Do you know what would happen to your company if your CEO suddenly died? Or got seriously ill? Or had to resign immediately for personal reasons? These scenarios, while rare, do happen, and many companies are not prepared. In fact, only 40 percent of business owners have a formal plan in place for succession, according to a Wealth and Worth survey released by U.S. Trust.
Many questions – do you have answers?
As a business owner, you may have an exit strategy in place for your company, but do you have a plan to bridge the leadership gap for you and each member of your leadership team? Does the plan include the kind of crises listed above? What would you do if your next in-line left suddenly?
Whether yours is a family-owned business, a company of equity partners, or a private company with a governing body, here are things to consider when you need a strong succession plan:
- Get a plan in place. First, assess the situation and figure out your priorities. If there is already a plan for these type of circumstances, evaluate how much of it is applicable to this particular circumstance. For example, if the plan is for the stepping down or announced retirement of your CEO, but some other catastrophic event occurs, you may need to adjust key components and focus on immediate messaging rather than future positioning. If there is no plan, assign a small team to create one immediately.
Make sure management, team leaders, and employees are aware and informed of your progress; this will help keep you organized and streamline communications. Management needs to take the lead and select a point person to document the process. Management also needs to take the lead in demeanor. Model your actions so employees can see the situation is being handled with care. Once a strategy is identified based on your priorities, draft a plan that includes what happens in the present, immediate future and next steps. Include time tables so people know when decisions will be made.
- Communicate clearly, and often. In times of uncertainty your employees will need as much specific information as you can give them. Knowing when they will hear from you, even if it is “we have nothing new to report” builds trust and keeps them vested and involved. By letting them know what your plan is, when they’ll receive another update, what to tell clients and even what specifics you can give them (e.g., who will take over which CEO responsibility and for how long), you make them feel that they are important stakeholders, and not just bystanders. Stakeholders are more likely to be strong supporters during and after any transition that needs to take place.
- Pull in professional help. Depending on your resources, we recommend bringing in a professional to help you handle the situation at hand. At the very least, call in an objective opinion. You’ll need someone who can help you make decisions when emotions are running high. Bringing someone onboard that can help you decipher what you have to work with, what are your legal and other obligations, help rally your team, deal with the media, and manage emotions can be invaluable during a challenging time. Even if it’s temporary.
- Develop a timeline. Figure out how much time you have for the transition. For example, if your CEO is ill and will be stepping down in six months, you have time to update any existing exit strategy or succession plan you have in place. Things to include in the timeline:
• Who is taking over what responsibilities • How and what you communicate to your company and shareholders • How and what you communicate to the market • How to bring in the CEO’s replacement, while helping the CEO transition out
If you are in a crisis situation (e.g., your CEO has been suddenly forced out or asked to leave without a public explanation), you won’t have the luxury of time. Find out what other arrangements have been made in the past and update them as needed. Work with your PR firm to help with your change management and do the right things for all involved to salvage the company’s reputation. You may remember the Tylenol poisoning case in 1982 in Chicago, when seven people died from what ended up being cyanide-laced containers of Tylenol. Johnson & Johnson, the makers of Tylenol, acted swiftly and decisively, communicating immediately with the media and recalling more than 31 million bottles. J&J’s response has become a textbook example (and a case study in business schools across the country) of exceptional crisis management. After losing millions in revenue, they invested more than $100 million in tamper-proof packaging and a new caplet that was harder to tamper with. A year later, Tylenol was back as the top selling over-the-counter pain reliever and the company never looked back. When handled correctly, crises don’t have to have a lasting negative impact on your business.
- Manage change management. When you’re under the gun to quickly make significant changes at the top, you need to understand how the changes may affect various parts of your company. While instinct may tell you to focus externally, don’t neglect your employees. Be as transparent as you possibly can be, present an action plan, ask for support and get them involved in keeping the environment positive. Whether you bring in professionals or not, make sure you allow for questions, feedback, and even discord if challenging information is being revealed.
- Handle the media. Crisis rule #1 is making it clear who can, and who cannot, speak to the media. Assign a point person for all external inquiries and instruct employees to refer all reporter requests for comment to that point person. You absolutely do not want employees leaking sensitive information to the media.
With your employees on board with the change management action plan, you can now focus on external communications and how you will present what is happening to the media. This is not completely under your control. Technology and social media changed the game in terms of speed and access to information to the public and transparency when it comes to corporate leadership. Present a message to the media quickly that coincides with your values as a company. If you are dealing with a scandal where public trust is involved and your CEO is stepping down, handling this effectively will take tact and most likely a team of professionals to help.