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When a CEO steps down, it can trigger a domino effect of chaos. Boards—often caught off guard—have to jumpstart the search for a successor. And in the process, they sometimes exclude the departing CEO from the search or transition—leading to a loss of institutional knowledge and broken trust. But it doesn’t have to be this way.
Leadership advisors Rebecca Slan Jerusalim and Navio Kwok say the relationship between a board and CEO can make or break the changing of the guard. They spoke to Curt Nickisch on HBR IdeaCast in 2024 about best practices for CEO transitions.
CURT NICKISCH: Rebecca and Navio, welcome.
REBECCA SLAN JERUSALIM: Thank you. We’re thrilled to be here.
NAVIO KWOK: Thank you. Thanks for having us.
CURT NICKISCH: Obviously, the CEO transition is super important to a company. Is that importance something that means that people really give it a lot of attention and do it right, or that there’s so much pressure to do it right that people kind of fumble it as they try to manage it well?
REBECCA SLAN JERUSALIM: Well, I would say there’s tons of work out there looking at the succession process, what parts of the succession process are really critical, and particularly even around CEO succession. What is the right step and cadence to this? What is the board’s involvement? What role does the incoming CEO play?
And what hasn’t been studied or looked at or really understood is the experience of that person who’s so pivotal to the organization; the person who has been at the helm of the organization, setting the strategy, managing the strategy, creating the organizational culture. How does that person’s experience in transitioning out of the role really impact the organization, the succession experience, as we are really very much focused on the incoming CEO?
NAVIO KWOK: I think we often also see that there’s a bit of this tension between how urgent something is and how important it needs to be. And so CEO succession for a board and possibly the top team as well is something that is extremely important, but not very urgent, because these decisions tend to happen well in advance unless there was an emergency situation. And so what a board will do is they’re going to focus on the day-to-day, and naturally, non-urgent important things are always going to get pushed off, and I would bucket succession in that category, and as a result, it’s not always top of mind.
CURT NICKISCH: And then it becomes top of mind very quickly often. In your research, you found that 83% of CEO successions were initiated by the CEO themselves, which kind of surprised me a little bit. You kind of feel like these people are supposed to be in the hot seat and if they’re not performing, they’re out and we need to get somebody else in. And really, it’s kind of mostly largely on their timelines.
NAVIO KWOK: Yeah. I had seen some research. I think they plotted the performance trajectories of CEOs, those that were performing well and those that weren’t, and then they kind of looked at whether or not they initiated succession or if they were forced out, and actually, that isn’t a strong predictor. So in recent years, the performance of the CEO doesn’t always have that direct contribution to when they step down. And so I think that plays into why mostly, we found in our sample, it’s CEO initiated and it aligns to what you can gather from public CEO data on at least why CEOs or why boards reference CEOs stepping down is it’s a retirement decision.
REBECCA SLAN JERUSALIM: I would say we were also quite surprised at the number of CEOs who self-initiated the succession. I mean, if you go through any kind of board governance training, you really know that succession is supposed to be really top of mind and not a last minute decision in and around who will be the next successor, but this should be a real process around identifying early, building up the capabilities of internal successors and running through different scenarios to be able to put the right person in the role. And very much a good portion of our sample, and you referenced 83%, many of them self-initiated, and what we found was also fascinating was that they really surprised the board.
CURT NICKISCH: Yeah. You had a story in the article of a board that met eight times to try to convince the CEO to stay when they needed to be spending that time on not trying to arm twist an unwilling executive to be unhappy longer, but go out and find the replacement.
REBECCA SLAN JERUSALIM: And some of the reasons that CEOs were initiating the succession were reasons that the board could have and should have had better insight into long before the CEO made that declaration, so things like we talk about temporal reasons, age and tenure in role. Those are easy things that a board can have regular ongoing conversations with the CEO about.
