How CEOs Can Best Prepare to Leave the Top Post
July 26, 2019 – The privileged position of a chief executive officer (CEO) brings many benefits and rewards. But it can also be isolating and intensely demanding.
Research conducted by Heidrick & Struggles found that only 13 in every 1,000 CEOs of publicly listed companies move on to a comparable position. So where do they go — and how do they cope with the transition? A recent white paper by Heidrick recruiters Dan Cullen and Alain Deniau delved into the topic.
“Stepping away from an all-encompassing role can be profoundly unsettling at first but the process of renewal can begin quickly as well,” said Nils Andersen, former CEO of Maersk Group. “I think all CEOs who leave such a demanding job go through a sort of detox phase.”
It can be hard to accept that being productive does not mean being busy all the time. “It’s very important you don’t fall into the trap of taking on five or six or seven projects just to feel busy,” Mr. Andersen said.
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It could also be tempting to postpone the final goodbye. Chaly Mah, for example, was invited to extend his tenure or, at least, take on an advisory role, when he retired as CEO of Deloitte Asia Pacific. This was hardly surprising given the amount of experience and knowledge he had gained in his 38-year career with the firm. But once he had made the decision, he settled on a clean break.
“If I’d hung around, I don’t think it would have been fair to the new managing partner,” he said. “An advisory role could have been enjoyable but I believe you need to respect the new team and let them get on with their own agenda. If you plan your succession early, this should be a seamless process. You should also try to remember you are no longer in charge but, if your team needs help, then they should feel able to call.”
Planning Well Ahead
The demands of the job leave many CEOs with little time to plan ahead—but Lim Soon Hock was equipped with a three-stage career plan he had formulated back during his university days. “Plan A was to work for others and for money,” he said. “Plan B was to transition to my own work once I had helped to build a large-scale business. Plan C is to continue to do more for charity and the church.”
The plan has played out. After helping to build Compaq from a $50 million business to a $1 billion business, Mr. Lim stepped down in 1996 to create PLAN-B ICAG, a boutique corporate advisory firm. He also has close to 20 boards in his portfolio including government agencies and not-for-profit organizations as well as publicly listed and private companies.
“Many people who have built large companies and have managed large teams have a lot to share,” he said. “I find this rejuvenating, accelerating and rewarding.”
Joining a Board
Traditionally, CEOs of listed companies have extended their careers by serving as non-executive directors (NEDs), where they can bring their management experience to a governance role.
Wong Su-Yen, who now chairs Nera Telecommunications and serves on a number of private, listed and not-for-profit boards, including MediaCorp and Yoma Strategic Holdings, found this transition relatively seamless.
“I had been CEO of the Human Capital Leadership Institute for nearly three years when I decided to move on,” she said. “By then, I already had several independent non-executive director roles so this provided an opportunity for me to increase my portfolio.”
Mr. Andersen, whose board positions include chairman of AkzoNobel, Salling Group and Faerch Plast A/S, made the decision to join the board of Unilever while he was still a CEO. “I think the company is interesting and I thought it would be a useful experience and good preparation for a possible future career on boards,” he said. “As a CEO, you go to all the board meetings, but it’s a different sort of priority.”
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When Mr. Lim sits on a board he starts by putting himself in the shoes of the CEO. “I put a lot of emphasis on empathy,” he said. “I will provide my advice but the CEO makes the final call.”
Mr. Mah, who sits on a number of commercial and public sector boards and chairs Netlink NBN Trust, Singapore Tourism Board and the Singapore Accountancy Commission, agrees that it is important not to slip into a directive approach. “On the board, your job is to provide oversight, guidance and expertise, not management,” he said.
Going It Alone
Philip Forrest has developed a successful boardroom career; he’s an independent director on several commercial and nonprofit boards as well as a council member of SID. But, when he retired from his position as ANZ’s head of Asia, his first aim was to establish his own business.
“I had six months with the company after I’d made my decision and I started to think about the consulting activity I wanted to develop,” said Mr. Forrest. “That was easy.”
“The next six months, when I was alone at home, was much more difficult,” he said. “I was so used to having someone to make my appointments, my flight bookings—even my coffee—I suddenly felt very much on my own. I was concerned about loss of status and began to doubt my own competencies—whether I’d be able to maintain and expand my networks without having a big brand behind me. Then I won my first clients and was invited to chair a not-for-profit organization and it all became rather positive.”
A New-Found Freedom
Once she had relinquished her CEO role Ms. Wong quickly decided she had no desire to take on another management role.
“I’m happy with the level of professional engagement my current portfolio offers,” she said. “The diversity of the NED roles is the entrepreneurial challenge of building my own company as I increase my influence as a global speaker and thought leader. While I am no less busy than before, I certainly have more flexibility in terms of how I manage my time.”
Mr. Mah still travels about 20 times a year, about half of that for business, but now feels about 50 percent of his time is his own. And, while most of Ms. Lim’s days still run from 6 a.m. to 10 p.m., he said the big difference is that when you are on your own, you have the freedom to choose what you do. For him, this includes contributing regularly to the Business Times’ “Views from the Top,” lecturing at National University of Singapore as an adjunct professor and publishing four books along with corporate advisory work, board positions and public and community service.
