a top-level transition, they commit errors in how they perceive the task ahead in ways that block them from the goal of a successful handoff. Chapter 2 describes a number of these thinking errors and the underlining attitudes that cause them. They are most apparent in the form of three myths that commonly appear in organizations where transitions at the top fail.
The first myth is typified by the statement from a CEO, who said, “People join companies all the time; it's nothing to get all excited about.” The attitude behind this was that a top-level transition does not warrant special attention or planning but can be handled as a routine event.
The second myth, this time described by a lead director, is “Our job is done when the one we want says ‘Yes.’” The underlying attitude here is that the board can relax and back off once the candidate it wants has agreed to an offer. Directors who assume the CEO will take it from there are ignorant of their special responsibilities, ones that they alone must fulfill.
The third myth, “We know what he can do,” was uttered by the head of human resources of a large corporation that had just rehired an executive who had left several years before. It masks the attitude that past experience or familiarity can predict a new leader's performance in a job he has never done under conditions he has never faced.
Thinking errors are particularly destructive when committed by people in positions of authority who express them with certainty even though they may not have been thought through carefully. When followers fail to question or raise concerns, the collusion leads to errors in the execution of the transition.
Execution Errors
Chapter 3 reviews common errors that major players make as they execute the steps of the transition process. The first major execution error is one of omission as the directors and CEO simply ignore the need for ensuring that the demands of the transition are handled. Either from ignorance, organizational dysfunction, or laziness, a surprising percentage of companies make no effort to smooth the way for a new leader.
The second common execution error is when the directors either miss or ignore warning signs in the relationship between the CEO and the designated successor. Problems in this relationship pose the most serious block to transition success because of the need for trust between the incumbent and the person who is preparing to take over.
It is the board's responsibility to monitor the quality of the relationship and make sure that both parties are doing whatever is necessary for the relationship to be a factor that facilitates success rather than one that enables failure. Also, the CHRO has an important role to play here. It is he who should be close enough to the CEO and to the new leader to see the signs of trouble, and should be the one of all the major players with the training to recognize such problems early enough that they can be avoided.
The third execution error is when the company is affected by a type of tunnel vision that brings into focus only the new leader coming aboard but ignores the fact that for every new leader elevated to the top position in a planned transition, there is another transition as the incumbent leaves, and often there are other “derivative defections” when senior managers leave because of disappointment at not being awarded the top job or because their influence will decline with a new leader. As we stress throughout this book, the organization is a general system where when changes happen to one part, other parts will be affected in some way. The wise board and CEO will recognize this system-wide interdependence in how they plan for and carry out their transition duties.
The final common execution error is mismanaging the process of steps and events that make up the transition. Of course, every transition is different because each one happens in a unique organization culture with people who have unique personalities, strengths, and weaknesses. But, while each approach must be tailored to the particular conditions and demands of the situation, every top-level transition should be designed and implemented on the basis of a primary guiding principle: Transitions at the most senior level must be treated as special events because they are unlike transitions at any other level. What is good enough in the case of a new functional vice president or general manager will be insufficient for a CEO handoff.
Lack of appreciation of this principle contributes to three missteps that are described in Chapter 3: not organizing and interpreting the information that is most important to the new leader's success, particularly cultural and political information; inadequate preparation of people for the roles they must perform in order for the transition to be a success; and mishandling the part of the transition process that has to do with onboarding the new leader. Poorly designed programs to assimilate the new leader commonly detract from a smooth transition, especially when the new leader is coming into a culture and political structure that are unlike what he has experienced before.
Roles for Success
Errors of thinking and of execution can be minimized if the major players do their parts. Chapters 4 through 7 detail the role, the most impactful contributions, and the key success factors for each of the major players: the board, the CEO, the CHRO, and the senior managers.
The Board's Role
Directors must assume overall accountability for the transition's success. Chapter 4 highlights why and how the directors who are most involved must be engaged, informed participants. At the same time they must be careful to not be so active that the CEO's role is compromised. When that happens, not far behind is confusion or, worse, divided loyalties of the CHRO, senior managers, and also the new leader. Finding and maintaining this right balance is a key success factor not only for the board's role but also for the entire handoff.
In addition to accepting accountability, the board must manage relationships adroitly with both the incumbent leader and the new leader. With the existing CEO, the relationship must be that of a partner in making the transition a success. That requires the board to agree with the CEO on the rules by which they will work together, and to be as open to his point of view about how the transition should be managed as the CEO should be to the board's point of view. A partnership relationship also allows for input and advice from directors to the CEO, and vice versa. For advice to work, especially for a leader from his board, it must be given in an effective way by directors and also must be taken well by the leader. Chapter 4 explores this sometimes delicate interaction and the part the board and the CEO play to make the most of it during a handoff.
True partnerships are not common between a board and CEO. This chapter explores how new rules and regulations governing