Should you extend your stay? Establish Board Ownership, Involvement and OversightMore than at any other time in history, stakeholders today expect a company’s board of directors to have a command of the entire CEO succession process. Actually, I must have had three hands then. Rusty O’Kelley is Global Leader of the Board Advisory & Effectiveness Practice at Russell Reynolds Associates. In December 2018, John Stankey sat down with HBO CEO Richard Plepler and his leadership team. Make sure your announcement ends with, “Now I need to get back to work.”. So here is my 8-step transition plan template for how to depart from your nonprofit organization the right way. Recognize when it’s time to step back from the process. The executive chairman can also provide a sense of continuity to the workforce as the new leader finds his or her footing in the corner office. This may be necessary since the next thing out the door will be an email blast to your entire list. Also, the plan automatically upgrades your batteries when improved batteries come out. I’m guessing this post has raised a lot of questions for board and staff alike. If a CEO cannot be found within the timeline, the Board will hire an Interim CEO. Bring one person in on this with you. Have ideas for topics I should cover? But I wished I could tell her more about the how. Understanding that is key. This effort starts with the board regularly engaging the sitting CEO around long-term succession planning, starting early in his or her tenure. What else would you add to a transition plan template? How often new CEOs arrive, their tenure, and the rate at … Please write down this list and put it in priority order months ahead. File Format. Now, let’s take a look at those six tasks. Leadership transition is the single most turbulent time in an organization. The key to a successful transition is disciplined and thoughtful planning. Read more: CEO … MY 8 STEP TRANSITION PLAN TEMPLATE. By contrast, we have found that well-thought-out transition processes are generally comprised of six phases but should be refined to fit the specific circumstances. These materials need to be approved and finalized before the verbal communications begin. Nash further noted, “I grew up inside this company, but when I became CEO, I recognized that the role required a different mindset. The transition from one CEO to another is a critical moment in a company’s history… When did you begin putting your succession plan in place? You’re not alone. One of the most challenging issues they will have to work through is whether or not the departing CEO stays on as executive chairman. Most likely, you don't. If they last longer, the relationship should be reviewed annually and effectiveness regularly reviewed by the board and CEO. The CEO is a very important player in CEO succession planning, both in an of-counsel role to the board or the committee responsible for the process and in overseeing the company’s overall management succession… If your nonprofit advocates for kids to get a better education, how about a senior state or federal government official who can validate the importance of the work of your organization and your leadership? Leadership Transition Planning Guide Sample transition timeline Time Action Ongoing Ongoing Ongoing Beginning Sept-Oct According to a 2015 study by PwC Strategy&, “Companies that have to fire their CEO forgo an average of $1.8 billion in shareholder value compared with companies that [have a succession] plan, regardless of whether the replacement is an insider or outsider.” The study also noted that companies that experienced unplanned successions “would have generated, on average, an estimated $112 billion more in market value in the year before and the year after their turnover if their CEO succession had been the result of planning.”. No! Building Your Transition Plan. But she just knows it’s time. Leadership Transition Plan Checklist: Ways to Prepare for Change With Success 1. Done thoughtfully and systematically, a CEO transition creates value for the organization, reduces risk and enables the new leader to hit the ground running and create immediate value for the company and for shareholders. For instance, Franz Humer CEO of Hoffmann–La Roche, set the right priorities during his initial period; persuaded all stakeholders; and brought Hoffmann–La Roche from an industry laggard into an industry leader. The board should ask how the current CEO and the CHRO are identifying and developing the best internal candidates, as well as the strength of the overall bench. Sample’Transition’Communications’Plan’’ Goal:’To#support#asmooth#transition#between#National#Church#Residences#CEOs#while#maintaining# confidence#in#the#organization’sleadership#among#internal#and#external# These forward-looking I did not leave the news on a voice mail. When done well, CEO transition planning engages the organization’s stakeholders and proactively alleviates potential areas of stress, keeping the top team focused on the business and on value creation. I had stayed in touch with them and wanted them to hear the news from me. We recommend to our clients that such roles are limited to no more than one year, but we have seen successful longer-serving executive chairmen. In any case, if there is a transition of leadership taking place, there has to be an official document for it. I n this issue, Clarke Murphy and the CEO/Board Services Practice set forth the specific elements and timeline of a successful CEO succession plan, as well as the steps necessary to ensure a smooth transition. Think it through carefully. Or better still, draft a quote from the chair of the search committee that hired you. CEO transitions have always been challenging, but never more so than in today’s environment… She LOVES her organization and is desperate not to do any harm on the way out. The possibility for confusion most often occurs during drawn-out transitions or when the former CEO remains as executive chairman without a clearly defined role completely separate from that of the new CEO. In our research, we considered a range of disparate factors. Losing a boss is certainly a challenge but losing a leader is an emotional loss and can cause all kinds of things to go bump in the night. Chico's FAS, Inc. Any leadership transition can be fraught with uncertainty and difficult decisions, but founder transitions can be particularly wrenching. "project," "believe," "plan," "estimate," "intend" and similar words and include, among other things, statements regarding our leadership, management transition plans, growth and business strategy. So you may need to broaden the circle beyond the board chair to the Executive Committee to get buy in on the two core pieces of written material – the email blast to your constituents and the press release. I’m talking about transition plan consultants or a former ED or board chair who cares about the sector who can provide pro bono support. To send an inquiry, please fill out this form. It’s not really a transition plan template per se. Adopt an Emergency Leadership Transition Plan to address the timely delegation of duties and authority whenever there is an unexpected transition or interruption in key leadership. Additionally, the presence of a former CEO on the board can limit a new CEO’s ability to be a change agent or even to be seen as the ultimate leader. The interviews can also serve as a vehicle for delivering key message signals to essential constituents—among the most important being that the new leader listens to and values outside perspectives. Beg for confidentiality and explain why it would be far from ideal if your biggest donor didn’t hear the news directly from you. Board Chairman Michael McGrath said, “The board appointed Alex as CEO in 2016 to lead the transition from our founder, Dr. James Truchard. It was also a topic at Marillyn’s first meeting when she was elected to the board. Assuming an orderly evaluation and selection process, boards (particularly the chairman or lead independent director) can guide and support the new CEO as they prepare to move into the new role. Incoming leaders understandably look forward to their new role with enthusiasm, while departing CEOs often struggle to let go and cannot help but focus on their legacy. Use your talking points. Any new CEO must learn to appreciate board members’ expectations as well as the board’s operating style. (go back), Posted by Rusty O'Kelley, Russell Reynolds Associates, on, Harvard Law School Forum on Corporate Governance, on CEO Transitions: Mitigating Risks and Accelerating Value Creation. Whether new CEOs are hired from the outside or promoted from within, they should be aware of a daunting statistic: One-third to one-half of new chief executives fail within their first 18 months, according to some estimates. Executive Coaching & Strategic Consulting, Ep 122: How to Use Artificial Intelligence to Improve Donor Retention (with Allison Fine and Beth Kanter), Ep 121: Creating a 5-Star Board Retreat (with Dolph Goldenburg), Bonus Episode: Turn Your Impatience to Your Heroic Pursuits, 10 Things That Drive Executive Directors Nuts, 5 Ways to Make Sure Your Best Employees Never Want to Leave. Cases it will need a good plan for screening candidates and conducting the.! Your announcement ends with, “ Now I need to be approved and finalized before the communications... 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