// . //  //  The CEO Is Leaving. Now What?

This article first appeared in MIT Sloan Management Review on June 28, 2022.

An increasing number of CEOs are deciding to leave their posts on their own terms in the wake of COVID-19, for factors ranging from burnout to a need to take stock of their lives. Others are simply coming to the end of their agreed-upon term in office. Most want to minimize disruption to the company and preserve a positive legacy — but best practices on how to navigate the last 100 days of a CEO’s tenure are an under-researched topic. Beyond the first step of the CEO and board agreeing to an orderly transition, including timing and financial terms, how should the CEOs and boards proceed?

A CEO’s last 100 days typically can be divided into three phases: preannouncement, when only the CEO, chair, and board are aware of the planned departure; a post-announcement phase, when the departure has been announced but the business carries on much as before; and a pre-transition period, when a successor has been picked but is not yet in office.

How an organization and individuals manage these phases is crucial to an effective transition and continued momentum for the organization. Get it wrong, and the dislocation from one leader to the next increases the risk of organizational disruption. For the departing CEO, reputation and business relationships are valuable assets to take on to the next stage of a career. But for many, the motivation is primarily emotional — a desire to make a success of the last chapter of their service to an institution, its people, and its customers.

Examining CEO transitions across numerous sectors, it is possible to identify best practices for boards, the departing CEO, and the successor alike. Here’s a guide, informed by the experiences of three senior leaders who have recently left their very different organizations in the U.K. and whose experiences apply to CEOs everywhere.

Preannouncement: Form a common narrative

CEO departures can be read in different ways internally and externally, and it can be difficult to achieve the optimal positioning. While the CEO might prefer to personally announce their departure at a time of their choosing, it risks making the company board look weak, given that the departing leader is preempting one of its most important prerogatives: the power to decide who is chief executive. Both CEO and board will benefit from communicating the departure around a common narrative that is positive for all parties and will not destabilize the company, cause concern among colleagues, or unsettle the external market.

After six years at the helm, Joe Garner decided in September 2021 to step down from his job as CEO of Nationwide Building Society, the United Kingdom’s largest mutual financial institution. His first act was a long walk in Windsor Great Park with the chairman of the board, to discuss the timing and nature of the transition. His departure was then mutually agreed upon at the September board meeting, and only then did he speak to his direct reports. Garner then wrote a blog post and made a video before the announcement to ensure that the internal narrative was defined and agreed to up front. There were no further communications until a press release went out at 7 a.m. on Sept. 23. At the same time, the blog post was published on Nationwide’s intranet, and the video was emailed to all 17,000 employees, 9,000 of whom watched it. “Video enables you to do a very personal, emotional piece of communication,” Garner said. “And it meant that I owned the messaging and killed any alternative story dead, because it answered the questions.”

The key takeaway: Keep the news among a small group and jointly prepare detailed messaging — both the narrative and the way it will be communicated. Get the message out to colleagues personally and to the market before any external commentator does.

Post-Announcement: Let go of the longer-term future

Chief executives are still accountable for everything that happens in the company until their final day. But inevitably, they also progressively lose influence, which lessens their capacity to fulfill their duties. The period after the announcement but before the transition to a successor is particularly challenging, and it is easy to remain in denial that any change is underway.

While David Ellis was CEO of leading English rugby team Harlequins, he used to divide his work into three types: business as usual, growth, and experiments. After his departure was announced, he and the board agreed that he should focus on business as usual. He handled ticket sales, contracts, and stadium finances but let go of longer-term decisions about personnel and strategy.

To make sure he could remain accountable, Ellis went back to a habit from his first 100 days, when he was learning the business. “Back then, I was trying to figure out where the really bad risks were,” he said. “In my last 100 days, I found myself defaulting to watching all those risks again. I almost reverted back in an arc and was asking myself, ‘Are all these risks OK to hand over?’”

The key takeaway: Set out the time frame of various types of work and decisions. Let go of longer-term, strategic goals and focus on day-to-day management — on ensuring that things do not go wrong. Don’t let the selection process for a new CEO distract from the day-to-day business.

Both CEO and board will benefit from communicating the departure around a common narrative that is positive for all parties and will not destabilize the company

Pre-Transition: Champion the successor

Not all transitions should be seamless. When a CEO is fired, the board is often demanding change to keep pace with an industry in flux or to stabilize a company in turmoil. But many companies want continuity from one leader to the next, and some industries codify the transition. For example, the Senior Managers Regime for U.K. financial services details the information a departing CEO must provide to their successor. Less formally, recently departed leaders often note the importance of serving their successor; one even recommended being “subservient” to them, for the benefit of the organization. Newly departed CEOs also say they were keen to pass on their institutions’ culture to an outside appointee.

Even more than other organizations, the armed forces require seamless succession, and they have developed a model of leadership to ensure this. If a commander is lost on the battlefield, someone else must be ready to step up immediately. When the U.K.’s Gen. Sir Nick Carter was preparing to stand down as Chief of the Defence Staff in November 2021, he decided to spend some of his remaining time helping his successor learn the job. The aim: to assure continuity, particularly in important personal relationships. “There is merit in having structures and systems that are resilient enough to be able to withstand the change of leadership,” he said. “If the cult of personality becomes too much of a feature of military life, there’s a risk that you’ll end up being one-man or one-woman deep when you actually need to be rather deeper than that.”

The key takeaway: The incumbent CEO should champion the incoming leader by publicly reassuring staff members and emphasizing continuity. Arrange for a short period of overlap, if possible, during which the newcomer could shadow the work of the departing CEO, by sitting in on meetings, for example.

Moving on — to next time

The rise in voluntary CEO departures suggests it is time for companies to draw up plans for future successions. The public sector is a good source of templates because it often carries out essential services and cannot run the risk of a temporary period of disorder. That’s why its leadership roles often come with formal or informal term limits, and handovers tend to follow established procedures that make the process smooth and predictable.

Private-sector companies could start by creating a playbook based on these and other best practices, combined with lessons learned from their own transitions. They could also consider an informal term limit for an incoming CEO — say, five years — and agree on goals for that time frame. The board could then decide in good time whether it wants the CEO to continue beyond that. If a company has recently installed a new CEO, it might not be too early to start thinking about their departure.