Coaching successor CEOs for the new role

In the best of cases, successful coaching is difficult. Teams or individuals that win often claim to do so because of their talent and skills and those who lose often blame the coach. This may be why coaches are more likely to be replaced than players.

Ultimately, the difficulty of coaching comes from assuming someone can change another’s behaviour or attitude. Psychologists tell us that many attitudes and behaviours derive from genetics, others form in early developmental years, and others come from peer groups and associations over time. If coaches have the goal of changing ingrained behaviour and/or attitude, why would we be surprised that successful coaching is so difficult?

Increasing opportunities for coaching success may come by focussing on transition moments, times when individuals experience major change and are more open to new ideas and willing to experiment with new behaviours. A significant transition moment occurs when an individual assumes a new role in the organisation. New roles often bring excitement and energy. They are times when individuals are willing to try new ideas. Perhaps the most visible transition moment within an organisation comes when a new CEO is appointed. A new CEO has a number of unique challenges — to honour the past and create a future, to set an agenda that others will follow, to manage both the institutional and symbolic role as head of the organisation and to deal with the individual and personal challenges of leadership. I have coached current and future CEOs through this important transition moment. In this essay, I lay out steps for coaching CEOs through transition moments.

1. Set the stage
Realistically, succession transfers power and authority from an old to a new regime. Symbolically, succession communicates values both in terms of who is appointed and how the appointment is made. CEO succession creates a firm’s symbolic identity: “he’s from marketing”, “she’s had global experience”, “this person is committed to technology”. Each of these statements sends signals about the organisation’s direction. Many firms have thoughtful, rigorous, and useful succession plans which identify potential successors, provide CEO candidates opportunities to demonstrate competence in multiple roles, and select the individual for the new role based on ingenious screening processes. Once a candidate has been identified as CEO successor, coaching kicks in.

Coaching deals less with who the successor might be and more with how to orient the successor to the new role, facilitates a process whereby current and future roles are clarified, and makes the transition from old to new regime as seamless as possible. Generally, the retiring CEO initiates transition coaching. Transition coaching generally occurs between the time when the new CEO is identified and the old CEO retires, often prior to the formal announcement of the new CEO. At times, coaching CEO transitions may be accomplished by the former and incoming CEOs working alone. More often, CEO transition coaching requires an outsider respected by both the retiring and incoming CEO. An individual outside the firm cuts through political issues, raises difficult questions, and generally has little personal agenda in the transition.

2. Define the purposes
CEO transition coaching has outcomes for both the retiring and incoming CEOs. The retiring CEO should leave the office with honour and dignity. At times, this may be difficult, but when a CEO leaves angry it sets a bad tone throughout the corporation. In a large computer firm, when the business hit a series of difficult times, the founder was ousted by the board. He did not leave easily and the ruckus created through his departure echoed throughout the organisation. Employees whose lives were indebted to this founder were unable to thank him, to shift their loyalties to the new regime, and to face new business realities. The new CEO could never fully engage employees as had the firm’s founder, ultimately resulting in the firm’s demise. Transition coaching should help ensure that CEOs leave with dignity.

Also, current CEOs need to transfer their relationship equity — or the network of personal contacts and alliances — to the incoming CEO. These relationships may be with other CEOs, board, top team, all employees, customers, suppliers, regulatory agencies, investors, and others. Through coaching, the retiring CEO must transfer this equity to the incoming CEO.

In coaching, incoming CEOs need to develop a point of view about how they will interact with each of the stakeholders. Coaching also helps incoming CEOs explore behaviours to enact their point of view. Every new leader needs to figure out where to spend time. How much time the incoming CEO spends with each stakeholder and what the new CEO spends time on sets the tone for the new CEO’s term.

Coaching the outgoing and incoming CEO through the critical transition moment serves both the old and the new. It allows for an ending to occur, and a beginning to be initiated. A coach might have insights and observations unbiased by either the former or current CEO.

3. Create a stakeholder map
Each retiring CEO has a set of stakeholders with whom relationships have been formed. A coach working with a CEO transition moment identifies these stakeholders and raises questions the old and new CEO need to address for each.

Some of these stakeholders are outside the firm and might include customers, investors, suppliers, regulators, trade associations and professionals groups, community leaders, and media relations. A coach helps the current CEO identify individuals in each stakeholder group who have been important, makes observations about future relationships for the new CEO, and plans to transition relationship equity to the new CEO.

Internal stakeholders might include the board, top management, corporate governance, the retiring CEO and employees. Again, a coach helps the old CEO reflect on specific experiences and relationships.