“I believe each of us can have an enriching, fulfilling and significant second-half life in our own unique way,” he said. “It can even be better than the first half—a choice we can make, or an aspiration we can seek to achieve.”
Free from the imposed discipline of corporate life, Mr. Forrest was surprised by how easily he was able to maintain an organized schedule while working at home.
“I was enjoying my new opportunities and challenges as well as the freedom, so it wasn’t a strain to start early and put in a solid day,” he said. “Eighteen years later I still work mostly from home, and I’m happy with my productivity. Of course, I’d go crazy if I didn’t have a bunch of external appointments and networking occasions to balance the homework.”
Mr. Forrest said he feels that his career has had a natural flow, from joining a big company at a junior level through more senior and consulting roles to board positions. “In retrospect, I think each change happened at about the right time for me,” he said. “So far so good.”
Veteran Search Consultants Weigh In
“A CEO has spent years developing and executing on a company’s priorities,” said Drew Desky, managing partner at Rand Thompson Consultants. “I’ve spoken with CEOs who have to work to transition that outward focus to an inward focus. Prioritizing one’s own needs and desires can be challenging to someone who has been in a leadership role for so long,” he noted.
“Once someone knows his/her own goals and aspirations, apart from adding value to a prior company, then he/she can take the appropriate steps to focus on those goals. The most common paths are philanthropic, entrepreneurial and mentorship. Each can satisfy a personal need, but it’s usually beneficial to seek out an advisor, since each of these is really like starting a new career.”
Jacob Navon, partner at Westwood Partners , said that while the Heidrick report focuses on CEOs, the issues it addresses can be generalized across similar transitions for any higher-level executives contemplating phasing out of their prior careers into a “next chapter” of their lives, regardless of whether they have climbed up to the top rung or not.
“Any executive who wants to transform in this way faces the same questions about what specific things they want to do, how to generate opportunities, and how will they cope when they are on their own without the corporate support system, and brand, that they have relied on,” said Mr. Navon.
“Planning for this change while still employed full time can be difficult, more so for lower-level executives and, once out, many executives face similar doubts about self-worth and how even to get started,” said Mr. Navon. “In many respects people who have reached the CEO level may find it easier in that incoming unsolicited opportunities are more plentiful than for executives lower down the corporate hierarchy. The latter may need to network harder to generate suitable roles,” he added.
“It is very common for people to ‘panic’ a little and over commit to the first things that come along and suddenly find themselves as busy as before, without necessarily enjoying these specific commitments,” said Mr. Navon. “The key to navigating this process effectively is to take the time to think it through very carefully before committing to anything. It requires giving oneself the mental space after the transition to do it right without succumbing to the pressures of all this unstructured time. There is no denying, however, that the process can be daunting for anyone.”
Ralph DiPisa, partner at Phillips DiPisa, said that he has seen many healthcare CEO retirements over the years, and oftentimes the retiring CEO believes that their continued involvement is critical to the success of the organization.
“This can compromise the search process in finding their replacement and should only happen if there is a clearly identified timeline and role for the outgoing CEO, along with the consent and support of the incoming CEO,” he said.
“I find that many CEOs are thoughtful about what professional life looks like after retirement, including corporate boards and charitable organizations,” said Rick Slayton, managing partner and CEO of Slayton Search Partners. “Where the planning often falls short is on the home front. For example, how do the dynamics between spouses change when they are spending 24/7 with each other? I hear often about the significant adjustment required for relationships, both at home and with friends.”
“Most CEOs join boards for multiple reasons, one of the most common is that they want to remain mentally sharp. They worry about losing their edge and becoming irrelevant to the business community. Sitting on multiple boards allows the former CEO to remain active, mentally sharp but also have some down time,” he added. “Others join boards for more altruistic reasons. They feel fortunate to have gotten the ‘brass ring’ and want to give back to the business community.”
Deborah Page, managing principal, technology practice leader at The McCormick Group, said outgoing or former C-level executives too often hunt for unlisted leadership roles or vie for interviews based solely on their resume of typical executive management skills. “In most cases,” she said, “this is not the best approach.”
“Instead, we suggest a focus on an in-demand area of expertise, backed up by past success,” she said. “What emerging critical issues in this area create opportunity or pose a threat to business? What type of organizations can capitalize on that opportunity or avoid the peril, if only they had the right person to guide them? “Research targets and then make the case on value add. This will lead to more meaningful conversations and opportunities for interesting work,” she added.
“For many of the CEOs, with whom I meet, exiting their current responsibilities, the reality of greater independence can be both attractive and daunting,” said Mike Magsig, managing partner, global board & CEO practice at DHR International. “No longer are they shackled by the constraints placed upon their time by various corporate commitments. ‘What do I do, where do I begin,’ becomes a perplexing challenge if someone hasn’t pre-planned life’s next phase.”
“For CEOs, the options are numerous and varied and can be guided and limited by one’s passions,” he added.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media