A change of CEO always provides an opportunity to evaluate, and often change, how the company is perceived. The way that the media, employees, clients, and capital markets perceive the change of CEO is business critical.
In a harsher economic environment, pressure increases on the management of both publicly listed and privately held companies. This is particularly true for the role of the CEO. A change of CEO also signifies an important shift in the company’s strategic direction. The initial period following the appointment of a new CEO sets the tone for what type of transition the change represents. This requires well-planned and thoughtful communication.
How do you foster internal engagement for the new leadership? How do you build trust in the CEO from the start among external stakeholders? Which priorities should be communicated initially, and which formats can support the communication?
Initial communication must be based on the nature of the transformation that the company is undergoing, and intends to convey, through the CEO. Through the appointment of a new top executive, a troubled company can gain a fresh start or, at the very least, enter a new phase. A successful company can further accelerate growth with a new CEO, bringing different qualities and approaches.
Every company experiences various developmental stages, often requiring different kinds of leaders. A CEO who has delivered strong results during a period of growth may not perform well in other phases. Driving growth through acquisitions is particularly challenging, as many have experienced. Especially considering the current period of (relatively) high interest rates. Such a strategy also demands a different type of CEO, both for operational and communicative reasons.
An abruptly dismissed CEO necessitates specific measures, while a carefully planned succession requires an entirely different approach to communication. However, a common characteristic of all change is the necessity of a clear direction, regardless of whether it involves a new or old strategy. Explain what is happening, and the reasons behind it, in a way that is easily comprehensible for all stakeholders.
A new CEO can maintain a certain distance from past issues, difficult challenges, and company history. No matter the cause, a change of CEO always entails a role shift within the company. The CEO must have a clear understanding of their role, an understanding which should be aligned with the board’s chosen direction. However, both external and internal expectations include that the CEO’s ambitions must be communicated almost immediately after assuming the position. This presents a rather challenging situation, particularly for a CEO with limited knowledge of the company they are going to lead. Therefore, the process of preparing, adjusting, and training a new CEO to act as a spokesperson in various internal as well as external contexts needs to begin as soon as possible.
If you have any questions regarding the above, please feel free to contact Linus Paulsson, Senior Advisor, or Kristian Stålberg, Associate Partner.