Some stakeholders are personal — like the new CEO himself. CEO transitions have an impact on personal life since CEOs become public figures. Since the decision has already been made about who the new CEO will be, the former CEO can share personal observations about strengths and weaknesses of the incoming CEO. Often these discussions alert the new CEO to style challenges required in the new job. No incoming CEO has all the attributes required to succeed and feedback from the retiring CEO helps the new one see challenges ahead.

The new CEO also has to understand how the job will affect lifestyle. Scheduling private time, managing his calendar, and thinking through personal issues (e.g., health, hobbies, community image, etc.) fall within the coach’s purview. The coach also helps the new CEO think about the family demands of the new role. Sometimes, the retiring CEO and spouse hosted the incoming CEO and spouse and talked through the changing roles as a couple.

Again, many of the stakeholders wouldn’t be new to the incoming CEO but the new role may require new ways of dealing with them.

4. Articulate a point of view for each stakeholder
As the stakeholder map is generated and relationships identified, the new CEO needs to create a point of view for each stakeholder. This is done in two steps. First, the new CEO needs to figure out which stakeholders require the most attention at which time. If there are 10 stakeholders and each requires 10 units of energy to fully satisfy, but the new CEO only has 60 units of energy available, a coach may help allocate the 60 points. Some of this allocation may be sequential, for example, when the CEO transition actually occurs, the new CEO has a unique opportunity to have media coverage of the event and go public with a direction and point of view. This may require a higher percentage of the 60 units of energy for some time, but afterwards, the media stakeholder may receive less attention. Satisfying multiple stakeholders also becomes manageable by having similar messages shared across them. One new CEO prepared a clear statement about his goals, then used this as his “80 percent talk” with employees, customers, suppliers, board of directors, and investors. This 80 percent came from completing the statements, “I am excited about this new role because…”, “My agenda as CEO will likely be to….” Coaches help with this reflection so that the 80 percent message communicates vividly. Then, he would tailor the final 20 percent of his message depending on the audience.

Second, the new CEO needs to develop a point of view about key stakeholders. Which customers and suppliers will be most critical? How will the CEO build credibility with investors? How will the CEO communicate to employees? How will the CEO manage the transition of the retiring CEO? To answer these, the new CEO needs to figure out [1] who are the key stakeholders with whom I need to form relationships, [2] what are my goals and desired outcomes of each relationship, [3] how can I communicate this agenda in ways that have the most impact? Coaches help the new CEO build an agenda.

5. Specify behaviours for each stakeholder
A point of view that does not result in behaviour is pointless. The most scarce asset for the incoming CEO is time. Everyone will want to be on the new CEO’s calendar. An incoming CEO needs to be very disciplined with scheduling the calendar. Many events are mandated, e.g., board meetings, shareholder meetings, etc. Other events need to occur, but have some flexibility about when they occur, e.g., customer and supplier visits, investor relations meetings, top management meetings. Finally, other stakeholders might be overlooked if they are not scheduled, e.g., employees, personal and family time.

For one CEO transition, we prepared a four-quarter calendar depicting which stakeholder would receive CEO attention each quarter. The first step was to identify required and expected meetings, then to manage the new CEO’s calendar to make sure that each stakeholder received adequate attention. Using this framework, this CEO told her marketing people that she had 15 days in a particular quarter to spend with customers and invited them to make sure she used the time wisely. The marketing department appreciated the opportunity to use this time to leverage the CEO with important customers.

One of the most critical and immediate issues for most new CEOs is the transition of the former CEO. The incoming CEO is the only person who can help the former CEO leave with dignity. This might include an employee or customer tour where the former CEO gives and receives thanks for the work performed. This allows employees to experience the important endings and new beginnings of a new regime. In one company, the incoming CEO founded a scholarship for the retiring CEO at his alma mater which meant a great deal to the retiring CEO and sent a signal to the company about how the new CEO would treat people.

Coaches force the new CEO to realise that he will have more demands on time than resources. They help him prioritise and sequence activities that will have the largest impact. They create a relationship plan that helps the new CEO set and deliver an agenda.

Conclusion
This essay is about how to coach during a CEO transition moment. I pick this particular transition moment because it is a critical time in the firm when the old melds into the new and when significant change may be made. The stakeholder logic used to create the plan for the CEO transition may be applied to other management transitions as well. In any case, the coach who recognises this transition, intervenes with sound frameworks and questions, and forces honest dialogue, adds enormous value. Transitions occur more quickly; former CEOs leave the firm with dignity; new CEOs have the impact they desire; and the firm overall makes progress.