Changes in leadership are on the increase. Some top executives just see this economic shift as an opportunity to take a different course. Some companies need a leader with a different style/competency as they restructure the company or reposition the business strategy.

The business challenges of yesterday are not the same as the business challenges of today. Today's leader has to navigate through the marketplace uncertainty and be willing to assume some risk to take advantage of opportunities. Today's operating and capital budgets cause the leader to make difficult choices -- taking advantage of opportunities to invest in the future while also achieving current year profit goals.

The effective transition of those executives in their new role is critical, whether they are an incoming CEO, COO or business unit leader as well as whether they are promoted from within or hired from the outside. The transition is one of many important factors for the new leader to not only make a great first visible impression but also to make a positive impact on the bottom line. The transition can have a positive or negative impact on the bottom line depending on the design of the transition plan and how well that plan is executed.

Goodfriend Observations of Transitions of Incoming Executives

I have made some observations over the years regarding these types of transitions:

Observation #1: Uncertainty increases when the speculation begins about a possible change in leaders. Rumors about an executive leaving might begin before any decision is made around departure. These rumors begin to increase uncertainty. Uncertainty without confirmation/announcement begins to have a negative impact on the commitment to the goals, the way the teams work together, etc.

Observation #2: Incoming executives often delay the transition activities. The company's transition should begin upon informal or formal confirmation that there will be a change in senior executive leadership -- not upon the formal handover. The transition may not be visible, but it should begin. When the outgoing executive is no longer in a "committed relationship" with the company, the nature of the relationships with the other executives, managers and employees begins to change. You have probably seen how the message/communication of an outgoing top executive is not heard the same way as compared to before any confirmation of the departure. You may have seen that their influence over decisions, plans and policies change because the new top executive may change course. Early transition steps are not just about an orderly succession, it's about business/profitability continuation.

Observation #3: Incoming executives don't build enough trust with their direct reports. In the early stages of the transition, some incoming leaders are not active enough with their communication or trust building with their leadership team of direct reports (as well as other key managers/contributors). This period of transition prior to handover is a great time for information gathering and building working relationships with direct reports (or assessing who should be a direct report).

Observation #4: In the early stages of the transition, the leadership team often regresses in their level of trust with each other. Upon announcement of the departure or announcement of the new leader, leadership team members often become more self-protective because of the uncertainty of a possible new strategic direction, self-questioning about their own standing, etc. Becoming more self-protective often reduces transparency, openness and vulnerability with each other. That causes leadership team members to wonder about the true intentions of other leadership team members i.e. trust concerns about each other.

Observation #5: Incoming executives don't initiate enough communication with all levels of employees. Some incoming leaders don't take the first step to initiate communication or to gather ideas and input from all levels of employees. Two-way communication will help people feel they have some influence and will also help decrease uncertainty. When there is not enough communication, people begin to "invent" what they think will happen, instead of hearing it directly from the leader or seeing it in his/her actions.

Information Gathering From Incoming Executives in Transition

In preparing to write this article, I did some information gathering with some incoming executives going through a transition. I was hoping to learn what they see as their transition challenges as well as their transition activities thus far. The following is a summary of what I learned:

• The incoming executive will be bringing strengths and competencies that are different from their predecessor. Those different strengths will bring different expectations of the leadership team and the broader culture.
• Transitions that are going smoothly have been well planned with Board of Directors involvement (where applicable) on the front-end. There has been collaboration during the transition period among some of the incoming executives with their predecessors. Some responsibilities are being transitioned quicker than others. In some cases, written communication is coming from both the incoming and outgoing leader - together for certain issues and then separate for issues that each is responsible for.
• These leaders are facing a challenge that their predecessors didn't have to face - the recession and having to maximize profitability during more challenging economic times.
• These new leaders are having to deal with a high level of uncertainty from the change to them as a new leader, possible changes to the leadership team and potential changes to the business strategy. The leaders also stated that they are dealing with their own uncertainty also -- from being out of their comfort zone in their new role.
• Incoming executives are seeing the need for meeting with managers/employees, being visible, answering questions and listening their observations/comments during informal communication. One leader discussed his 90 Day Plan and his focus on meetings with leadership team members to understand the current challenges/issues.

