The CEO Is Leaving. Now What?

A three phase process can help your organization navigate the boss’s
departure and transitions moothly in to new leadership.

An increasing number of CEOs are deciding to leave their posts on their own terms in the wake of
COVID-19, for factors ranging from burnout to wanting to move on to the next stage of their careers and
lives. Others are simply coming to the end of their agreed upon term in office. Most want to minimize
disruption to the company and preserve a positive legacy, but best practices on how to navigate the last
100 days of a CEO’s tenure are an under-researched topic. Beyond the first step of the CEO and board
agreeing to an orderly transition, including timing and financial terms, how should the CEOs and boards
proceed? ACEO’s last 100 days typically can be divided into three phases: pre announcement, when only
the CEO, chair, and board are aware of the planned departure; a post-announcement phase, when the
departure has been announced but the business carries on much as before; and a pre transition period,
when a successor has been picked but is not yet in office. How an organization and individuals manage
these phases is crucial to an effective transition and continued momentum for the organization. Get it
wrong, and the dislocation from one leader to the next increases the risk of organizational disruption.
For the departing CEO, reputation and business relationships are valuable assets to take on to the next
stage of a career. But for many, the motivation is primarily emotional: a desire to make a success of the
last chapter of their service to an institution, its people, and its customers. Examining CEO transitions
across numerous sectors, it is possible to identify best practices for boards, the departing CEO, and the
successor a like. Here’s a guide, informed by the experiences of three senior leaders who have recently
left their very different organizations in the U.K. and whose experiences apply to CEOs everywhere.

Pre announcement: Form a Common Narrative CEO. departures can be read in different ways internally
and externally, and it can be difficult to achieve the optimal positioning. While the CEO might prefer to
personally announce their departure at a time of their choosing, itrisks making the company board
lookweak, given that the departing leaderis preempting one of its most important prerogatives: the
power to decide who is chief executive. Both CEO and board will benefit from communicating the
departure around a common narrative that is positive for all parties and will not destabilize the
company, cause concern among colleagues, or unsettle the external market. After six years at the helm,
Joe Garner decided in September 2021 to step down from his job as CEO of Nation wide Building
Society, the United Kingdom’s largest mutual financial institution. His first act was a long walk in
Windsor Great Park with the chairman of the board, to discuss the timing and nature of the transition.
His departure was mutually agreed upon at the September board meeting, and only then did he speak
to his direct reports. Garner then wrote a blog post and made a video before the announcement to
ensure that the internal narrative was defined and agreed to upfront. There were no further
communications until a press release went out at 7 a.m. on Sept. 23. At the same time, the blog post
was published on Nation wide’s intranet and the video was emailed to all 17,000 employees, 9,000 of
whom watched it. “Video enables you to do a very personal, emotional piece of communication,”
Garner said.“And it meant that I owned the messaging and killed any alternative story dead, because it
answered the questions.

The key take away :Keep the news among a small group and jointly prepare detailed messaging—both
the narrative and the way it will be communicated. Get the message out to colleagues personally and to
the market before any external commentator does Post- Announcement: Let Go of the Longer-Term
Future Chief executives are still accountable for everything that happens in the company until their final
day. But inevitably, they also progressively lose influence, which lessens their capacity to fulfill their
duties. The period after the announcement but before the transition to a success or is particularly
challenging, and it is easy to remain in denial that any change is underway. While David Ellis was CEO of
leading English rugby team Harlequins, he used to divide his work into three types: business as usual,
growth, and experiments. After his departure was announced, he and the board agreed that he should
focus on business as usual. He handled ticket sales, contracts, and stadium finances but let go of longer
term decisions about personnel and strategy. To make sure he could remain accountable, Elliswent back
to a habit from his first 100 days, when he was learning the business. “Back then, I was trying to figure
out where the really bad risks were,” he said. “In my last 100 days, I found myself defaulting to watching
all those risks again. I almost reverted back in an arc and was asking myself, ‘Are all these risks OK to
hand over?’”

The key take away: Set out the time frame of various types of work and decisions. Let go of longer-term
strategic goals and focus on day-to day management on ensuring that things do not go wrong. Don’t let
the selection processfor a new CEO distract from the day-to-day business

Pre-Transition: Champion the Successor. Not all transitions should be seamless. When a CEO is fired,
the board is often demanding change to keep pace with an industry in flux orto stabilize a company in
turm oil. But many companies want continuity from one leader to the next, and some industries codify
the transition. For example, the Senior Managers Regime for U.K. financial services details the
information a departing CEO must provide to their successor. Less formally, recently departed leaders
often note the importance of serving their successor; one even recommended being “subservient” to
them, for the benefit of the organization. Newly departed CEOs also say they were keen to pass on their
institutions’ culture to an outside appointee. Even more than other organizations, the armed forces
require seamless succession, and they have developed a model of leadership to ensure this. If a
commander is lost on the battle field, someone else must be ready to step up immediately. When the
U.K.’s Gen. Sir Nick Carter was preparing to stand down as Chief of the Defence Staff in November 2021,
he decided to spend some of his remaining time helping his successor learn the job. The aim : to ensure
continuity, particularly in important personal relationships. “There is merit in having structures and
systems that are resilient enough to be able to with stand the change of leadership,” he said. “If the cult
of personality becomes too much of a feature of military life, there’s a risk that you’ll end up being one-
man or one-woman deep when you actually need to be rather deeper than that.”

The key takeaway: The incumbent CEO should champion the incoming leader by publicly reassuring
staff members and emphasizing continuity. Arrange for a short period of overlap, if possible, during
which the new comer could shadow the work of the departing CEO, by sitting in on meetings, for
example.

Moving On — to Next Time. The rise in voluntary CEO departures suggests it is time for companies to
draw up plans for future successions. The public sectoris a good source of templates because it often
carries out essential services and cannot run the risk of a temporary period of disorder. That’s why its
leadership roles often come with formal or informal term limits, and hand over stend to follow
established procedures that make the process smooth and predictable. Private-sector companies could
start by creating a playbook based on these and other best practices, combined with lessons learned
from their own transitions. They could also consider an informal term limit for an incoming CEO—say,
five years and agree on goals for that time frame. The board could then decide in good time whe the rit
wants the CEO to continue beyond that. If a company has recently installed a new CEO, it might not be
too early to start thinking about their departure.

Departing CEOs remain accountable for everything that happens in the company until their final day, but
they progressively lose influence.