Top Strategies for Sudden Executive Transitions

December 2, 2022 – In a perfect world, executive succession planning for executive departures is an orderly process. Organizations work with key leaders to plan out departures, and successors are groomed and ready to go. But, as we all know, executive departures do not always cooperate with this planful approach. A new report from LHH Knightsbridge Search says that sudden illness, scandal, and voluntary resignation to pursue other opportunities are just a few of the scenarios that leave organizations to face a sudden and unanticipated executive departure. In those situations, organizations will rely less on succession planning and more on a departure crisis checklist.  The Toronto-based search firm offers strategies that will help you avoid a crisis and assure there is a process in place to manage the transition smoothly.

Guidance on How to Manage a Senior Executive Transition 

1. Build the Transition Team.

Although you cannot plan for all executive departures, you should have a transition team in place, ready to respond to any eventuality, according to the LHH report. “The exact composition will depend on the type of business organization, the executive involved in the transition, and the type of separation. But in most instances, your team begins with representation from the board of directors,” the report said. “If you’re managing the exit of a senior executive, the CEO will take point. If the CEO is being terminated, then senior oversight will be provided by the board chair or chair of the executive committee. The team should include other key stakeholders, including the CXO, the CHRO, general counsel, head of compensation and benefits, and head of public relations and communications.”

2. Know the Circumstances.

Once in place, the team needs to find out exactly how and why the separation occurred and if it is a voluntary or involuntary separation. “A retirement presents a much different challenge than a sudden illness, a scandal, or termination for cause,” the LHH report said. “The transition team must establish all contractual obligations, legal implications, and liability to the organization from any actions taken by the executive on the decision to terminate. All this must be done before anyone contacts the executive involved.” 

3. Identify the First Point of Contact.

Someone will have to inform the executive he or she is being terminated. In the case of a voluntary separation, someone from the organization must serve as the first point of contact for all negotiations.

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“For all members of the executive team, other than the CEO, that will typically be the direct supervisor. If the CEO is leaving, then the first point of contact could be with the board chair or chair of the board’s executive committee,” the LHH report said. “At the first point of contact, the organization’s chief representative in these situations should always be accompanied by, and work closely with, the general counsel, CHRO, head of investor relations, and head of compensation.”

4. Prepare Talking Points.

Whatever is said to the executive in transition at the first point of contact will set the tone and direction of all future discussions and decisions. As a result, it is important to establish a consistent script and ensure all key stakeholders are aligned, according to the LHH report. “The executive involved will want to know exactly what the organization is going to say about the separation,” the report said. “Public statements are not always part of an executive departure, but it’s very important to make sure that everyone in a position to comment is working off the same talking points. The importance of clear, unambiguous, and consistent language cannot be understated.”

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5. Negotiate Positive Outcomes.

LHH explains that you should always enter a separation negotiation with an eye on building an agreement that is acceptable to both the company and the transitioning executive. “This is not always easy when prohibitions are part of the equation,” the search firm said. “Protection of intellectual property, non-disparagement, and non-compete clauses can easily become flashpoints for conflict. Approach all the monetary and non-monetary issues with a focus on consensus.”

6. Manage Unintended Consequences.

Even the best-planned executive separations can occasionally run off the rails. It’s the nature of the beast; executive transitions can be emotionally charged events in the life of both the individual and the organization.

The LHH reports notes that you should try to think through potential unintended consequences that might occur, remembering that no organization can maintain complete control over the details of a separation. 

“Stakeholders, customers, and the news media all have their own agendas and thoughts about high-profile departures,” the report said. “Anticipate that and be prepared to hold firm on your script and plan when outside pressures intervene. Whether it is a small business or a large international organization, similar themes such as who manages the process, stakeholder communication, and message alignment need to be agreed upon in advance. Even the most planful companies can become embroiled in situations they cannot anticipate or prepare for. The only way to prepare for the unknown is to have a team in place with the skills and expertise to assess and respond to those unforeseen events.”

Lee Hecht Harrison Knightsbridge delivers expertise in four search practice areas: executive search and recruitment, interim executive management, board of directors’ search, and recruitment solutions. The firm assists organizations in finding new talent, as well as helping their employees navigate change, become better leaders, develop better careers and transition into new jobs. The firm is led by president Jim Mitchell. He is responsible for all Canada operations of the firm across all lines of business: career solutions, talent and leadership development, and executive search and recruitment. Mr. Mitchell is a member of the executive committee for both Lee Hecht Harrison Knightsbridge and Lee Hecht Harrison globally.

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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media

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