Goodfriend Recommendations - Effective Transitions For Incoming Executives

We recommend a "Parallel Change Model for Executive Transitions" for an incoming executive's transition activities – with a focus on the organizational/strategy change simultaneously with the development of a leadership team that works well together. The following are recommendations (from our leadership transition model) for the incoming executive:

Recommendation 1: Make a Great First Impression

Whether the incoming executive is getting a promotion from within the company or is hired from the outside, it will be important to make a great impression. Many people in the organization will make a judgment about the incoming executive based on their first impression or first significant amount of informal/formal communication about the individual. That initial communication needs to be crafted carefully and orchestrated to increase certainty and credibility. That communication needs to answer questions, not create questions.

Recommendation 2: Build the Relationship Between the Outgoing and Incoming Leader to Collectively Lead the Transition Process

The new leader and departing leader should build a transition relationship - a "team of two" to lead the transition. It should be a relationship that is trust-based and where the dignity and respect will be maintained for both the incoming and outgoing executive. The transition should be a collective responsibility -- not just of the incoming or outgoing executive. There should be opportunities for confidential dialogue and discussion about transition issues -- but with clear definition of responsibilities for decision, communications, etc. Both the incoming and outgoing executive should participate in the development of a transition plan because both have an interest in a smooth transition -- so they can collectively manage the transition according to the same plan and goal.

Recommendation 3: Conduct One-on-One Meetings with Direct Reports

Prior to handover of the role, the incoming executive should conduct one-on-ones with leadership team members (direct reports of the current executive) and other key managers/contributors. These one-on-ones will not only help the incoming executive gather information and understand the current state, but will also help build trust with those possible direct reports. This also helps cascade messages to other managers/employees - through those leadership team members. These one-on-ones could be done over breakfast or lunch outside the office if it is more appropriate to meet away from the office. They also can be done by phone if necessary.

Recommendation 4: Provide Regular and Frequent Opportunities for Two-Way Communication Between Employees/Managers and the New Leader Regarding the Company's Strategic and Organizational Challenges

People can make a lot of assumptions when there is no communication.

Two way communication opportunities allow both the leader and managers/employees to share information and learn from the other. The following could be the focus of these communications:

• The new vision and strategy
• Business, market or customer strategies/opportunities
• Product, service or process improvement opportunities
• Internal, organizational challenges

These two-way communications can be a real opportunity for the new leader and the employees/managers he/she will be leading. Here are a few tips for incoming leaders:

• Create certainty by communicating openly in areas that you are prepared to discuss. Acknowledge uncertainty when necessary.
• Be genuine in what you communicate. Show passion for what you believe in and the goals you set. This genuineness will create trust in you as a leader
• Follow through on what you communicate. People will be observing whether your follow-up actions are consistent with your words
• Ask questions, listen to observations. Asking questions and listening to responses is a show of respect. It shows you are interested in their views. Good talent, more often than not, will want to stay at a place where they feel like their ideas and perspectives are appreciated.

Recommendation 5: Form/Build the New Leadership Team as Soon as Possible

A leadership team with a new leader must be rebuilt -- where team members trust each other, are able to have productive debate, demonstrate their commitment to a plan, be accountable to each other and make the team's results more of a priority than individual status/ego.

Typical incoming leaders might do some behind the scenes development of their leadership team but much of the team development occurs after the leadership handover. This is a mistake in my opinion. There are several advantages to forming and developing the leadership team as quickly as possible during the transition:

• Time delays are usually a new leader's enemy when it comes to change. You want a leadership team that is ready and aligned with the new leader on Day One. Once the handover to the new leader occurs, the new leader has double the job than his/her predecessor - managing the company and the change.
• Informal communication between executive leaders and their direct reports can begin earlier if a common message can be communicated and acted upon by a leadership team that is on the same page with each other as well as their new leader
• A leadership team that is involved on the front end of the change will likely have more at stake and have more accountability when it comes to the execution of the change.

Recommendation 6: Produce and Communicate Short Term Wins

Short term wins increase the incoming leader's credibility and confidence. Some experts believe overinvesting in those early wins will result in a great long term return on the change effort. There are always low hanging fruit opportunities out there - it's just they always don't get focused on. One example was an incoming executive who stopped a corporate initiative that was seen as a huge time drain with not a lot of value added.

If you are an incoming executive, you may want to read a recently published book, "The New Leaders 100 Day Action Plan" by George Bradt, Jayme Check and Jorge Pedraza. Good luck with developing and executing your transition plan.