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Change of CEO – how should chair of the board and interim CEO strengthen stakeholder trust?

Change of CEO – how should chair of the board and interim CEO strengthen stakeholder trust?
Pontos' Communications Manager Lilja Kettunen
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“A change of CEO always marks a key point for companies. Once the captain of the ship leaves, the importance of communications grows. In a change situation like this, the chair of the board and interim CEO are tasked with engaging the rest of the management in the change, keeping the personnel satisfied and strengthening stakeholders’ trust towards the company,” writes Pontos’ Communications Manager Lilja Kettunen.

Bad communications will undermine the company’s credibility and efficiency, as the CEO acts a key person in the company’s culture and performance, and a role model for the team. Yet even the most difficult change can also be positive.

What are some things to consider? I will go through items the chair of the board and interim CEO should include as priorities on their to-do list. Internal communications receives particular attention, as it is often overlooked. I also included practical examples. Although the tips have been created from a non-listed company’s perspective, they can also be applied to more regulated environments at one’s discretion.

Coordinating communications should be done by the board of directors

As the CEO leaves, responsibility for coordinating communications lies with the board of directors, more specifically its Chair. Since the matter is new to the company’s management, and probably more or less surprising, internal resources that can be utilized in the situation are scarce. An active owner can help when there are not enough helping hands available.

The interim CEO or successor must take ownership of the situation. From the communications perspective, the change situation is built upon three pillars: (1) prepare, (2) ask and listen; and (3) coordinate.

Define the communications responsibilities for the board and company

A change of CEO is closely linked to the communications responsibility of both the board of directors and the company. How these responsibilities are divided should be planned carefully in advance. How will the board communicate the topic to the CEO about to step down and/or rest of the management? What support is given to the company?

The company, i.e. interim CEO, has to manage internal resource allocation and scheduling.

Prepare – Include the communicator as early as possible

The communications expert should be included in the process as soon as possible. They will help the board and interim CEO to plan, prepare and resource the communications. The work can begin once the board decides, for example, on how to communicate the matter to the soon-to-be-former CEO and company’s management.

Even if the CEO has made the decision to step down on their own – instead of the board – the internal key message related the change is the most important aspect of the process. The work can be started by contemplating on what the communications aims at and the biggest challenges it will help solve. The goal can be, for example, “to maintain the personnel’s work motivation and trust.”

Th situation should be communicated openly enough, but in a way that keeps engagement in the company high. Single word choices, nuances and word order matter greatly.

It is different to say, ”There will be a change of CEO, because the company has not developed in accordance with goals” than ”There will be a new CEO, because changes in the operating environment require new competence in the company.” The first immediately results in the question, ”What have I done wrong?”, whereas the latter is more future-oriented.

There is also a difference between saying, “The CEO is leaving” and, “There will be a new CEO” – even if the new CEO has not yet been appointed. Avoid change rhetoric in communications, and instead highlight continuity and the fact that the company is headed in a stable direction.

Board members should receive support for communicating the change. Communications support can also be given to the leaving CEO as early as possible. How can the person stepping down come up with messaging to serve all parties in the best way?

Ask and listen – anticipate concern in advance

In situations involving a stepdown of the CEO, everyone in the company will think: How will this affect me and my work? How will this affect the company’s operations?

Good change communications answers these questions and possible other concerns related to the situation in advance. The communicator should draft Q&As for the interim CEO, management, team leaders and managers to help them communicate about the subject. The materials should prepare for questions internally and for questions from the media and stakeholders.

Coordinate – Include a few key members of the management and schedule the change

Engaging the management is crucial when a change of CEO is taking place: the management team has most likely been formed as a tightly-knit team over time, and personal chemistry plays a role. It is only human if the change leads to resistance. If the CEO stepping down has recruited several people in management, engaging them in the situation is important for advancing the change and maintaining efficiency until the new CEO takes over. However, the change also poses an opportunity for the management.

Engaging a few key persons in advance gives the interim CEO enormous help for implementing the key message. It also results in additional listeners to address possible concerns.

As the transition takes place upon the board’s decision often within a few days, the timeline of these days should be planned on an hourly level. Compile a communications plan for the change, with the communicative goals, timeline, key messages, central events and resources – and make sure that the board has time to comment.

The chair of the board communicates the change of the CEO to the management team, and the interim CEO should make time to support the management and also schedule an event for internal discussion as soon as possible.

The external key messages and narrative should also be planned ahead of time, and the related practical resources allocated. Who will draft the news, and when will it be communicated on the company website? Should it be communicated to the media? How are the other relevant stakeholders informed – via e-mail or in person – and in what order?

The spokesperson answering questions by the media should be prepared for possible questions and be reachable during the communications period. Naturally the external message differs from the internal one, but they should not contradict each other. It is also important to ensure that the personnel know what they should communicate externally.

Finally: Listen and offer information and support

An anonymous channel for personnel to ask questions is a good way to gather important concerns and questions that even members of the management team might not otherwise bring up.

Another aspect to consider is how the business lines and teams should become organized so that people get the time and space they need for discussing the change, in the future as well.

People on different organizational levels should receive a brief information package containing all relevant matters pertaining to the situation: how long will the CEO about to step down continue in their task, how are reporting tasks allocated to the interim CEO, when is the change made public, how can stakeholders be addressed in the topic, and to whom or where should questions around the topic be directed?

 

A change of CEO always marks an important step, yet also an opportunity for the entire company. It is a way to build even stronger trust internally and in the eyes of external stakeholders. Communications is a means to significantly impact the direction the company is headed towards in the future and to maintain a steady course!

Lilja Kettunen

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