By Professor Dave Ulrich, Ross School of Business
The last few months have seen noteworthy CEO appointments in South Africa and the rest of the world. At home, MTN announced in June that Rob Shuter will replace Sifiso Dabengwa as chief executive in 2017, and in September it was announced that Sisa Ntshona will take over the reins at South African Tourism. Internationally, Vicki Hollub became the first woman to lead US independent oil giant Occidental Petroleum, a Fortune 500 company, and Edward Bastian stepped into the corner office at Delta Airlines.
Changing a company’s top leadership can raise a lot of questions about its immediate and long-term future, and may even have a material effect on the company’s value and stock pricing. Many, both inside and outside the company, look to the CEO to set the tone in the immediate aftermath of any major change. Here are a few things that any CEO leading a company through a transition should keep in mind:
- Be aware of how the departures look to outsiders: Any leader is made stronger by the leaders he or she creates. Leaders should multiply others and make them better, and talk about “we” more than “I.” When an entire team leaves, it may send a signal to investors and others watching that a leader is not empowering his or her leadership team.
- Remind people watching, of your track record of leading people to success: An effective leader delivers results and takes personal responsibility for doing so. In high tech firms, there is often “patient” capital that will provide market value far beyond earnings—as seen in companies like Uber and Amazon—but executives need a track record of building market presence and share in clear and measurable ways. At a time when doubt runs high, a CEO should reassure those watching that he or she has a strong action plan and vision.
- Position the departures as an opportunity for growth: An effective leader has insight into industry trends and how to position his or her company to win. In fast-moving social media industries, it is critical to continually reinvest and create a future. For example, Google may not succeed in balloons or driverless cars, but its leaders are constantly positioning themselves to be the innovators and leaders of the future. There’s opportunity for the CEO and other company spokespeople to message the departures as a chance to propel the company forward.
- Hire the right talent to replace the people who have left: Good leaders surround themselves with better people. The most confident leaders are able to hire and develop very competent teams; the least confident leaders often try to make themselves look better by bringing in people who are not as effective. Whether someone has left or was asked to leave doesn’t matter, as long as the CEO takes this opportunity to replace them with someone even more closely aligned with the company’s goals. This will help propel the company forward.
- Stay true to the company’s mission: Effective leaders should turn customer brand promises into leadership actions in order to build trust. Walmart’s leadership team is dedicated to delivering low cost; Disney leaders are dedicated to guest experience. Twitter’s challenge is to create a clear external brand promise to customers and then use that as criteria for its leadership team.
- Above all, put the company and its success first: Effective leaders build cultures and HR systems that institutionalize the leadership. When the company becomes more important than the leader, it is more likely to navigate, and even thrive, through a transition.
Leadership transitions happen, especially when a company is entering a new strategic phase, and the current executive team isn’t the right one to get the company to where it needs to be. But all too often, the transition itself focuses too much on the individual people involved and not enough on the requirements and unique needs of the company. By keeping the focus where it always belongs—on how these developments can serve the greater business goals—a CEO can lead his or her company to an even stronger position.
Dave Ulrich is the Rensis Likert Professor of Business at the University of Michigan’s Ross School of Business and author of Leadership Capital Index. Ulrich is ranked as the #1 management guru by Business Week, has been profiled by Fast Company as one of the world’s top 10 creative people in business, and listed as a Top 5 Coach in Forbes. Ulrich was in South Africa last week leading an ongoing series of events on Human Capital, hosted by Business Results Group and the Gordon Institute of Business Science.