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executive transition

Smart Planning for Executive Transitions: When You See It Coming (Part 1)

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Transitions, including executive transitions, are high stakes for companies for obvious reasons. They bring about logistical, bureaucratic, professional, and emotional challenges for everyone involved. That’s why we’ve created a two-part Executive Transition Series to help you out during seasons of change in your company. 

Executives can be a powerful retention mechanism, or the reason people leave. Consider the old adage, people quit bosses, not jobs. Alternatively, sometimes employees come to a company to work with a particular leader. What happens when that leader leaves? And what about when veteran employees have worked with the same leader for multiple years, and a new leader radically changes the culture? These are tough questions, and not ones you can sweep under the rug.

The key for dealing with executive transitions is communication. It’s important to tailor your strategy to the kind of transition you’re facing. On the one hand, you might be facing a planned transition—one that’s been on the horizon for months or years. On the other hand, you might have a leader—maybe one who hasn’t even been around very long—give two weeks notice. These are two very different situations, and having a strategic communications plan can help you make it through either one.

In this two-part series, we’ll consider both situations. First, we’ll consider some tips for handling a planned transition.

4 Tips for Planned Transitions

Executive transition is a specialty of ours here at Audacia Strategies. Let me share one of my favorite engagements and biggest client wins when supporting a client through a planned transition. Recently, Audacia was brought on board to help with an executive transition in a software company. The outgoing senior executive was the founder of the company and also an avid, talented guitarist. A low key rockstar, if you will. The company culture was centered around music: leadership documents were full of music analogies, guitars were given as gifts, leaders put their favorite song in their website bio–you get the picture.

The leader planned his exit and helped to identify a new CEO. The new CEO was brilliant—he had run billion-dollar organizations and grew up playing chess blind-folded! While this new CEO was a great fit to guide the company to its next phase of growth, he was different from the founder-CEO. An executive transition is one thing, but the reality is that the company was also about to undergo a cultural transition.

How do you manage the exit in a case like this? Here’s the playbook we advised.

1. Storytelling

As long as people have been around, they have connected over stories. We made space for the outgoing CEO to share his story, and time to celebrate his work with the company. Just like a graduation or retirement party, this allows for closure and creates appropriate professional space for processing the (big) feelings that come with transitions.

 2. Getting to know the new leader

 In addition to telling the story of the outgoing CEO’s time, we worked with the incoming CEO to help him identify and share his story. This humanized an ultra-smart leader and gave employees a chance to get to know him and understand his priorities and what makes him tick. 

We also advised on creating plenty of opportunities and multiple channels to engage with the CEO and ask questions. Unanswered questions can leave employees feeling ungrounded and many may be too intimidated to ask the hard (or even simple!) questions. 

We always advise to be as open as possible and provide opportunities for interaction in multiple formats (in-person, online, large group, small group, 1-to-1). Transparency and accessibility are key for maintaining and building trust.

3. Working with the team

The logistics and bureaucracy involved in a transition are not to be underestimated; however, it’s also important to work closely with the team. Share the transition plan, let your executive team know what is coming and let them weigh in on what they and their teams need. And, practically speaking, set expectations about which responsibilities will be redistributed, who will be responsible for training whom, and so on. Executives have questions too–give them time to process the transition and bring their questions to the new executives or trusted confidants. 

4. Mind your communications

We trade a lot in written word, scripts, and talking points. Emails and other written messages are important artifacts that preserve institutional memory long after the transition. Because everyone can look back and see where leaders followed through and where they didn’t, it’s important to be consistent across multiple mediums (video intros of a new CEO, webcast town hall, in-person meet and greets, welcome letter, and so on). 

Perhaps even more importantly, organizations should make sure messaging is consistent across informal communications as well. During times of transition, employees will first bring their worries and questions to direct supervisors and peers. The executive team and their team needs to be on the same page so they’re ready to help their teams navigate organizational changes. During times change most employees and customers will turn to their line manager or customer success contact for reassurance, make sure these critical team members have the information, resources, and support they need to succeed.  

Concluding Thoughts

 Planned transitions are admittedly easier than unplanned transitions; however, planned transitions can still be destabilizing to company culture. At worst, transitions can result in employee turnover, loss of trust, lost business momentum, and a decline in workplace climate if you don’t go in with a strategy. It’s important to keep in mind both the emotional and logistical challenges of executive transitions.

