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Leadership Transition – Harnessing the Power of Disruption (Part 2 of 2: Tactics)

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Category: Leadership

Margaretta Noonan, Founder of noonanWorks, has global experience with Fortune 500 companies and a record of identifying issues in complex organizations and implementing effective solutions. Before becoming an entrepreneur, Margaretta was Executive Vice President, Chief Administrative Officer for Hudson Global. Before Hudson, Margaretta was Senior Vice President, Global Human Resources at the parent company of Monster.com. Her retail career included time as the Vice President, HR for Kohl’s and for Lord & Taylor.

Evan Smith is a Senior Partner with Schaffer Consulting focusing on helping leaders achieve seemingly unreasonable goals to grow, innovate, and reinvent, in provocative and creative ways.

In Part One of this article, we discussed setting strategic direction and context that we have helped organizations use effectively when going through a change at the top. Orchestrating successful achievement of the transition can have many moving parts; here we share some of the tactical applications to take the inevitable disruption created by this change and use it to transform the company in an energizing way.

Acknowledge and plan for the disruption of the exit

The departing CEO deserves a dignified exit unless compelling legal or ethical reasons prevent this. Stakeholders inside and outside the organization take cues about the company from how this is handled. How is an important transition of power – including a considerate exit – orchestrated?

First, understand the motivations, needs and goals of the departing CEO. What matters…money? status? reputation? legacy? next career move? Often, a combination of several of these or other factors drive the individual’s response to a proposed exit. Before beginning an exit conversation, prepare some scenarios on what drives the leader, and what elements of both form and substance related to the departure (and her next opportunities) might have real meaning.

Carrots are important. Once you understand the factors that matter, work to satisfy as many of these as possible. This can be done through cash separation payments, amended benefit terms, or the ability to craft the departure press release. Other “carrots” might be intangible in terms of economic compensation but have important symbolic value: an “ambassadorship” to an industry association; a different, new position; a board seat.

But don’t forget sticks. One of the advantages of providing consideration through separation payments or other means is requiring a written release of claims in order to receive them. These releases should stipulate not just that the individual not sue the company but also that she will not disparage it, release confidential information or solicit employees or clients.

The period between the announcement and the leader’s actual exit is a time when people may want to express appreciation for hard work, for the partnerships and teaming that were personally rewarding, for personal gifts of attention and insight; they may want to celebrate together the achievements great and small that the work together helped to create.

Allowing the exiting CEO to address the organization, to receive acknowledgement as an honored guest at a party to celebrate his tenure, to be visibly thanked by the board–These and similar actions are cathartic for the company and meaningful to the leader. They provide structure and ritual to what could otherwise be a chaotic time.

Capitalize to maximize disruption value of the entry

The disruption of a new CEO isn’t about throwing out what went before and building all over again. Nor is it about maintaining the status quo. Rather, the disruption allows the new leader to exploit some important opportunities that include:

  • Transferring Knowledge from the Old to the New: interrogate every conceivable resource – the departing CEO, employees, senior leaders, the board, outside consultants – to develop an enriched perspective on the past, present and future of the organization. Aggressively soliciting a diversity of perspectives will provide a fuller picture of an array of cultural norms, internal execution capability and business opportunities.
  • Aligning the Executive Team: A new CEO has the opportunity to turn a management group into a remarkable team by focusing its members on:
    –Creating the desired culture that maximizes the execution capabilities of the firm toward a clear strategy – what’s good of what the company has and should be kept; what new elements need to be built
    –Developing a shared vocabulary that does justice to the new direction of the company
    –Defining (or redefining) the core values, the mission, and the shared vision
    –Creating a team charter that specifies the important behaviors, service standards and commitments agreed upon by the leadership team
    –Of huge importance is defining the strategy – whether an extension of the old or a wholly new approach – and translating it to goals: what represents the collective direction and what outcomes are we harnessing our efforts to create?
    –Cascading the outputs of this agreement to the rest of the organization
  • Assessing Talent – and Developing Leaders: Many managers and executives in the organization may have great passion for delivering superior customer service, say, or creating a positive work environment, though they may lack the technical skills. Others may have the skills but not the passion. The new CEO has to address these gaps uncompromisingly by:
    –Formally assessing all leaders in key positions
    –Creating a professional development plan for each individual, which might include “classroom” time to address content gaps, periodic coaching and/or structured development experiences to create successful business results and test new ways of working
    –Setting clear expectations and relentlessly holding individuals accountable for results
    –Identifying other key roles in the company – most productive sales person? best product developer? customer service award winner? – and be sure they clearly understand and endorse any changes to strategy or culture – make them champions and change agents

Move from disruption to transformation

Orchestrating a high-stakes, successful leadership transition is a critical competence, and an important marker of organizational maturity for many company stakeholders – employees, vendors, and financial investors alike. Doing it well, through creating a thoughtful exit for the departing leader and a transition period focused on knowledge, alignment, assessment and development for the new leader, send clear messages of consideration, value and values, principles, and other signals. Using this framework can help to take a disordered time and bring not just order but improvement. It generates the power to harness disruption and create a transformative moment for the company.

