Written by Cheryl Flink, Ph.D.
You could not be prouder. The business has delivered on its promise. It has a strong culture, an industry leadership position, and a clear mission and purpose. And now it’s time to go. That decision might be spurred by an eye toward retirement, the entrepreneurial itch, or a desire to provide a family member with the opportunity to lead. As that decision becomes more public, you sense that people are uneasy, and perhaps jockeying for attention. Employees may notice you are spending time with financial advisors, lawyers, and even investors, and may be wondering about what will happen to their jobs. Everyone knows change is coming. And the biggest question of all is on their minds: who will lead?
Transitioning the business to a new leader can be fraught with emotion. The current CEO is letting go of their baby—and wants to make sure the legacy endures. People may feel insecure and wonder whether they should seek new opportunities. Succession planning may or may not have been established, so various entities (investors, family members) may be heavily involved in determining who leads next. For some businesses, there will be a sale process that requires an enormous amount of time and energy as the company seeks the best valuation possible. The organization must prepare for the transition, and the CEO must lead differently.
The four leadership challenges of the Transition Phase
The four CEO challenges of the Transition Phase have the central theme of both inspiring passion and letting go. The business must go on without you—and you must go on without the business.
Succession planning must happen early
The CEO and investors cannot give short shrift to succession planning. Otherwise, interpersonal dynamics can create turmoil and distract the organization. Early preparation and communication of intent will pay dividends. The board may be involved in wanting to evaluate candidates—and may not agree with the CEO on who is best qualified to run the company. Investors will want to weigh in. And family dynamics may play a role as well. In some cases, the CEO may decide who succeeds, especially in family-owned businesses. In virtually all transition scenarios, the CEO will be ceding control of the company to a new leader and will need to move from “I run the company” to “I advise the company.”
Reinvigorate passion
The company cannot stop running while the transition happens, particularly if the CEO plans to sell the company. The due diligence process will have a keen focus on customers and talent. If there are signs of an exodus, investors may back away or assign a lower valuation number. The CEO needs to reassure customers that the business is stable and thriving. Perhaps more importantly, they must reinvigorate purpose and energy in employees and emphasize that the company’s mission will continue. The company is not the CEO, it is the organization and the people who work there. What the company accomplishes in the future will be theirs to create. The CEO moves from “what legacy am I leaving?” to “what legacy will you create?”
Prepare the next leader and management team
It may be tempting for CEOs to want the new leader and management team to be their mirror image. Afterall, the CEO built the company and so must have done a lot of things right. The new CEO surely needs to develop an appreciation for the thinking and decision making that were foundational to the company’s success. However, this is the time to allow space for new ideas, new thinking, new perspectives, and for the team to take a different shape under the guidance of a new leader. The CEO may not agree with those new perspectives and may have fears new ideas will wreck the business. That doesn’t matter. The CEO needs to support those new ways of thinking and then, quite simply, get out of the way, moving from thinking “you are going to ruin it” to “you will make it even better.”
Shut the door and open a new one
The CEO’s departure can create a storm of mixed emotions for everyone, including joy, grief, fear, regret, optimism, and even anger. The CEO may receive calls from former teammates and be tempted to answer them. “Do you know what they are doing now?” “What do you think I should do?” The CEO must definitively shut the door on this long tail of advice and dependency. They need to enforce the boundaries of time and space—and go about walking through the new door they sought when they decided to leave. That door might represent starting or running a new business, philanthropic leadership, retirement—any number of options. No matter what shape that door has, the CEO must walk through it, moving from “I’m here if you need me” to “I’ve moved on.”