We often think about corporations as faceless entities, but in moments of transition, we are reminded that corporations are made up of people who have hearts and minds. The more you share your story honestly, transparently, and thoughtfully, the more you can weather this season of transition while building long-term trust and continuing to achieve your company goals.

If you don’t have the luxury of a planned transition and are facing an imminent unplanned transition, read the next part of our two-part series where we’ll discuss tips for handling an unplanned executive transition.

If you’re facing a transition—planned or unplanned—and you’re trying to find the right strategy, Audacia has you covered. Reach out to us here to schedule a consultation.

Photo Credit: Black Male And White Female Business Associates Shaking Hands In Hallway by Flamingo Images from NounProject.com

c-suite change

C-suite Change Can Be Energizing or Panic-Inducing. The Choice is Yours

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Does this sound familiar? Your organization is one of the bright, rising stars in your industry. It has taken years of hard work, but you’ve finally reached a point where you have strong leadership across the board, a steady vision for the future, and everyone from the executive team down to the employees on the frontlines are working together like a well-oiled machine.

And then…the CEO turns in their resignation letter. Does the prospect of C-suite change send a shock wave of panic through the company? Or are you ready to guide everyone through a smooth transition?

If your initial response is panic, that’s okay. This is the perfect time (i.e., before this scenario becomes your reality) to come up with a plan. Let’s look at how you can reframe c-suite change as an opportunity rather than a potentially destabilizing event.

Revisit Company Culture for Successful C-Suite Change

First, recognize that C-suite change is a natural part of company evolution. The person you had steering the ship during the start-up phase may not be the best person to lead you through the next stage and beyond. Thinking about how far you’ve come and how your culture has evolved will help you choose the right CEO for this next phase.

Also, if you’re moving from a founder as CEO to a new corporate executive, you’ll want to consider how much of the company culture is tied up with the founder’s personality and whether that makes sense going forward.

For example, suppose your Founder and CEO is a literal rockstar. He plays the guitar and performs regularly with his semi-famous band. He has even been interviewed by Rolling Stone. It’s an interesting draw and has given the marketing team lots of fun campaign ideas. But is this crucial to the DNA of the organization? In other words, is it critical that the new CEO also play the guitar?

Maybe. Maybe not. The point is that you need to figure out what is part of the DNA of your organization and look for a new CEO that shares the same values — someone for whom your culture is authentic to who they are as a leader.

Why is culture so important when considering C-suite change? Well, it’s likely that culture is one big reason that scaling and reaching the point where everyone is working together like a well-oiled machine has happened. So as you consider the selection and managing of the C-suite change for customers, investors, and employees, keeping the culture consistent should be your first priority. 

How to Keep Company Culture Consistent:

Once you begin to see your CEO’s resignation as part of the evolution of the organization, you can turn your attention to deciding, likely with the help of your board, what is crucial to the company’s DNA. Take your time here because decisions about how to separate the former CEO from the company culture will determine whether stakeholders perceive the C-suite change as energizing or destabilizing.

Keep the following tips in mind:

1. Have a good sense of the culture as seen through the eyes of employees. 

Find a way to take the pulse of your employees. One good approach is to use an external team to conduct Voice of the Employee interviews. You may be surprised that what you think of as crucial to the culture of your firm is really hidden from your employees and vice versa. So this kind of research is hugely beneficial for smooth executive transitions.

It’s also important to announce the transition itself to employees at the same time as you announce the C-suite change publicly. If you announce internally and externally at different times, rumors will fly and rumors are a huge source of instability during big transitions.

We recommend having a specific employee communication plan to address key cultural issues and how the C-suite change will affect the organization from a macro perspective. Also, as soon as possible, set up a town hall meeting where employees can be formally introduced to the new CEO and have their questions and concerns addressed.

2. Ground everyone back into the company strategy.

While the CEO may be changing, the company strategy is staying the same, especially if we’re sticking with the scenario where everything is going well and the CEO needs to move on. This means it’s a good opportunity to go back to basics. 

Let your mission, vision, and values drive you forward. Get everyone to recommit to company fundamentals and talk openly about what is changing and what will be staying the same.

