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Sunday, 7 May 2017

Moving From CEO To Chairman? You Have To Stop Interfering!

One of the most difficult and often painful decisions any leader has to make is when to move aside and let the younger generation take over.

This is particularly significant if the leader is an owner manager of a business and even more so for the founder.

Over the years with Vistage I have seen many examples of the consequences of this quandary, some good and some very bad indeed.

On the face of it the solution is simple.  Just move up from being a full-time CEO and promote yourself to be Chairman preferably non-executive. At the same time the question of the shareholdings needs to be addressed.

Would that it were so simple. I remember a situation where this happened after the owner had given his two sons 50/50 control of the shares via a trust and he moved to be a very non-executive director.

An excellent solution one would think. He still popped into the business occasionally and pottered about dispensing the wisdom of many years to all and sundry and that made him happy.   

However on occasions he might just offer an opinion that went contrary to that of the sons and because he was who he was his opinion tended to be viewed as a directive and that caused friction.

Eventually he realised the difficulty and retired completely and that solved the issue.

The point to emphasise is that the roles of CEO and Chairman are vastly different and each one must be defined and strictly adhered to.

A good scheme is to appoint a short term trusted advisor to act as moderator and to see fair play is maintained.

The real problem is that there is usually a strong emotional bond that needs to be severed and that is where the pain comes in.  

I have seen examples of a Chairman honestly trying to pull back to allow the successors a free rein but succumbing  to the lure of  being needed and frankly, interfering.

Conversely there is the example of an owner who passed the business on to his son, kept out of the way and allowed him all the freedom that he wanted. Good on him, I hear you say, but he retained all the shares in the business and had “little chats” with the son from time to time. Result?  Irritation and frustration.

There are two major issues here. One is the question of planned succession and the other is how to cope with the psychological and emotional trauma of apparently no longer being needed. You can only play so much golf before the novelty wears off.

Planning the succession needs to be started at the earliest possible stage so that everyone is well aware of who will take over and when it is likely to happen.  The big decision must be, what is the new life going to look like?

It takes a strong will to refrain from interference. To avoid that potential pitfall planning the next phase of your life is essential. You need to know what you intend to do - in other words renew your dreams and design a new and exciting future.

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