Announcing Your New CEO: Is Timing Positive or Political?
"Announcing the new CEO can be a constructive (or political) decision. Choose wisely." – Natalie Michael
Having spent considerable time researching the intricacies of CEO succession and the crucial timing of executive appointments, I've come to appreciate the deeply human element interwoven with these seemingly structural decisions. It's more than just filling a vacancy; it's about shaping the future of an organization with intention and care. Here are a few of my career reflections.
Timing is Truly Yours
One of the most empowering realizations is that the timing of the CEO announcement can be done almost any time you want, but the main goal is for the approach to build confidence, not erode it. Whether it aligns with a strategic milestone, the culmination of a long-term development plan, or even a moment of calculated transition, the decision on timing is yours. There are many examples of successful hand offs with a day’s notice and others with much more. Although it is more typical to be decisive in the communication and to have the transition within six weeks of the announcement, it is not a golden rule.
The public confirmation that Greg Abel would be Warren Buffett's successor came in May 2021. This was after Charlie Munger, the former Vice Chairman of Berkshire Hathaway, made a comment that revealed the succession plan at the company's annual meeting. Buffett then confirmed the news in a subsequent session and fast forward to today and the transition is still underway. Why? Because the CEO candidate is busy leading strategic projects that are foundational for the business! When Greg Abel finally takes over he will have broad context on strategic business operations, a track record of results and years of coaching and mentorship. Of course, this takes tremendous patience and a long-game view and deep commitment from everyone involved. It also requires positive dynamics between the incoming and outgoing CEO and I am assuming a relationship marked by respect and shared commitment to the long game.
Clarity is Kindness
Of course, this is a delicate process for everyone involved. It's paramount to maintain transparent communication with candidates. Leaving individuals in limbo can erode trust and negatively impact your organization's reputation. The biggest political turmoil on CEO announcements is a candidate who starts to feel like the delays are personal, not professional. A reframe is often needed here. CEO succession is about setting the business up for success and growing as a business and a leader. It’s okay if the process takes time, and ideally it does. We find the best transitions have years of development plans behind them, not months.
Having said that, it’s also possible to promote candidates who are newer to their careers. However, the more complex the business, the more turbulent the market conditions and the more unstable the team is, the higher the risk. In riskier transitions with developing candidates, we find that market confidence can still be built. In this case, we build a Syndicate Team. We use this term from drawing a parallel to a financial or real estate syndicate, which is a temporary alliance formed by multiple parties to manage a large, complex transaction and share the associated risks, the Talent Syndicate is a collaborative group that pools resources and expertise to ensure a new hire's success.
This "syndicate" is composed of key stakeholders—the new CEO, key leaders who support their business goals and a dedicated mentor. Each member plays a distinct role in managing the "high-stakes transaction" of talent integration and shares in the rewards of a successful outcome. Having a solid talent syndicate behind a candidate can really accelerate the CEO Transition process and build everyone’s confidence even when candidate readiness requires more work.
In the best of both worlds, the candidate is deemed well prepared to take over the CEO role and there is a Talent Syndicate to support the individual’s growth. This way, the transition communication can authentically point to both of these elements with clarity and confidence. Being clear about why behind your approach is more important than timing, unless your star candidate is ready to leave if there is one more delay.