Here is some quick guidance on how to handle a CEO transition:
A. Get ready for a surprise, because chances are that you will not be able to predict the transition.
Depending on the study you look at, almost 20% of CEOs turn over every year. (https://www.pwc.com/gx/en/news-room/press-releases/2019/ceo-turnover-record-high.html) So, there is high probability that you might face a new CEO in about 5 – 7 years. Yes, there are some long tenured CEOs, and they tend to turn out better performances. But a few years ago, there were more dismissals due to scandal and indiscretion than there were for performance!
In all likelihood, it will be a surprise that you will one day face a new CEO. And if you include other senior executives, you will be presented with several major leadership transitions in your career.
Just because leadership transitions can be unpredictable does not mean you have to go into them unprepared.
B. Check your own bias on how great you have been doing.
Our own bias is that we are doing a great job and that our annual plan is worthy of being framed for posterity. Ask yourself whether you or your team could have an overconfidence bias. Or the illusory superiority bias, where we think we are doing better than others.
Then also deliberately entertain the notion that your function now has an opportunity to strengthen its impact. You might find yourself more open to change.
C. Get ready for some tough questions. Or long pauses.
CEO questions could range across the entire spectrum. It could be extremely vague, such as “Could you just tell me what I need to know about your function?” Or, something rooted in skepticism, such as “Could you show me your plan for the year because I want to discuss which parts to keep, adjust add, or toss?”
This is not a personal attack, even though it might feel that way. Better to expect a mixture of ignorance, independence, and desire to change even though the reasoning may not be obvious. It is time to prove what value your influence function creates.
D. Focus on value not activity.
Influence functions are there for a reason, so flaunt it. Usually value drivers are some legislative, regulatory, social, political, or other mix of external issues that pose risks or opportunities to the organization. Generally, your function’s value-add is to reduce the potential impact of business risks and optimize the benefit from business opportunities.
If your organization has been focused on Value Management (one of the Six Pillars of Radical Influence), you will be able to demonstrate which issues have the greatest profit and loss impact, and that you are allocating resources to those issues in a way that recognizes the relative value of each.
Or, you might focus on the two other main drivers of value contribution – increasing the probability the chosen strategy is achieved through your function’s programs, or reducing the gap between what stakeholders expect of the company and what the company’s actions are.
I call these the strategy and reputation contributions from influence functions. Together with tangible contributions to profit and loss performance by addressing specific regulatory or legislative risks and opportunities, you should be able to articulate a clear story about how the company is better off due influence function support.Depending on the degree of internal knowledge of the incoming executive, identify which existing documents you can leverage.
Identify what stories illustrate the role your function plays in the organization or the way it helps the company succeed. Other than stories, how could you do it? What data would help? New CEOS love data.
Be able to describe your function’s role in strategy and policy in your subject area versus delivering day-to-day execution of tactical tasks. Some influence functions focus solely on one end of the spectrum, while others try to balance both strategy and tactics all under one roof. Neither option is necessarily better, but you manage each of them differently.
As a management consultant looking for clues on how well managed a function, I would often as “What do you want to be doing differently a year from now?” This separates the thoughtful leaders from the reactive tacticians. Organizations that had a focus on continuous improvement had a good answer. That is why Functional Innovation and Transformation is another of the Pillars of Radical Influence. Showing that you have thought about your next innovation demonstrates a deeper level of commitment and translates to a higher probability of being successful.
Here are six suggestions for a good first interaction with the new leader:
- Prepare in advance (which means now, since you cannot predict this kind of event)
- Offer background pre-read material, or just a conversation. Give them the choice, to best fit their learning style.
- Ask about the new leader’s priorities and probe so you understand why they are what they are, especially if there is a shift from the recent past. The company may be headed in a new direction.
- Adjust as you listen. New information or events could render some or all of last year’s plan obsolete.
- Focus on value, then tie value to the work that is required to achieve it, then on how the work requires resources. Eventually, it will get down to your unit’s budget. Make early conversations primarily about value derived from risks and opportunities, not the budget.
- Follow up and demonstrate responsiveness.
In general, the Six Pillars of Radical Influence can guide you when holding a meaningful discussion with a new leader who ultimately controls your fate in the organization. Check our news feed to sort articles by Pillar to get a better sense of each. Or the blog (https://radicalinfluencenetwork.com/six-pillar-capabilities-to-reach-radical-performance-in-the-influence-functions/ ) that describes all six pillars.
With a little management structure and forethought, you can avoid being caught flat-footed and use any early interactions with new leaders to enhance alignment, clarify value creation, as well as justify your budget.