3. Be as honest and transparent as possible.

This third recommendation is a big one, so strap in. As soon as your executive gives you notice that they’re even thinking about moving on, you want to have a strategy in place. This will allow you to be as honest and transparent as possible. This goes for all of your key leadership, not just your CEO.

Perhaps you will want to call a board meeting to open discussions about all of the topics above. Perhaps you’ll want to make an announcement (internally and externally) early and reassure everyone that the transition period will last several months. Whatever your first move, having a Standard Operating Procedure (SOP) around C-suite change is a smart idea.

In a previous blog article, we talked about the elements that plan should include whether your C-suite change is expected or unexpected.

4. Know your game clock.

Timing is also important here. The more you can be in control of the timeline, the greater your ability to control the message of the transition. Unexpected changes can raise questions about the stability of an organization. One way to ease these concerns is to share (at a high level)  your succession planning process with key stakeholders so that they understand the corporate calculus behind the leadership selection. 

For public companies: if you have a planned transition with a good amount of lead time, it’s good to make this announcement as part of your quarterly reporting cadence. If the transition is unexpected, public companies will likely have to disclose the leadership change via an 8-K within four business days, but make sure to consult with legal counsel to determine your specific disclosure requirements.

5. Teamwork makes the dream work.

If possible, make time in your transition strategy to allow the outgoing and incoming CEOs to work together. If appropriate, having a “pass the torch moment” can be a critical element to  transferring credibility and trust from the outgoing CEO to the incoming CEO. Part of this strategy should include coordinating their narrative. As an example, the outgoing CEO may talk about why they built the company and why the new CEO is the right person to carry the mantle forward. This gives the new CEO the opportunity to share their own vision about the future of the company.

Finally, make sure your new executive is prepared to take over. Is the new executive on the same page when it comes to the company culture? Have you defined your key messages? Have you acknowledged that C-suite change requires an acclimation period that can take at least 30 days? Have you organized listening sessions and key meetings with stakeholders? Do you have a comprehensive introduction strategy?

For our private equity-backed companies: if your CEO has experience with public company boards and they will be transitioning to working with your private equity board, do they understand what that entails? This is a helpful resource to share from McKinsey. 

C-suite change can be a powerful signal of an organization’s evolution. If you’re ready to move into the next phase of your company’s metamorphosis, our team can help make the transition energizing instead of panic-inducing. Let’s talk about your next business transformation!

Photo credit: Jacob Lund Photography from NounProject.com

M&A issues

What No One Talks About in M&A: Culture Integration and How to Deal With It

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We’ve talked about M&A before—the pros, the cons, where deals can go off the rails—but now let’s talk about what happens after the deal is closed. What comes next and what M&A issues come up?

Once your deal closes and the dust settles, it’s time for the real work to begin: integration. With any luck, you’ve already done some focused thinking about integrating the two firms. You’ve looked at M&A issues such as aligning billing systems, benefits plans, compensation strategies, etc. and you have strategies for each.

But what about culture? What’s your strategy for culture integration? If your reaction here is anything like, “A strategy for culture integration? Oh, the department heads will handle all of that,” you will probably want to keep reading.

Love and M&A Integration

M&A deals that work well are actually a lot like happy marriages. Yes, there will be some upfront work to do on both sides. But once you’ve skipped down the aisle after saying “I do,” you begin a new phase with its own set of challenges. This is the work of meshing together two lives into a cohesive, long term, happy union.

An M&A transaction can be a bit like courtship (ah, and you thought chivalry was dead): You date around for a bit, decide that you’ve found “the one,” get engaged, and then, you throw a heckuva wedding. And when you wake up after the honeymoon, reality sinks in…the thoughts start flying.

  • Thought Bubble #1: For better or for worse…wait, you didn’t tell me about that billing issue!
  • Thought Bubble #2: For richer or for poorer…what happened to the sales pipeline we reviewed?
  • Thought Bubble #3: ‘Til death do us part…why are all the employees leaving?

And as with any new marriage, there are logistical M&A issues that no one really considers before they sign on the dotted line:

  • How are we going to celebrate holidays? (Is everyone onboard and motivated by how we recognize and celebrate success?)
  • How should we handle joint finances? (Do both parts of this new mixed organization share the same fiscal priorities?)
  • How often do I have to see your family and friends? (What’s our customer relationship strategy?)