A couple of the other reasons CEOs announced their readiness for succession were really around, they saw that there were future needs of the organization that they couldn’t necessarily or shouldn’t necessarily be the ones delivering on. And they also recognized that they could potentially be a blocker to succession and that there were people ready or really should be in the process of being ready for that CEO role, and they didn’t want to block their opportunity.
And so these are two things that really stood out to us because a lot of what has been written about CEO succession speaks to the ego that’s involved in being at the top of the house and not wanting to relinquish that seat for others. And in actual fact, there were some really important and different ideas that came through these conversations that boards should really be talking to the CEOs about and not worried to the same extent that it is purely ego-driven or a hold on power that is keeping these CEOs in place.
CURT NICKISCH: Yeah, no, I suppose stories of people being CEOs, being forced out, burning it all as they go, right, those are big things that scare boards and scare a lot of people, but it’s probably few and far between when it’s really somebody who just says, “It’s time. I’m getting tired,” right?
REBECCA SLAN JERUSALIM: They probably make the news more.
CURT NICKISCH: You’ve outlined the ways that they should be more proactive before this news comes. Once the news comes, what mistakes do you see boards make at that point?
NAVIO KWOK: One that comes out through that research is the level of CEOs’ involvement in their own succession process. So in our research, we identified five things that they did all the way from just canvassing for candidates all the way to onboarding. And so if we leave aside onboarding, which most CEOs did have some degree of involvement there, we found nearly one in four CEOs were excluded from that process entirely. You know, leave it to us.
We didn’t use this language in our paper, but it reminds me of the RACI framework when it comes to project management. You’ve got responsible, accountable, consulted and informed, and the board is accountable for succession because the board will be there when the old CEO steps down and new one comes in, but who’s responsible? I think we would say that it should be the outgoing CEO to some extent – more than one in four being excluded entirely. And there’s all these reasons we found why it’s very important actually for the organization.
CURT NICKISCH: Well, it just stands to reason for any job, right? We’ve all left jobs and known that ideally when you leave a job, it’s a place that’s better than it was before you arrived. And it’s not just the hours of your time doing something that can be replaced, that it’s actually a stronger organization after you leave, but I don’t know, if you overlap with the person who’s replacing you to help train them, that that’s a very positive thing for an organization and it’s almost the same idea for CEOs, it’s just that it’s a lot trickier when you can only have one person in charge, but you go from one person to the next, so how do you handle that transition? So what do you tell CEOs that are in this position? What’s your advice for them?
REBECCA SLAN JERUSALIM: Listen, ultimately, when done right, there is a role for them to play in the succession process, but that they do also have to recognize that they aren’t going to have full control. The control here will ebb and flow throughout the process. And for them, what the connection is that the control piece, we likened it to or we connected it to mattering, that they are so used to having such a tremendous impact on every decision that the organization makes, that not having the ability to have some control or impact here actually connects to their ability to feel like they matter, like they have value, like they have input. And when they’re not given that kind of opportunity to weigh in, there’s a deeper kind of psychological need in and around wanting to show that they still have some value here to add.
CURT NICKISCH: It’s kind of an interesting dance, right? Should they offer information? Should they wait until they’re asked? What is the protocol there?
REBECCA SLAN JERUSALIM: Much of that has to do with how they operate with the board in any other matter. One of the strongest findings that we found is the connection and the strength of relationships between the CEOs and boards were predictive, and I say predictive, predictive, air quotes, this was a qualitative study, not a causative exploration, but the strength of the relationship between the boards and the CEOs really impacted how the overall experience of the CEOs in the succession process.
NAVIO KWOK: It’s like when you want to ask for a favor from someone in your network, it’s much more helpful and productive if you’ve had an existing relationship with them and then the request comes. But sometimes we have friends in our network where they only come to us when they need something. And that to me, what might be akin to a CEO board relationship, which is there’s quite a bit of a chasm between it, and so they’re only communicating when there are things that need to be discussed, and now you’ve got this big thing that we have to work with in theory together. It’s not the first time they’re meeting, but the relationship is so new and you’re trying to build this relationship at that very tricky point in time where there is so much risk even on a good day and a well-thought-out succession process.
