Target is the latest major US brand to replace its chief executive, following other recent examples such as Ford, General Motors, and Symantec. Target and Symantec did so partly in response to corporate crises that shook investor and customer confidence. Regardless of the circumstances, there are a number of "golden rules" to follow when announcing succession plans. The guidelines can help corporate communicators navigate leadership transitions, which are becoming more frequent because of the shrinking average tenure of the CEO, according to a decade of research from The Conference Board.
The outgoing chief executive should serve as a bridge At a town hall meeting last week, which the automaker streamed online, Ford said COO Mark Fields will succeed Alan Mulally when he retires on July 1. Mulally is widely credited for turning around the iconic automotive brand while other Detroit-based rivals were bailed out by the federal government, so there was the risk of turning the event into a celebration of his career.
She notes that "Ford celebrated Mulally, as they should have, but in a way that also explained how he laid the groundwork for what will come. PR pros say the outgoing CEO should whenever possible serve as a bridge to new leadership, even in cases where he or she is leaving under less-than-ideal terms.
Target announced the departure of president and CEO Gregg Steinhafel on Monday, about five months after a massive data breach during the holiday shopping season resulted in the theft of 40 million debit and credit card numbers.
The departure demonstrates that the discount retailer wants to wipe the slate clean. But when a CEO departs under less-than-desirable circumstances, there is a knee-jerk reaction by some to no longer show respect for that person. But companies should not try to completely erase a body of work [because of some blemishes during their tenure].
That is short term and foolish," he explains. While PR pros say that is important, it is equally critical to convey the character of the incoming leader given the rise of corporate transparency and accountability.How great leaders inspire action - Simon Sinek
The experts interviewed by PRWeek note that both GM and particularly Ford did well to address the character of their new leaders. But they underestimated his resilience and how much he loves this company. On average, corporations provided two months of notice, although the range was from two weeks to as long as six months. The report noted that this reflects an increased importance of succession planning, "and the development of an external communication plan [as] a fundamental aspect.
PR pros agree that succession plans are more critical than ever. They say they can help to mitigate some of the communications challenges that can occur when corporations unexpectedly lose a CEO and have no heir apparent. He moved up his departure to help care for his wife, who is battling cancer. That trend is expected to continue, despite the blip in attributed in part to retirement delays caused by the financial crisis.
This hypothesis is supported in part by the fact that the average age of departing CEOs was up last year. They may be dismissing CEOs more quickly who are performing below expectations.
Stay signed in. News Analysis. With that in mind, corporate PR pros were impressed by the restraint. Why that's a good thing for Oscars marketers The auto show as we know it is dead. Long live the auto show.However, many companies are unprepared for communicating executive transitions. Communications strategy is an integral part of CEO succession preparedness. Executive transitions can unfold quickly, demanding decisive action in developing the proper message and coordinating communications strategy both internally and externally.
When thinking about a possible transition announcement, there are several foundational elements for successfully positioning a senior executive change.
Whether a CEO retires, steps down, is terminated, decides to spend more time with family, or pursues new opportunities, companies must present a clear rationale for the departure. Given nuances in language that could imply the motivations of the executive and company, word choice is especially important.
Transitions that appear confusing, mysterious, or acrimonious will spook investors or stoke speculation. In the age of investor activism, boards look for opportunities to demonstrate they will take action when a CEO is viewed as underperforming. This may lead to a press release that does not shower the outgoing executive with praise, therefore signaling a less-than-favorable view of the executive.
Communicating CEO departure is a delicate balancing act. CEO transition announcements generally take financial markets by surprise and create immediate concern.
As a result, some companies have found ways to prepare advance messaging for a planned transition to precondition the market to a future change. For example, Kinder Morgan made a quick reference to a future CEO transition in its comments at an investor conference before an established timeline or formal announcement had been made.
In another example, when dealing with a series of executive changes over the course of 15 months, Mack-Cali Realty Corp. The presence of executive quotes in the release about their departure is another important signal of behind-the-scenes dynamics.
If the outgoing CEO is quoted, this suggests some deference to that individual, especially if their quote comes first. If the chair or lead director praises the outgoing CEO in their quote, that again sends a message.
CEO transition press releases tend to be brief, typically under words. CEO transitions typically raise many questions with internal and external audiences, and the media is often quick to report on perceived corporate instability. Companies should consider a proactive strategy to ensure their messages around a leadership transition are understood and conveyed in the first wave of media coverage.
A common strategy is to pre-brief a trusted reporter or two to secure a more holistic or accurate story at the outset of the announcement, with an embargo time established to coincide with the press release timeline. Another option is to hold a post-announcement briefing with reporters to provide greater context and answer questions. Another approach is to package the CEO succession announcement with a quarterly earnings announcement.
This approach allows the company to simultaneously address any questions or concerns about financial performance. As boards develop their transition plans, they will be best prepared for changes at the top of the organization by considering their communications approach as early in the process as possible.
During transition planning, communications staff can develop materials to guide executives through a successfully executed exit process that establishes a positive narrative for both the outgoing and incoming CEO alike. Skip to main content Insights.