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From Directive to Participatory to Invasive.

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Category: Leadership

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Sandra Hoskins, owner of The Kellan Group, discusses the leadership evolution and how businesses have shifted from directive environments to participatory and now invasive. Hoskins argues that after World War II, businesses had a very military-style leadership structure. That evolved into an environment where it was encouraged for opinions to be shared, and now, in a world of increasing technology, we have moved into an environment where it is very hard to draw boundaries between work and life because your employer can contact you 24/7.  She believes that there is room in the leadership world to share a vision that says yes you need to balance work and life.

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Leadership Transition – Harnessing the Power of Disruption (Part 1: Strategy)

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Category: Leadership

Margaretta Noonan, Founder of noonanWorks, has global experience with Fortune 500 companies and a record of identifying issues in complex organizations and implementing effective solutions. Before becoming an entrepreneur, Margaretta was Executive Vice President, Chief Administrative Officer for Hudson Global. Before Hudson, Margaretta was Senior Vice President, Global Human Resources at the parent company of Monster.com. Her retail career included time as the Vice President, HR for Kohl’s and for Lord & Taylor.

Evan Smith is a Senior Partner with Schaffer Consulting focusing on helping leaders achieve seemingly unreasonable goals to grow, innovate, and reinvent, in provocative and creative ways.

A change of leadership is arguably one of the most important and risky moments in the lifecycle of an organization – and it will inevitably cause disruption. We sometimes think of disruption as a negative change that must be avoided, reduced or endured. But with careful planning and appropriate intervention, boards or other stakeholders can use this disruption almost as a form of martial art to use the energy of the disruption to transform the organization. Harnessing this disruption means using it to drive the goals of a revitalized organization and helping the new leader build a platform for success.

In this two-part article, we share both the effective strategy and the tactics that we have seen in our work with clients. First: lets overview the strategy, process and symbol of a successful transition in leadership.

Acknowledge and plan for the disruption of the exit

Though not the right person to lead the organization in its next chapter, most CEOs have both enduring value and important constituents inside and outside the company. Unless there are compelling legal or ethical reasons for an abrupt departure, creating the time and the context for a dignified exit is important both for the company and the individual.

In most cases, creating with the departing CEO a meaningful “closing chapter” in the organization is a worthwhile investment. In those situations where timing permits, before the new CEO arrives, a window of time after the leadership change has been fully announced can create an important closure moment. The departing executive, the extended leadership team and the company as a whole need the symbolic acts associated with one door closing before another opens. At such a time, people often express important statements of “who we are” and of organizational culture – which can be critical to carry forward to the next era, under the new leader.

Ultimately, a dignified exit hinges on treating the departing executive with respect. This individual served the organization in an important role and deserves the appreciation that comes with that. Handling all communications – internally and externally – with discretion and thoughtfulness will go a long way to minimizing potential negative disruptions. Saying a graceful “thank you” to someone on the way out, takes nothing away from a warm “welcome” to the new leader.

Capitalize to maximize disruption value of the entry

An article by McKinsey & Company on managing CEO transitions recognized, “Transitions are always hectic, challenging times. The pace is intense. Everything demands attention”[1]. And that was written in 1994 – before the omnipresent technical devices, 24/7 global demands and ever shorter-term turnaround expectations so common today. Accepting the reality of a limited time to achieve rapid results, a CEO change is a period of intense disruption for any organization. How both the CEO and the organization handle this disruption determines whether it is ultimately a positive force of power.

Particular areas of opportunity are in the transfer of knowledge from the old to the new, the alignment of the executive team, the assessment of talent and the communications – internally and externally – about strategy, mission, values and expectations.

A new CEO is always a signal event for the company. It doesn’t happen often and it focuses the attention of employees, customers and the community, all of whom expect to see changes. The new CEO has the opportunity to make this a reinvigorating event by using her arrival to challenge the leadership team and to energize the company and its brand.

Move from disruption to transformation

Just as the departure of the former leader signaled the closing of a chapter, a new leader brings a new beginning. This disruption is a high-leverage opportunity for positive change. The disruption caused by a new CEO should result in transformation.

Assuring a dignified exit and positive “emeritus” status for the outgoing CEO and harnessing the disruptive power of a new leader, a refocused strategy and a reenergized leadership team can create a bold new platform to transform the organization. It requires focused attention during a chaotic period but using the opportunity of disruption to engender true change in the organization is a goal worthy of the best leaders.

[1] “Managing CEO transitions”, McKinsey Quarterly, May, 1994

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