For business owners, shareholders’ and boards, coping with the sudden loss of multiple key figures in a business can be challenging. Notwithstanding the uncertainty it can create for employees and to some extent customers/suppliers etc, for a listed company any significant change in its management can have a direct impact on its financial position. SkyCity is a recent example with shares down 11 cents following the announcement of the departure of three of the senior leadership team which included the Chief Executive.
This isn’t however a time for panic or impetuous decision-making. So, what steps should boards take?
Manage the (immediate) transition
Depending on notice periods, there may be some short-term people changes that need to be made immediately. Part of a board’s core responsibility is the recruitment of a Chief Executive and if this person leaves suddenly, someone needs to step up in an interim capacity. Boards, in conjunction with senior HR leaders, should maintain a list of ‘back-up’ candidates in advance of this situation arising – which they can refer to should it be required. This could include directors, who have the capacity to step up at short notice. This applies not just for the CEO role but also other senior leadership positions. Given the current environment, preparing for an emergency scenario with the CEO and other critical roles is more important than ever.
There are many reasons why senior leaders decide to leave a role and not all of them are bad. Even with multiple departures it may not necessarily point to a systematic failure, but it is important to scratch the surface and ensure that there is nothing fundamentally “off”. Perhaps there isn’t the right level of challenge or stretch for senior leaders within your business or maybe the organisational structure isn’t conducive to innovation and creativity that many senior leaders strive for. Your HR team or an external HR and people strategist can help guide you in this fact-finding mission.
Know the pulse of your business
An exodus of senior leaders can be incredibly unsettling for the wider business and this can result in employees going on high alert. There is an assumption that those at the top of the organisation have more visibility around company strategy and financials – if multiple leaders depart this can motivate other staff to act fast and start looking for other opportunities. The reality is that once people start looking in the job market, opportunities will come their way. Being as transparent as possible, maintaining strong relationships with key players and injecting a little kindness in your decision-making can pay dividends.
Opportunity for change
Does this unexpected turn of events provide a broader opportunity to reconsider your organisational design? Creating positive change is a leadership function. As a board you need to understand what the business is trying to achieve and create the framework for the structure and people resource, to enable the business to successfully execute their strategy. At Decipher Group we call this process the ‘People Framework for Success’.
Go to market
The long-term solution is replacing senior leaders – these people could come from within the business or externally through an executive recruitment process. While this may need to be accelerated depending on the timeframes you are working with, it is critical that boards work through a robust process to ensure that the right talent is being recruited for the right role. As the saying goes, ‘haste makes waste’ – don’t cut corners in hiring senior leaders or CEO selection. It is also imperative that these new recruits, external or internal, are provided the right level of support and onboarding when they take on the role. Particularly when you have lost key people with specialised institutional knowledge.
Circle back on the succession plan
Regardless of the reasons for senior leaders departing, boards are responsible for ensuring that a robust and up to date succession plan exists to manage changes and role transitions. Succession planning fosters organisational stability by having processes and strategies in place to meet staffing needs, ensuring transitions occur smoothly and with little disruption.
Decipher Group specialise in the recruitment of management, executive and governance professionals for New Zealand businesses. We also provide a suite of talent advisory, succession planning and organisational design services. We’d love to chat.
The Decipher Team
To stay on top of current recruitment trends and technologies follow Decipher Group on LinkedIn.