Five Mistakes Companies Make with Leadership Transitions

When organizations decide they need new leadership—regardless of the reason—it’s just as important to know “what not to do” as it is to know “what to do." And, with corporate and personal reputations at stake, understanding the negative consequences of poorly managed leadership departures can help organizations avoid these common mistakes and ensure more amicable transitions.  

Mistake #1 - Offering standard outplacement services. Many organizations make the mistake of offering the same type of career transition service to all their employees. This approach misses the fact that transitions are different for every person. For employees to successfully transition, the role and level the individual has attained is an important consideration. 

For example, a salaried professional can land a new job by working with a three-person support team—a career coach, brand specialist, and job connecter—in a relatively shorter timeframe. But placing senior executives into new opportunities adds greater complexity and can take longer because they have many more options to consider including: Board Service, Private Equity / Venture Capital firms, a Portfolio Career, etc. 

Instead of standard services, senior leaders need a much bigger and level-appropriate transition support team—that includes a highly accomplished peer-level Advisor and a bespoke team of experts guiding them toward a rewarding outcome. “Doing right” by departing executives means selecting outplacement services that provide the right depth and level of support that matches the considerable value they have provided to the organization. 

Mistake #2 - Overlooking the business risks. With all the seismic change that started in 2020, a considerable number of senior leaders have departed or announced their intention to step down. And, because organizations are taking stock to determine whether their senior executives are fit for the current environment, more shake-ups are on the horizon.  

Organizations that overlook the business risks of highly visible executive departures can be exposed to unnecessary backlash. Their customers, shareholders, employees, and the news media are constantly scrutinizing their decisions about senior leadership turnovers—and this will be even more prominent in the post-pandemic world. 

We’ve seen global organizations endure massive collateral damage to their brand reputations from negative headlines in the news. This kind of fallout effects their employment brand and their ability to attract the best talent for the skills they need to drive the business into the future. It also has a profound impact on their internal teams who need to recover from the aftereffects. Which leads us to the Mistake #3.

Mistake #3 - Discounting the impact on their peers. During their tenure, senior executives tend to build very strong peer-level ties. In our experience most everyone who involuntarily loses their job, regardless of their position in the hierarchy, experiences feelings of insecurity and anxiety at some point. 

Because senior leaders command greater influence with internal stakeholder constituencies, if their departure is overly emotional or messy, or if they believe they have been unfairly—or illegally—terminated, it can have a crossover effect onto their peers—especially if they become sounding boards for their colleagues who are going through any difficulties accepting the situation.

Leaders who remain in the business want to trust that the organization will do right by the outgoing executive—in a respectful and compassionate manner—like they themselves would want to be treated if they were in their colleague’s shoes. That’s why providing the right level of support builds greater trust in the organization and improves retention overall. 

Mistake #4 - Missing the value of their influence. In addition to their internal influence, leaders in transition also have extensive connections outside the organization—with clients, market analysts, business partners, suppliers, and the media. Therefore, it’s important to recognize the value of their deep commitments and associations in the industry they have served. 

Rather than losing the touchstone of these associations, it’s far better to build ongoing dialog and agreement about how they can continue to benefit with an enduring employer-employee relationship for as long as it is mutually beneficial. By keeping them on strong terms with the organization—as brand ambassadors and influential advocates—the transition becomes much smoother and more beneficial to the firm and the individual.   

Organizations that engage with their executives in transition in an open and honest context will have the advantage. If they display a willingness to work together to come up with a transition plan that is fair to both the individual and the organization, an otherwise intense situation instead becomes a win-win for all parties.

Mistake #5 - Failure to plan. Executive departures can be deeply consequential events in the evolution of any organization. In the post-pandemic world, constant and profound transformation is going to be the name of the game. A thoughtful, well-planned approach for re-casting your senior leadership team can replace ambiguity with certainty, and emotion with rational resolve.

In our experience, being well-prepared requires involvement from the very top of the organization, starting with the board of directors and reaching through critical leadership roles including the CHRO, general counsel, and the head of compensation and benefits. And, perhaps most importantly, it requires dispassionate advice from a third-party transition partner to help support the leaders in the company who are managing the exit, as well as the departing executive.

A planful approach is always the best practice as it serves organizations well in the long term. Just as business strategies are required to move an organization into the future, so to is solid preparation needed for managing all senior executive transitions. It’s also the fair and respectful choice.

In summary, reputations can be made or destroyed in a single news cycle. How executive departures are handled can have a profound effect on an organization’s brand, on the ability to attract and retain high quality talent, and on safeguarding the business during challenging times. 

Are leadership shake-ups on the horizon at your organization? Read more to learn how to prepare a planful approach that protects the company's brand and provides the support needed for smooth transitions.