I’m not suggesting that the key to successful M&A integration is scheduling time for employees to do a bunch of trust falls and escape room activities. What I’m suggesting is that you consider how culture impacts any business transaction in the same way you consider how to maximize earning potential for shareholders.

Lessons from a Culture Integration Fail

Early on in my career, I worked for a multi-billion dollar firm. With much fanfare, we acquired a smaller firm that was highly respected and well-known in the industry for its creativity in “getting things done” for customers.

Within a year of acquiring the firm, the larger company had overlayed all of their big company processes and requirements onto the smaller firm—squashing the very flexibility and creativity for which they had been known (and for which we had acquired them!). Unsurprisingly, half of the employees were gone within 2 years…as were the customers.

While it’s easy to see the internal (e.g., from the employees’ perspective) impact of cultural M&A issues, we don’t often think about the external (e.g., from the customers’ perspective) impact. However, culture certainly does impact customer experience and this is especially true after a merger. For a case study in how NOT to complete a successful integration, check out the Starwood / Marriott merger. Yikes!

The hard lesson learned here: The reality is that human challenges are often harder to smooth over than system challenges. If you don’t anticipate the cultural challenges, it doesn’t matter how prepared you are on the business side. So, how do savvy M&A dealmakers address the human side?

1. Start early.

By early, I mean during due diligence. Yes, cultural fit is a deal maker or breaker! The very things that make an acquisition target attractive may also be the most fundamental to their culture…and the most different from your organization’s current culture.

Make sure that someone on your team is putting together a culture strategy prior to the close of the transaction. At a minimum, this strategy should include:

  • Key metrics for competitive landscape, demographic, and market trends to discuss with leadership.
  • Outlines for any necessary cultural change initiatives (Tip: stick with no more than 2 major change initiatives during the first year).
  • Ideas for creating employee buy-in and a sense of community.

2. Know thyself.

What is your vision for the joint culture? What changes after the deal? What stays the same?

Keep in mind that this doesn’t have to be all or nothing. There are no rules that say that everyone must conform to a single culture or that culture is immutable. In fact, allowing room for the culture to adapt is crucial for long-term viability.

Why are these firms merging? What is valued in each and how can we take the best pieces of our cultures and bring them together respectfully?

3. Focus on building credibility.

In most cases, there is a fairly steep learning curve that happens after a merger. Like moving from dating to marriage, we need to adapt to daily life and its new rhythms. How can we put in place mechanisms to better understand each other? How do we establish trust?

Remember that credibility is earned, not given. When a large firm acquires a smaller firm (especially if the smaller firm was once a competitor), there can be some apprehension. It’s important to warn employees of the large firm that taking a victory lap is not appropriate.

Past is not prologue. So the acquiring firm should look to create the right environment to nurture a bright future and bring the new acquisition into the fold. This will require transparency in sharing plans, following through, listening when challenges are raised, and addressing the concerns of everyone.

This is a key building block for #4.

4. Communicate.

Communicate early and often. Key leadership (ideally those with credibility) should share the aspirations for the combined entity in a clear, straightforward manner and acknowledge that integration won’t be easy. When talking about challenges, be specific. Show everyone that you are committed to making this work and addressing all M&A issues together.

Employees need to know what’s changing, why, when, and what will happen, both in the overall big picture, as well as on a day-to-day basis. They need to understand what the merger means for them and what the new expectations will be.

Communicating is about way more than printing off new motivational posters with the company’s core values and firing off a few “rah-rah” emails. (GAH!!) Cultural integration requires a change management focus, leadership commitment, transparency, a willingness to listen (and integrate) feedback, and continued communication via as many channels as possible…even when you think you’re done, you’re not. Keep going. Like a marriage, you’re in this for the long haul.

Preparing for a big M&A deal in 2019? Check out our guide for working with a Communications Specialist.

The team at Audacia Strategies is ready to stand shoulder-to-shoulder with you as you make a smooth integration, both in terms of systems and culture. Contact us to learn more about how we can enable your transformation and help you avoid serious M&A issues!

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