At Watson, we do a lot of thoughtful work with clients around CEO succession, leadership planning, CEO search, CEO transition challenges, and more. Most of the time, the challenges are about doing it well and making careful decisions. But sometimes, there are additional layers: tough situations, difficult and high-risk decisions, ambiguous information and just general messiness.

And, unlike many of the Board’s decisions, there is no member of the management team who can support and advise on this; it’s high risk and nondelegable.

Every situation is unique, but we thought we would share some tough questions and hard truths that we’ve learned along the way. If you’re facing a challenging CEO transition, you might find some comfort in knowing that other boards have struggled with these types of decisions, as well as some inspiration in the approaches we’ve taken with others. And of course, we invite you to reach out to Watson as your sounding board, ready to guide and support you through these situations.

A year into our new CEO’s tenure, we are seeing some potential red flags and performance gaps. Is this just the expected disruption of a new CEO, or do we have a problem?

A certain amount of change is expected, and often welcomed, with a new CEO. Fresh eyes, a different perspective, new energy – these things can invigorate an organization. They can also make people, including Directors, uncomfortable.

At this stage, it’s probably too late to say that it is helpful for the Board and CEO to align early and often on what is expected for both results and leadership behaviours. Given where you are now, the core questions are: How big are the red flags and performance gaps? Do they reflect problems, or the disruption of expected change that the Board has agreed to? Either way, it’s time for some candid talk and to recalibrate with the CEO. You will have to gauge whether the discussion is in the spirit of tweaking their leadership or a bigger course correction. You also likely need some more data (the CEO will need this too if they are going to adjust their leadership). Gather some feedback and then calibrate the tone and approach to the degree of concern.

It might also be worthwhile to circle back to your search partner who helped find your CEO, as they should have insights from the search process to help guide you. For example, what did they learn about the context the CEO would be coming into, and the kinds of support they might need? They can share insight, and also be a trusted party as you navigate.

Our CEO really built this organization and many of us are on the Board because of them. But what got us here won’t get us there; we need a fresh leader at the helm, and it is incredibly uncomfortable to take this on.

Time to summon the courage to face this difficult work, as it will be a journey rather than a single conversation. First, the Board needs to be on the same page with the need for change; then it will take some sensitivity and process to honour the CEO’s contributions while helping them understand the need for change. Ideally, the CEO arrives at the same conclusion with you. If not, it might take some firm (but still respectful) action to start the wheels in motion.

Some process elements can help. Initiating succession planning, which is simply part of good governance, can open up a conversation about the CEO’s plans and intentions. Most CEOs will understand that this is about managing the organization’s biggest risk and helping preserve that value they have built. Next, we find that developing a CEO success profile that describes what the CEO of the future will need to bring to the picture is a valuable exercise, and the current CEO can be engaged in that. This approach makes the conversation about the future, versus feeling like a critique of today’s CEO. Sometimes these conversations alone will get you on the right track; or they might need to be followed by more difficult and direct conversations.

While CEOs are strong people, they are still human. Respect and an invitation for them to bring their best self to the table go a long way. Remind your CEO of the incredible organization they have built and their desire to leave it strong, for the long term. At the end of the day, the Board has an obligation to face the truth that change is needed, so it’s helpful to have Directors with real diplomacy skills and deep trust with the CEO to take the lead. It is also worth considering where the power and influence lie in the organization and amongst its stakeholders, as many such transitions have been derailed by unexpected opposition (Look no further than the recent events at Gildan or OpenAI for great examples of this).

We’ve just received a whistleblower complaint about our CEO, and it’s bad. What now?

The nature of the complaint matters here; but no matter the nature or the source (if known) this has to be taken seriously. The Board must be aware of concerns about its own independence and is encouraged to hire an institutional investigator (we have some we can highly recommend!) to get to the facts, and an advisor to help guide decisions before and after. Or you might need a different type of expertise such as a forensic investigator, or even a need to alert authorities, depending on the issue.

Know that investigations, while essential, are also somewhat thankless. Rarely do complainants get the satisfaction they desire, especially since so much is confidential. And, of course, the process is disruptive to the workplace and to relationships. Often, it makes sense to ask the CEO to take a leave of absence or make other changes while the investigation takes place, and that creates its own disruption. These situations need to be managed carefully and the Board will need to be alive to both people and process.

Our CEO is truly wonderful – an exceptional leader. However, they will not have a conversation with us about succession, and they must be getting close to the end of their career. We can’t even open the door without them feeling hurt or implying it’s time for them to move on.

This is not a topic you can avoid due to fear of hurt feelings, but you can take care to manage it with sensitivity. Go the extra mile in reassuring your CEO that they are, as you say, wonderful and exceptional. You may also need to play some cards carefully, so they are both inspired by the legacy they will leave, and equally concerned about the risks of not protecting that legacy.

The good news here is that you know it’s a point of sensitivity, so you can approach it with care and not accidentally hit a nerve. Often we find that having two Board members (in an ideal world, the Chair and HR Committee Chair, assuming they have the right skills and CEO relationship) put their heads together on an intentional approach. It might start with simply asking them open-ended questions about where the organization should be in five and ten years, and how they envision their own role in that. Those questions could be part of the annual performance evaluation debrief or strategic planning; they don’t have to “wait” for a succession planning process. Another opener is to talk about the career trajectory of the CEO’s direct reports; asking the CEO about their aspirations and whether any of them see themselves on a CEO path.

