COVID-19, the accompanying global economic meltdown, the anti-racism protest movement, misconduct, M&As, personal health and wellbeing and good old-fashioned succession planning. Whatever the reason, the C-Suite in many iconic companies saw seismic change in the first half of 2020.
The list of high-profile CEOs and other senior executives who have departed, announced their intention to step down or been derailed by any one reason is pretty long. And it’s only going to get longer.
Some of the change was well-planned and widely anticipated. In February, Disney Co. CEO Robert Iger stepped down after years of searching for a successor. The same could be said for Mastercard CEO Ajay Singh Banga, who announced the same month he would step down in early 2021 after 10 years at the helm and assume the role of executive chairman.
Other departures were much more unplanned and, thus, a bit more surprising.
Mandy Ginsberg, CEO of Match Group—the company that operates the Tinder and Match dating apps—announced in January she was stepping down to attend to personal health and family challenges.
Greg Glassman, CEO of the popular CrossFit gym franchise, resigned after posting a Tweet that referred to the outrage over the killing of George Floyd as “Floyd-19” in a botched attempt to protest government quarantine measures. Later, in a call with his gym owners, he stated that he wouldn’t mourn Floyd just because it was the “white thing to do.”
And James Bennet, opinion editor for the venerable New York Times, was forced to resign in early June after publishing content that the paper’s journalists believed unfairly undermined the Black Lives Matter movement.
The trend is clear: an increasing number of organizations are taking stock to determine whether their senior executives, and the plans they had for an orderly departure, are fit for current purpose. And as the pace of change picks up, it appears more and more likely that the pre-pandemic leaders these organizations relied upon may not necessarily be the people who will lead them into the future.
That should be a top concern for organizations of all kinds given that most are not very well prepared to deal with a sudden or unplanned executive transition. In reality, most organizations are not even prepared to deal with planned transitions.
The Harvard Business Review has been tracking and conducting its own research on succession preparedness of global corporations. Despite the increasing need to plan ahead, that data shows that only 53% of corporate boards of publicly traded companies have a contingency plan for CEO succession, 41% do not regularly discuss CEO succession and 54% have not established a formal CEO succession plan. The situation was even more dire for private companies, where nearly two-thirds did not have a CEO succession plan.
These are troubling trends at a time of crisis when, history has shown us, executive transitions typically occur with much greater frequency. The collision of multiple global crises and a lack of preparedness is going to create chaos in many companies.
Why have we been so reluctant to plan ahead when it comes to predicted or surprise executive departures? The simple answer is that many organizations don’t face these scenarios often enough to drive interest in developing a contingency plan.
For others, transition can be an awkward topic to broach with senior executives. Some organizations fear that planning ahead will be interpreted as a lack of faith in current leaders. This is particularly true with CEOs; involving the chief executive in planning for their sudden departure is an inherently awkward and difficult conversation.
There are also concerns around governance. Who is ultimately responsible for designing a contingency plan for executive departures? Who triggers the implementation? These are the questions most organizations never get around to answering.
However, in the forthcoming post-pandemic leadership shake-up, organizations that have procrastinated or ignored the need for a planful approach will be hit the hardest. At some point, we all need to acknowledge that ignoring this problem won’t make it go away.
The lack of attention is all more concerning when you consider the impact of a botched executive transition.
Many of your customers will be scrutinizing the decisions you make about senior leadership following the easing of pandemic restrictions. Given the economic stresses that accompanied the pandemic were not the consequence of any specific incompetence or malfeasance, it will be important to showcase your organization as a fair and respectful employer who knows how to treat people who are leaving through no fault of their own.
Organizations that suffer collateral damage to their brand are typically those that try to transform their leadership ranks in an ad hoc fashion. Executive departures can be emotional, messy and complex challenges, particularly so in the context of a global public health crisis.
For those organizations that want to put a plan in place, the options are limited.
The gross majority of career transition services are not really tailored to meet the unique needs of senior business leaders. An effective executive transition plan must be viewed less as a form of crisis management, and more as an essential component of talent management. It’s just as important as, say, recruitment and retention, and possibly more so in certain situations given the damage that can accrue to an organization’s brand from an awkward termination.
What does a planful approach look like?
The best executive transition plan will probably look a little bit different depending on the size and nature of the organization. However, the key best practices—transparency, collaboration and support—will remain a constant.
Establish your transition team. Regardless of whether it’s a planned or unplanned executive departure, you must assemble a team of key personnel where each member has clearly defined roles and responsibilities. The team will involve members of the board, senior executives not directly impacted by the transition in question, the CEO (if they are not the subject of the transition) and the CHRO.
Carefully plan support for the executive in transition. Organizations must, wherever possible, ensure that an executive in transition is supported in ways that avoid drama, negative headlines and other challenging disruptors. Although business executives are often looked upon as the most capable employees in any organization, they are also people who are defined by their jobs. A support plan must be cognizant of the emotional impact of these departures.
Set out a deliberate, defined process. Your transition team must have a playbook. They must gather all the relevant facts, establish a first point of contact for the executive involved to facilitate negotiations, and develop a comprehensive communications plan that serves the need of both the individual and the organization.
Organizations must engage with the executives in transition in an open and honest context. They must display a willingness to work together to come up with a transition plan that is fair to both the individual and the organization.
In the absence of crises, it’s easy to ignore things like succession planning and executive departure strategies. In our current environment, which is defined by volatility and uncertainty, no organization has an excuse for not planning ahead.