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CEO Quits Over Corporate Strategy Disagreements

I-Quit

Headlines often report CEO quits amid criticism. Not so often is the headline, CEO quits over disagreement with Chairman over corporate strategy implementation. CEOs quit when they are not able to carry out the job the way they see fit. Unplanned CEO departure can cause real problems for the Board of Directors and the executive management team.

CEO Departure Affects Company Stock Price

An unexpected unplanned CEO resignation is likely to affect stock price. Read here how a CEO Resignation affects a Company’s Stock Price. 10 CEO exit examples here show how they affected company shares.

Whether a CEO resignation affects company stock price depends on the seniority of the officer, the timing of the resignation, and the reasons for it. Board executive accountability requires transparency of reporting. Listed companies are therefore required to notify stockholders and stock exchanges when a senior executive resigns. CEO resignation may have a material impact on corporate performance.

The size of the company has an effect on the overall market reaction. For example, the departure of a Dow 30 CEO is likely to cause broad market turbulence, while the resignation of some other CEO is likely to be limited to the company’s stock price only.

Unplanned CEO Departure Affects Employee Morale

The chairman, or chairwoman, needs to encourage employee engagement of creative ideas. The CEO needs the chairman on board with business proposals. To avoid unplanned CEO departure, a chairman needs to support the CEO. To manage conflict in meetings. To foster and support the CEO to be an employee engagement champion.

Each CEO has their own unique behavior style. To engage employees the CEO cannot afford to be fettered or undermined by corporate strategy disagreements with the Chairman of the Board. It takes two to tango. Continued disagreement can affect morale on both sides. Sometimes it may even seem as if the Chairman needs training in dealing with difficult employees. When in reality the Chairman is not keeping in step with CEO modern momentum.

A generation gap can develop between the experienced Chairperson and the younger energetic CEO. The CEO may hold strong beliefs, pushing the business case and the employee engagement action plan..

CEO modern management training methods may differ from founding fathers of the business. If miscommunication and conflict results, it’s possible for a Chairman to develop a new communication style to support the CEO instead of having the CEO resign. Lack of executive flexibility can force a replacement CEO which affects employee morale.

The style and success of employee engagement is part of the culture of the business. Successful employee engagement starts with it’s business leaders. Employee engagement is a retention tool. Effective employee engagement takes the business case to a successful outcome.

An Employee Engagement Action Plan That Works

A good CEO employee engagement action plan is demonstrated by Dolf van den Brink, President and CEO Heineken USA.

A key element mentioned by Van Den Brink, relevant to Chairmen and Chairwomen, is “step back and allow my team to step up”. A Chairman actively listening to CEOs and senior executives is a successful communication ingredient for the CEO. When the CEO is listened to, a CEO with passion and preparation can propose, explain, and influence decisions for the employee engagement business case.

A key element mentioned by Van Den Brink, relevant to Chairmen and Chairwomen, is “step back and allow my team to step up”. A Chairman actively listening to CEOs and senior executives is a successful communication ingredient for the CEO. When the CEO is listened to, a CEO with passion and preparation can propose, explain, and influence decisions for the employee engagement business case.

An executive communication aid suggested by Van Den Brink is a games ritual for meetings to “stop beating a dead horse”. This colored card idea gives an opening to voice disagreement while limiting negative ramblings beyond productive listening.

Van Den Brink, CEO Heineken, values competence, collaboration and character in his executives. Backing the CEO, the Chairman also needs to encourage competence, collaboration and character at Board level.

As a CEO Van Den Brink recognizes the need for complete employee engagement by functional team interdependencies and collaboration. In turn, a CEO needs a collaborative Chairman to provide advice and feedback to energize organizational employee engagement.

Lastly, the CEO Heineken, makes a very good point about ego control. He looks for someone who has ambition and successful employee engagement to affect the bottom line. He seeks executives with their egos under control. He looks for executives with high ego. You want a CEO with high ego in your organization too.

However, a high ego without being able to show vulnerability, is one without ego control. A CEO with an ego under control and able to be vulnerable in communication allows others to experience them as authentic. Authenticity engenders trust.

An authentic CEO and an authentic Chairman are needed to develop trust between executives on the team. All organizations need trust in the team, with customers and suppliers, and between senior executives and financiers. A working relationship with trust and commitment, while encouraging authentic self-expression,  keeps a good CEO on board.

Transition and Succession in the Wake of CEO Departures

It’s smart business practice to continually develop talented executives for rapid senior-level executive promotion. Smart business leaders consider CEO succession planning such that an unexpected CEO departure will not leave a yawning gap at the corporate helm.

Planned development of CEO replacement leadership is always needed. This avoids corporations being unexpectedly forced to backtrack to former leaders should the CEO quit. Founding fathers, for example, who started the business 20 years ago, cannot provide the optimum by doing what was done before. The market has changed. The organization has changed. The name and industry sector may seem the same, but nothing is as it was 20 years ago. What gave success then worked in those circumstances. Organization and market needs today are different.

Successful CEO leadership today is not based on what was done before. With a suddent CEO departure, inexperienced senior executives cannot be expected to step up and perform as well as the CEO if they have been held back from leadership development training and development. In a interim CEO stopgap situation, other senior executives carry a greater work load, performing less efficientl. Costly is the impact is this kind of impact on the employee engagement cycle in the organization.

Prudent organizational planning has a transition plan ready to implement to assure investors and financiers in the event of unexpected CEO quit. After all, a CEO could be accidentally killed leading to an immediate CEO succession in any event.

The situation to avoid is the unplanned or sudden CEO departure which leaves a lack of confidence by investors and employees in a vacuum left at leadership level. When a CEO quits to spend time with family – really – the business can continue momentum with mature executive governance by the Chairman, Board Executives, and Senior Management.

CEO Quits Provides A Team Leadership Makeover Opportunity.

When key personnel quit suddenly this can be the opportunity to evaluate the team structure, review what’s working and not working, and replace the CEO leadership with an even better team fit than. Personality profile assessment, team feedback, and review of employee career development plans provides positive restructuring opportunities. As does review of the corporate strategy. Sometimes a different personality style CEO leader can better lead the next generation product and organizational development. Review why the CEO quit and find out lessons to be learned. Undertake Independent review, question previous assumptions, and ask objective questions to open up untapped potential. Team leadership makeover when the CEO quits can turn up a positive result.

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