Or, the conversation could start with simply putting cards on the table: the CEO is exceptional and deeply valued, and the Directors can see that succession is a point of sensitivity, but they also care about the organization and need to address the CEO risks – how does the CEO suggest they best approach it?  This gives the CEO some agency and a chance to reflect on why the Board may need to step into this conversation, grounded in a shared commitment to the organization.

Our married CEO has let us know that they have been having an affair with a staff member, two layers down in the organization. 

This one is not cut and dried; context matters. There are situations where the affair does not violate a policy or code, where disclosure has been managed well, and where the relationship has been insulated from risks related to power and influence.

Let’s start by taking the moral judgment around marriage off the table. Unless you are in a faith-based or similar organization, whether or not they are married is not the core of your issue or decisions.

Rather, the first question is whether the CEO has acted in accordance with your code of conduct and policies. And then, even if there is not a clear violation of something embedded in your policies and practices, there remains the question of whether this can be an acceptable relationship, given the power differential that exists, especially when it’s the CEO. The next questions for the Board to wrestle with are around whether this relationship can be appropriately insulated from abuses of power, undue influence, etc., and also what the affair and how it has been handled so far tells the Board about the CEO’s judgment. The Board will need to be in tune not only to what the CEO and the employee say (recognizing here too the power differential) but also the risks around internal perceptions, external stakeholder and public reflections, and downstream risks should the employee or others feel that this affair has had negative consequences for them.

None of this is said without sympathy; we’re all human, and sometimes our emotions can outweigh our rational judgment. CEOs are not perfect and we should care for them as people even while we hold them to a high standard. No Board will make their decisions here lightly, especially if the CEO is someone they respect and instinctively want to support.

Our CEO is charismatic, well-liked, and has an answer for everything. Yet we are not convinced as a Board that we have a resilient organization that is going to continue to survive and thrive. The challenges just keep growing, and somehow there is always a reason why we didn’t achieve our intended results.

All too often we talk about the CEO who delivers great results but bulldozes people along the way; definitely a problem. You have the opposite problem: a likeable CEO who somehow isn’t delivering and who doesn’t seem to be accountable. It is time to make sure your goal setting and evaluation processes are up to scratch to ensure there’s real clarity and no room for excuses. Coaching may also be valuable. If this has been done and it hasn’t worked – or if you are out of time – this may be heading for a very serious conversation.

Either way, having clear emergency succession in place will be important, because whether the CEO initiates it or the Board does, a change may be in the wind. As you navigate this, be sure to think about good process, careful decision-making and risk management; and put careful thought into how you will mitigate the cultural impacts if the outcome is the departure of a popular CEO.

Roughly a third of our Board is fed up with the CEO and wants to make a change. A third still support them, and a third are uncertain and wondering if some type of probation/performance monitoring period makes sense. How do we come together on this?

As a Board, you are going to have to come together and agree, which can be hard to do. But you are in a tough spot now that is likely to get tougher, and it won’t help if the Board is fractured. In these situations, we suggest using a facilitated approach to avoid people having to pick a position and get stuck in it. Whether the decision is to change, support, or monitor the CEO, you don’t want people to feel like there are winners and losers in the outcome – you’re all on the same team.

Ask the whole Board to talk about each potential path and what needs to be true for that to be the right option, rather than asking people to advocate for the path they currently believe in. This approach, often done with an external facilitator, can help everyone come around to the same place, or at least support the decision when it’s made. We suggest you really have two options: make a change, or commit to supporting the CEO; supporting can include clear expectations and feedback (what’s not an option is half-hearted support).

A note of caution: While you might be tempted to do a CEO evaluation to guide the decision, it might simply be too late. The evaluation will likely tell you what you already know, including the fact that there are different camps. And, if you collect feedback from inside the organization (or from key stakeholders), those people might feel like it’s on them if you then let the CEO go.

Our CEO is vague about their timing. But the Board feels it’s time for fresh leadership, and there are a couple of ready-now successors who might move on to other things if they don’t have a clear path to being considered for the CEO role.

Sometimes we find that the Board is in the passenger’s seat on CEO transition, passively waiting for the CEO’s timing. The Board has an accountability to decide whether it’s time for a change at the top. Fear of losing the leadership bench beneath the CEO is a factor to consider, but not as a form of blackmail forcing you to act. You need data. If you haven’t done so already, conduct a leadership assessment to make sure these would-be successors truly are ready-now, and consult with a search expert to understand how hard or easy a potential internal/external search will be when the time comes. Based on what you find out, the right decision might be to continue with the CEO and not force their hand; or it may be time to move into a more active transition phase. Either way, face the decision head on and base it on the facts as much as possible, not on assumptions and wishful thinking.

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Facing a tough decision, or simply looking down the road and anticipating what lies ahead?  Reach out to us at Watson for expert guidance on CEO transition challenges. We’re here to help.