CURT NICKISCH: Well, it makes it sound like then it’s also incumbent on the outgoing CEO to be communicating with the board earlier so that it isn’t a surprise and that emotions don’t flare up when they do give that announcement.
REBECCA SLAN JERUSALIM: That’s right. It should be a long ongoing conversation. And CEO succession should not be considered kind of a momentary or moment in time. It should be a years in the making, ongoing conversation between the CEO and the board and real identification and preparation of key successors along the way; should make the board feel confident that they’ve got optionality, that the CEO is on top of this and helping and developing these folks; that the board has visibility to them.
And so when the CEO then announces their willingness and readiness for succession, the board should really feel like they’ve got a line of sight to who those high potentials and those potential candidates are, that they’ve been built up over the years, that they have clarity around what that profile looks like. And yes, there might be tweaks along the way, but it shouldn’t come as such a shock and surprise that this is happening.
NAVIO KWOK: I think the implication too for any manager of a team or a leader in an organization is to always have a strong bench. We’re not expecting boards to be not surprised when a CEO says they want to step down. We’re not asking boards to not try and persuade and shift the timeline a little bit, but they should be prepared for that very inevitable outcome. And so for any leader or manager, you should have a deep bench. An example is the Vancouver Canucks were just in a playoff run.
CURT NICKISCH: This is an NHL hockey team…
NAVIO KWOK: Yes, NHL hockey team and the goalie was the back-up to the back-up. That was the one who ended up playing because the first goalie was injured and then something happened with the second goalie. So we’re thinking that all sports teams, sports team managers, they have an awareness of where they’re going to pull talent. Now, whether or not it comes to fruition like this case, it’s not always going to be a success story, but at least having an awareness of the key players that you can pull on when needed is very important and when it comes to CEOs, especially so because there is so much that is on their shoulders when they step into that role.
CURT NICKISCH: What did your research find for the best practices for outgoing CEOs?
NAVIO KWOK: I’ll share a story. One CEO said to more clearly demarcate their roles and responsibilities and the time at which one person was officially going to be enrolled. So this particular CEO had said they felt they were quite clear that, “I’m still CEO until a certain date, then you’re going to step in,” but it seemed to blur, and in fact, he could see the board members and certain top team members shift their allegiance to the new individual, and so there’s a bit of almost encroaching of responsibilities. So being more clearly demarcating, whose responsibility is going to stop and start when that was fairly notable, and I would say, Rebecca, it’s probably part of the transition phase of succession.
REBECCA SLAN JERUSALIM: Yeah, I would say two related things. One is many of them talked about taking their successor with them to any meetings, external meetings, vendors, suppliers, board meetings, et cetera, so that they could really get the benefit of the outgoing CEOs’ relationships and the tie to whatever relationship they were fostering.
This clarity and demarcating roles and responsibilities is true for the board with the CEO and really laying out what that transition plan should be and look like, what the timeline is, what the responsibilities are. And some of them even talked about, and few, but some of them did talk about the board having a role in that being their end of the day performance review of how much have you helped support your successor in transitioning.
CURT NICKISCH: Now, no matter how clear the role is, it’s still hard, right? You may have a very clearly demarcated when the other person takes over, but then they take over and their priorities are different. The things that you’ve really thought are important as CEO all of a sudden are maybe lower down on the priority list. Even though you want to leave the role, to see somebody else do things differently, there’s got to be tough emotions there.
REBECCA SLAN JERUSALIM: There is a tremendous amount of emotion throughout the entirety of this process. A real roller coaster, again, buffered by the strong trusting relationship with the board. But I’ll give you a sense of what that roller coaster looked like. The emotions, the outgoing CEOs were very much managing their own emotions as well as the board’s emotions, the senior team’s emotions as well.
