How To Transition Non-performing Leadership

As companies evolve and change, CEOs and executives often come to the realization that their trusted lieutenants, who once played a crucial role in achieving early success, may not be growing with the business. This realization creates a challenging moment for CEOs, as they grapple with the tension between the evolving needs of the business and their loyalty to the individuals who have contributed to their success. At times, Shine Talent is brought in to provide discreet counsel, introducing CEOs to potential new executives better suited for the next phase of the company while maintaining confidentiality. This period of transition can be unsettling and tough for all parties involved, but there are ways to manage it more effectively.

Five Key Considerations When Transitioning Leadership:

1. Confidentiality Matters: Loose lips sink ships. The decision to change your executive leadership should only be discussed with trusted advisors. We sometimes see CEOs prematurely inform key leaders within the organization about intended changes. This premature disclosure can result in misinformation spreading throughout the company, leading to distraction and uncertainty. While transparency with the team is important, it's best to have a well-defined plan and identify your next hire before sharing your thinking with others.
2. Consider Organizational Design: Too often, executives structure their organizations around individuals rather than considering factors such as organizational effectiveness, accountability, customer needs, technological advancements, and shifts in the competitive landscape. When transitioning top leadership, it is important to assess how your business has evolved and to design an organization that aligns with your future opportunity. Avoid the pitfall of structuring your organization around individual skills and experiences; instead, focus on hiring executive leaders who align with your vision for the next phase of growth.
3. Compensate Fairly: Take a moment to truly reflect on how the executive you are letting go has contributed to your company over the years and how they have impacted your personal success. It is okay that they are not the right person for this next phase but remember, they have been heads down on your business for years and deserve the financial freedom to step back, reflect, and decide what is next for them. Reward their past work with a generous severance package, typically equivalent to one year's compensation for a top-performing leader.
4. Have a Smart Communication Plan and Communicate Broadly: Once you are clear on the path you want to take, communicate your plan with the executive you intend to replace and, immediately after, communicate broadly with the company. Live by the mantra that once one person knows, everyone knows. It is important to manage messaging, answer questions directly, build confidence, and mitigate team disruption.
5. Build Your Bench: Remember how you got here and know that it will likely happen again. CEOs and executive leaders need to continuously carve out time for networking so they understand the marketplace and are building relationships with current and up-and-coming leadership.

A change in executive leadership creates a new opportunity for your business. If you are smart about how you implement change and properly manage the transition, you can create a massive unlock for your company that can allow for explosive growth.