According to Spencer Stuart, the outgoing CEO becomes the Board's Executive Chair in over 40 percent of S&P 500 CEO transitions, and I've worked with several clients who followed this path. [1] In these cases everyone agreed in principle that the company would benefit from the continuity afforded by having the former CEO take on this special role, but what this meant in practice was often highly ambiguous.
A degree of ambiguity is inevitable. Any standardized "job description" for such a specialized role will fail to meet a given company's unique needs. (This is also often true for Chief Operating Officers, another role that varies widely from one organization to another. [2]) But too much ambiguity makes it difficult for the parties involved to understand what it will take for this new arrangement to work.
This can pose a particular challenge for the Executive Chair and the incoming CEO. The Chair may have played a large role in recruiting and selecting their successor, and if so it's likely that both parties said the right things about their future working relationship and were reluctant to jeopardize the deal by asking too many inconvenient questions. As a result sometimes very little is spelled out with any specificity before the Chair and CEO must begin working together, which can easily lead to misunderstandings.
I don't believe there are best practices that an Executive Chair must follow in order to succeed, but here are a set of questions that a new Chair and an incoming CEO can explore to arrive at a shared definition of success:
The Executive Chair and the CEO
- What expectations do you both have for this relationship?
- How clearly have those expectations been articulated?
- How often will you communicate, and on what issues?
- What decisions does the Chair expect to be consulted on?
- How does the CEO (really) feel about this?
- What decisions does the CEO expect to make autonomously?
- How does the Chair (really) feel about this?
- What will happen when you disagree?
- How will any disagreements be resolved?
- What role will the Chair play in assessing the CEO's performance?
- If necessary, how open are you to working jointly with a coach?
The Executive Chair and the Board
- What role will the Chair play during Board meetings?
- Will they facilitate or have any other special responsibilities?
- How does the CEO (really) feel about this?
- What role will the Chair play in between meetings?
- Will they hold one-on-ones with other Directors?
- If so, is this an option or an obligation?
- And how does the CEO (really) feel about this?
The Executive Chair and the Business
- What ongoing responsibilities (if any) will the Chair have?
- How much autonomy will they have to conduct these duties?
- How accessible will the Chair be to other parties, such as investors, analysts, or the media?
- What role will they play in those settings?
- To what extent will they be empowered to speak for the company?
- And how does the CEO (really) feel about this?
Footnotes
[1] 2023 CEO Transitions (Spencer Stuart, 2024)
[2] The Mythical COO
Photo by Kyle Taylor.