Communications for Leadership Transitions April 25, Home right Post right Communications for Leadership Transitions. Why is the CEO leaving? When is the right time to communicate about a succession? Who gets quoted in the release? How can companies leverage the media? How can companies mitigate concerns about financial performance? Share Facebook LinkedIn Twitter.But it happens all the time. Leaders who have been at the helm of an organization anywhere from 6 months to several decades might suddenly need to resign for personal or professional reasons.
There is a lot at stake when a CEO either voluntary or involuntarily resigns. Not only is the public watching, but funders, staff, other stakeholders and constituents are as well. The board has a fiduciary responsibility to ensure the organization is not placed in any unnecessary risk until a new CEO is identified. Also, begin thinking about internal executive talent that is ready to step up to keep the critical work moving forward.
Control both internal and external communication. In the absence of a succession or transition plan, transparency and timely communication will be critical. You want to get the messaging correct. Be strategic and forward thinking in your approach. Keep it simple. The internal message will help control rumors and amplify the main points you want heard. You also have an opportunity to call an emergency town hall format staff meeting, if necessary, so all employees hear the same message at the same time and have an opportunity to ask questions in an open forum.
Let employees be your communication ambassadors.
This will not only help with transparency, but will control how the story is shared and repeated. Now is not the time to work on a succession or transition plan, but earmark the experience as a first order of business for your new executive. The future of your organization is at stake during times of transition. Without the right leadership and a lack of funding to invest in the development of a succession plan it will suffocate during and after an executive resignation.
Previous Next. View Larger Image. Second order of business: control communication Control both internal and external communication.
Third order of business: plan to build a succession plan in the future Now is not the time to work on a succession or transition plan, but earmark the experience as a first order of business for your new executive. Related Posts.You probably have heard your CEO or a member of the board expound on the need to have a succession communications plan. Perhaps you have been the one doing the expounding. More often than not, communications professionals walk away from these discussions wondering what goes into the plan.
So with that in mind, today we discuss the five essential elements of a successful succession communications plan. As soon as you know your board is conducting a CEO search, create a detailed timeline that will keep your succession communications on track. Name each task with the target completion date and the name of the person or people responsible for implementation.
List all the materials that are necessary for the announcement, including drafts and final versions. For example, whom will the Board select as its spokesperson for the announcement? Being systematic and detailed will help avoid last-minute headaches and afford the company sufficient time to evaluate the progress of the plan. These points all must be clear to the investment community if you are to succeed in selling that vision.
Now that you have determined your messaging, where will you communicate it? A press release is a must, at a minimum, but there are several other options. An investor conference call, media interviews and corporate website videos all are appropriate options.
You may also consider specialized content for the corporate website, such as a letter from the chairman or a corporate video.
In fact, make sure the same themes run across all of your materials, whether print or electronic. Otherwise, you will unwittingly confuse these finely honed messages.
Remember, it is imperative that your CEO create a positive first impression. Grill the CEO with questions both media members and investors will ask. This will both enhance public perception and set a baseline speaking style on which to build and improve in the future.
But if you include this section in your plan, you increase the probability that training will occur. The talking points you crafted back in step one will become a godsend when the CEO is meeting investors and deciding what to say. Generating support from your investors is no guarantee the strategy will achieve its aims, but that support can help make the road ahead smoother when speed bumps arise.
A thorough communication plan can make even a hurried transition appear orderly, so focus on the details. She is a trusted advisor to CEOs, CFOs and boards of directors on critical communications issues, including corporate governance, shareholder activism and proxy contests, CEO succession planning and disclosure issues.
Latest posts View all. New Technology for an Evolving Workflow 07 April Plan it out As soon as you know your board is conducting a CEO search, create a detailed timeline that will keep your succession communications on track.C EO change presents more downside risk than upside potential, with enterprise risk extending well beyond the point of transition.
Further, there is more value at risk in unplanned CEO transitions. In particular, the greater the surprise and the higher the potential for corporate strategy shifts surrounding the transition, the more enterprise value is at risk. But the value at risk also increases over time, irrespective of the circumstances related to the transition. Recognizing this environment, boards and new CEOs must take action before, during and after a leadership change to carefully manage the risk inherent in a CEO transition while setting the agenda for the future.
FTI Consulting also surveyed members of the financial community to learn how CEO changes affect their investment decisions, expectations and performance guidelines. CEO transitions are far from rare. In fact, on average nearly a third of investment decisions are based on perception of the CEO.
As a result, leadership transitions put a significant portion of the investment decision at risk as opinions of the new leader are formed. Once this honeymoon period has ended, investors expect CEOs to begin delivering on their strategy.
The reputation of a new CEO matters to investors. When CEOs change, investors are more than twice as likely to sell shares in a company as they are to buy them. Essentially, with greater surprise comes greater value at risk.
For this reason, planned successions present the lowest risk see chart, page 62 and can even have a positive impact on stock prices at the time of the announcement. While much attention is paid to the market reaction to the announcement of a CEO change, in reality the months that follow present an even greater period of risk — and reward — with a higher potential for both value destruction and value creation.