Prior to announcing that the succession process, it can be quite lonely for CEOs, for outgoing CEOs, knowing that they will at some point exiting that role. Lonely, I say, because they’re not necessarily able to share the news that they will be finding a successor initially, and there’s not that many people or places that they can turn to share some of that emotion. It can feel dishonest in some way.
But post-announcement, there can be excitement about handing over to the next successor. We heard stories of grief and distress in giving up the job. There can be a frustration with lack of involvement. And Navio shared some stories about the senior team kind of turning away from the outgoing CEO, even if they were still in the seat.
CURT NICKISCH: Sort of a lame duck kind of response?
REBECCA SLAN JERUSALIM: That’s right. They can feel guilty if they’re blamed for this process going poorly. One of the CEOs who we spoke to even talked about the stages of grief having to give up that seat, and this CEO actually didn’t fully exit from the organization, stayed on in an executive chair role, and so was still tied to the organization in some way, and yet still likened the experience of moving out of that role – it was his decision – but moving out of that role and still feeling like this was a tremendous emotional impact.
And so when asked about, “How do you deal with that? How do you recognize that?”, he said even just naming the experience and being aware or cognizant that this could and very likely that this roller coaster of emotions is present and can impact you – leaning into that a little bit more. We’re kind of taught there’s no emotions in the boardroom, but in actual fact, this is a very real human experience.
CURT NICKISCH: Personal, yeah.
REBECCA SLAN JERUSALIM: It’s very personal. And so it’s really critical to have good trusted advisors to talk through that experience, to recognize that it may very easily happen and have some plan around how you’re going to manage that kind of feeling and emotion.
NAVIO KWOK: Yeah. I want to give my wife Alana credit for this. She’s a clinical psychologist in training. She says, “name it to tame it,” with regards to emotions, so just simply being able to have a label for it is actually quite impactful in understanding what it is. And emotions in general I think especially in business, we talk about how important emotional intelligence is, but we don’t actually create or facilitate an environment where people are comfortable to talk about their emotions, and so it’s a little paradoxical to expect someone to have that skill, but there’s no opportunity to really kind of practice it.
And then when there’s something as major as a succession when you probably should be fully ready to utilize those skills, well, you never had any opportunity to practice up until that point, and we’re asking the CEO that they actually can’t talk about at all. So it’s this weird dynamic they have to deal with.
With that CEO that Rebecca had just mentioned too, he raised a good point that you might want to be aware of just what your triggers are, and you might not know what they are until you see them. So for that individual, what really struck them initially was when their office was no longer in the center of their building. So it was when they were more on the periphery physically, that’s when he felt, “Okay, this is real. This is significant and I’m the old guard leaving.”
So I think that speaks to an earlier question you had about just what a CEO can do, the outgoing CEO and the incoming CEO, is being aware of the symbolic nature of executive leadership at the top. And so this CEO actually made a concerted effort to move his office away from the center, and still he was hurt. That symbolic nature is very important, and it can both help people support the incoming CEO and sometimes unexpectedly can make it very real for the outgoing CEO that it’s very real and it’s time for you to step down.
CURT NICKISCH: Yeah. You’ve gone from being a very, very important person; it’s a part of your identity, it’s a big identity change.
REBECCA SLAN JERUSALIM: It’s interesting you call that out. One of the key questions that we asked our participants is, is CEO something you do or did or something you are? And it’s very hard at the top of the house to really be able to separate an identity. These CEO jobs are 24 hours, seven days a week. You’re all in. And when we asked that question, there was kind of a rough split. 47% said that it is something that they did, and 43% said it was something that they were. The rest were kind of a bit of both.
And that’s telling. I mean, even for the folks who had what we would say very low ego, kind of salt of the earth, very humble folks who would describe their role as CEO at the bottom of the organization, it was still a very personally challenging roller coaster experience to navigate. And many of them felt it was really helpful to have the reflection, the time to reflect on that experience, because very few people actually, as you’re going through it, you’re not taking the time to reflect on it.
