Navigating CEO transitions
The role of the CHRO after the handshake
Jan 16, 2018
In reality, many new CEO hires happen abruptly, given that CEO turnover rates are on the rise. Shutterstock
By Suanne Nielsen
It’s been in the news. Foresters Financial hired a new president and CEO, who took office on Jan. 8. It’s always fun to start a new year with a new CEO. A new year provides a blank page to establish our mandates and priorities going forward under new leadership.
But a CEO isn’t appointed overnight. Preparations kick into high gear as soon as a board decision has been made to find a new leader. Critical decisions need to be made from several points of view to ensure the transition is as seamless as possible and yields the maximum payoffs.
In the new world of work, the reality is that the president of an international organization such as Foresters has 2,000 employees to oversee, of which only 700 are in Toronto. His direct reports are from three different countries, and on two different continents.
The ideal scenario is to have a transition plan in place even before the decision to hire a new CEO is made. In reality, many new CEO hires happen abruptly, given that CEO turnover rates are on the rise.
Whether you’ve had a couple years to prepare for a new CEO or just a handful of months, the role of the CHRO is critical both before and after the handshake.
At Foresters, we’ve faced both scenarios.
In the past, a former CEO had signalled his plans to retire two to three years prior to his actual retirement date. With a heads-up like this, the role of the CHRO is very different in laying out the transition plan.
In our case, I worked with the human capital and governance committee, meaning the board, to ensure those who were in the CEO succession plan internally were given adequate experience over the next two-and-a-half years to situate them favourably when the decision was made to appoint the next CEO.
In the time we had, we changed the portfolios of three people quite significantly. For example, we put the CFO in charge of running our Canadian business, which was one of our smaller businesses. We had the head of the Canadian business run our larger operations in the United States. We recruited externally for a CFO replacement, someone who could also be a strong contender for the role of the outgoing CEO.
More recently, we had to replace our outgoing CEO immediately. As such, a decision was taken to put not one but two board members in the interim CEO role. The transition plan was for the two members to step out of their board roles and into the co-CEO roles. Even after our new CEO started in January, the co-CEOs will remain on until the end of the month to support our incumbent CEO during his initial days.
From the beginning, the role of the CHRO in both these cases is to support the CEO selection committee. Even though we had strong internal candidates, strong governance requires that we benchmark our internal candidates against external ones. We did a full search in both cases. Our current CEO was appointed from among our board, although he had joined the board only six months prior. His qualifications stood out well against the other internal and external candidates.
The transition plan then is for the CHRO to create an extensive onboarding plan for the first 90 days of a new CEO. The process begins with meeting the key executives, getting updates on personal deliverables in the first 30 days and meeting employees. It’s important to put an extensive communication plan into action that leverages any events where the incumbent can meet employees in their setting and have several different touchpoints in his first 90 days.
It is for the CHRO to ensure, firstly, that he meets all his direct reports and the executive team members. And the second order of business is to help him focus on the development of ongoing organizational projects that are number one on the priority list.
The days are packed with one-on-one and on-site meetings with team leaders to gain knowledge about specific areas. Foresters operates in multiple geographies and jurisdictions, which means that our new CEO will travel to our New York, New Jersey and United Kingdom offices where resident HR teams will mirror what we do in our Canadian headquarters.
One of the ways we have managed off-site communications is through use of video technology. Executive offices and meeting rooms at Foresters are equipped with high-definition video technology so that everyone can be face to face with each other and with our new CEO.
Our current and outgoing CEOs are both American, which brings along the additional complication of immigration. This is where Canadian legislation has not kept up with the requirements of the new world of work, something I’ve written about here. There’s a huge obstacle to ensure that Service Canada supports our decision to get an American citizen to work effectively in Canada. The process is made easier when we can provide necessary evidence that we’ve conducted an intense and effective search for candidates within Canada, before hiring from another country.
The relationship that gets often overlooked in CEO transitions is the role of the departing CEO. Once again, the CHRO should step in and work with the board to create an overlap where the incumbent and the outgoing CEOs could support each other. It’s a delicate balance, but one that helps the transition smoother.
The role of the CHRO is to be respectful to the outgoing CEO. It’s important to help him manage his expectations. While it’s ill-advised to have the outgoing CEO present in meetings once the new CEO is appointed, it’s important to have the former project an attitude of “I’m here and available to you.” He could be helpful in making introductions where appropriate, without overstepping.
It cannot be stressed enough that the CHRO ensures an appropriate handoff that is respectful to both CEOs. That might mean relocating the outgoing CEO to the next nicest office on another floor where he can end his tenure, or planning a series of retirement events with the executive team and employees.
It’s the responsibility of the CHRO and her team to navigate all of these sensibilities carefully.
When stepping into their role as new leaders, CEOs inherit a company’s culture, its people, its politics, (and in today’s world), its innovations. They are expected to master the art of relationship building, a skill that Foresters’ new CEO displayed when he asked me a simple question — a thoughtful question not commonly asked by many new CEOs who are raring to make their mark and establish their brand of leadership.
The question: “What are some things that the previous CEO did that I can learn from — things that I need to continue to do and things I need to do differently?”
To learn how CEOs need to equip themselves for the work dynamics of the future, join us at SCNetwork’s upcoming event, Learning Nation, where we will be hearing from Ilse Treurnicht, former CEO of MaRS Discovery District and member of the Advisory Council on Economic Growth, who is rallying all parts of the Canadian economy to adapt to — and lead — the unprecedented changes in work and the workforce.
Suanne Nielsen is president of the Strategic Capability Network and global chief administration officer at Foresters Financial in Toronto. The views and opinions expressed in this article are those of Suanne and do not necessarily reflect the official position(s) or opinion(s) of SCNetwork members or Foresters.
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