The outcome depends, in part, on how well the new CEO sets the agenda and manages the transition. As stated above, investors are generally willing to grant new CEOs a six-month honeymoon. Some nine months into his term, HP confused the market by first discontinuing its TouchPad line of mobile tablets, then selling them at a deep discount, and then restarting production. At about the same time, Apotheker said HP might sell its profitable PC division, then said it might not after all.
In SeptemberApotheker was dismissed from the company. During this period, investors seek evidence of successful execution of the strategy.
This should not be confused with financial performance per se, which most investors expect will take at least 12 months to see traction. At Yahoo! Bartz started with a splash in earlybringing an impressive agenda for a corporate turnaround.Leadership changes and transitions are common across the globe and industries. The most recent and widely publicized leadership exit at Groupon fueled much online conversation about what really transpired and how the CEO got the boot.
Communication can be a difference-maker in CEO succession
Even though CEO Andrew Mason pictured at right sent a mail describing the reason for his leaving it definitely left a lot of questions unanswered. Internal communicators can play a leading role in ensuring leadership transitions are communicated well and that employees get to know the story direct and upfront.
Their role is often examined closely and every action scanned. Apart from employees and the board they also need to gain the confidence of analysts, stock markets and the sales teams.
Those organizations expanding globally also need to consider keeping leadership transitions smooth to avoid unnecessary media attention. Communicating in a timely and suitable manner can allow stakeholders to focus on the way forward. Address the reason for transition : It pays to speak of the reason directly. Everyone wants to know the truth and it is best to avoid ambiguity. Clarify the plan and process : Before the transition takes place it is important to craft a communication plan.
Identify the key spokespersons. Have a trusted leader announce the transition. Provide a detailed flow chart for cascading the news beginning with leaders. If possible, make the announcement face to face and allow opportunities to clarify questions employees may have.
For example, they may want to know if there is a thought through succession or replacement plan in the organization and if the process of choosing the successor is logical. It is helpful if senior managers distribute their own communication to their teams identifying the milestones of their now-former CEO as well as what the transition means for the organization.
Get ready for media interest : Leadership transitions are news worthy and many journalists will want to cover the change. Identify who will be the most impacted : Inside the organization the leader who is moving on will have worked closely with several teams of employees. Depending on how smooth the transition is, there may be concerns that employees who have directly worked with the individual may feel insecure about the changes.
There can be attrition among key team members as well. Constructing messages : Each audience will need to be addressed differently. The organization needs to speak in the support, leadership, commitment and achievements of the two leaders.
In addition, acknowledge the contributions of employees involved in making the leaders successful. Be prepared to tackle frequently asked questions by stakeholders : As part of the transition briefing list, prepare for questions that can be asked by stakeholders. Managing the transition : Set up a briefing meeting or call to announce the change. Be clear about the agenda. Keep the subject line and content neutral. Avoid mentioning names and reasons in the invite.
There are possibilities of the content getting circulated beyond the group intended. As the internal communicator who manages the communication you may be asked questions about the changes prior to the announcement.
Avoid discussions and encourage participants to join the briefing.McDonald's masterful handling of its CEO transition following the tragic death of James Cantalupo highlights the crucial role of succession planning in protecting shareholder value. Even in cases in which boards have done an effective job in planning the operational side of management transitions, they often neglect the much more delicate task of communicating succession-related changes to key stakeholders.
Whether the transition is prompted by the tragic death of a CEO or is a routine case of management change, the key challenge is to reach consensus on the speed and depth of the change.
Is the CEO retiring completely or will there be a gradual transition? Will the responsibilities of the new CEO mirror past practice or is there an opportunity for the board to reallocate some aspects of his or her role? Many factors influence a successful transition, such as the familiarity of the company's stakeholders with the new CEO and his or her knowledge of the company and the industry sector.
In each case, there is an optimal amount of transition time that supports continuity, without creating "lame ducks" of both the outgoing and incoming executives. Companies need to avoid ambiguity about which aspects of the twin roles are being transitioned at which speeds and, having announced a timetable, need to stick to it.
Most companies tend to move too slowly in transition rather than too fast. The single most important aspect of succession communications is for the board to decide on the signals of change the transition should send to all stakeholders. Will the new CEO be charged with radical change? How important is it that the incoming CEO arrives with a new vision? Is there time for a "shakedown cruise"?
Does the transition involve only the new CEO and chairman or are there implications for other layers of management? Only by answering such questions can a successful communications plan be developed. Though it may seem straightforward, communications surrounding management changes can be quite difficult. The communications team must review milestones in the company's year and assess the most appropriate transition. These milestones include annual meetings, the annual report, quarterly investor calls, and analyst meetings, along with other major internal meetings generally led by the CEO.
The communications plan should address when and how the changeover is formally announced and how clear the time frame is. With respect to individual events e. Will there be a step change that gradually brings him or her into taking over the call? Opportunities for the incoming CEO to hold informal internal meetings, or "listening" tours, in the year prior to taking on the new role should be considered, as well as external meetings with top analysts and major shareholders.
Consideration should also be given to a written internal-communication opportunity for the retiring CEO who remains chairman to outline the critical distinction of activities between himself and the CEO.