And then you’ve left the role and there’s very little that people want to know and understand of your experience through that, but yet it was helpful to both understand and then for them in their next role, iteration, whether it’s as another CEO or on a board, to actually have really strong sentiment and feeling about how this should go and what feels right beyond the specific governance of it was helpful and impactful for them.
CURT NICKISCH: What are some of the best lessons here for other executives or really anybody leaving a job and handing it over to somebody else that you think we all can learn from?
NAVIO KWOK: I’d say relevant even well before you’re leaving a job is to not fully tie your identity to either your job or a role. I think that has particular implications with AI and its potential risk of displacing certain workers and at a minimum, changing the job that they’re doing in ways that we can’t necessarily forecast.
So Microsoft and LinkedIn came out with a work trends report just very recently, and they found that on LinkedIn’s fastest growing jobs in the U.S., many of them, I think maybe the number was two-thirds, weren’t in existence 20 years ago, so you don’t even actually know what job you might do in the future. And so if you tie your identity and sense of self to what you’re doing right now in the organization you’re in, it’s going to make that process of letting go, stepping down or changing jobs much more difficult.
So I’m not saying don’t tie it to it, but I’m saying consider it a little bit differently. So what do you tie it to?
And so I read a story in a book by Dan and Chip Heath, they’re brothers, one of them at least is with Stanford, and they shared a story of Floyd Lee, who was a retired Marine Corps and Army chef. He was 25 years in service, had retired, then the Iraq war happened, so he actually re-enlisted as a chef to help out. And typically, army food is very bland, and the mess hall he was leading was pristine food. Things were beautiful, food tasted great, and people would come from outside of that mess hall on weekends to eat his food. And he said for him, it’s not that he’s in charge of food, he’s in charge of morale.
And so if you align your identity to that kind of message for you and your role, I’m in charge of morale, then if for whatever reason you can’t be a chef anymore, there are still other ways in which you can satisfy that personal value and need of being in charge of morale. But if you’re tied exclusively to being a chef, an army chef for that individual in particular, then it makes stepping down very hard if that job no longer exists in the future.
REBECCA SLAN JERUSALIM: I would just add, and we asked this of some of the CEOs, what kind of advice would you have for folks? Part of it is like Navio mentioned, finding your intrinsic purpose. What is the value that you want to add? Where do you get the most joy? Many of the CEOs in our sample did not step down and retire. They went on to do other things.
There was also this question of avoiding just creating some busy work because you’re kind of worried you’ve got such a full work life and many can step on wanting to keep that pace up, not recognizing that without true planning and recognizing what next – they’re very strategic in their work life, but not very strategic in planning their personal life outside of this key role. And so thinking about that, having regular conversations, planning for it before the last day is really important.
We also heard about spouse and family renegotiations. What? You’re around now more? What does this look like? Or we said we would travel and now you’ve kind of thrown yourself into all this other-
CURT NICKISCH: I don’t know you! Yeah.
REBECCA SLAN JERUSALIM: Yeah. Board work, busy work. So there’s some renegotiation that needs to happen as well, but it does go hand in hand with really purposely thinking about and planning for that next stage.
CURT NICKISCH: Rebecca and Navio, thanks so much for coming on the show to share your research and to talk about this really important transition.
NAVIO KWOK: Thank you. It was a pleasure.
REBECCA SLAN JERUSALIM: Thanks for having us.
HANNAH BATES: That was Rebecca Slan-Jerusalim and Navio Kwok of the executive search and leadership advisory firm, Russell Reynolds Associates—in conversation with Curt Nickisch on HBR IdeaCast. Jerusalim and Kwok wrote the HBR article, “The Vital role of the Outgoing CEO.”
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This episode was produced by Mary Dooe and Me, Hannah Bates. Curt Nickisch is our editor. Music by Coma Media. Special thanks to Maureen Hoch, Rob Eckhardt, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener. See you next week.
