Sirajuddin Aziz
If leadership transitions in the political arena are full of intrigue, diabolical machinations, and deceitful manipulations, the story in the corporate sector is no different. In fact, the ruthlessness of backstabbing is equally lethal, if not more deadly, in the corporate world.
This turmoil during transitions largely stems from the absence of a well-documented and thoughtfully designed succession policy. Even when such a policy exists, a change in mindset often provokes violations of its principles.
The reasons for leadership change in the corporate environment are many — from failure to meet business expectations to issues of morality, integrity, and ethics. If it is the latter, the organisation pays a heavy price, facing setbacks caused by the distrust of market participants.
Transitions in leadership must meet the test of purpose — what newness is expected, how plans will be developed and executed, and how turbulence will be managed. The possibilities must be examined, evaluated, and documented to ensure a smooth transfer of power.
Leadership transitions are both an opportunity and a challenge. A successful handover demands meticulous planning, engagement, and communication with all stakeholders, employees being the most important. Only when this process is carried out systematically can trust between the new leader and staff be built and strengthened.
Leadership changes are fraught with risks of disruption, especially if the nominee is ill-prepared. Camaraderie between colleagues also takes a serious jolt when a leader changes. It is therefore imperative that transitions are well-prepared, starting from socialising the idea to the uneventful exit of the serving leader.
Most succession policies assume an organic change of guard — an individual from within is identified and groomed to assume leadership in future. Many organisations prefer internal generation of human resources to fill vacancies across the hierarchy, including senior management positions. The advantages are many: the designate does not need time to acclimatise, is already known to all, and can be functional from the first day. Familiarity with the vision, business plans, and growth strategies makes for a strong case for promoting from within. Knowledge of internal dynamics saves time and eliminates the need to train a newcomer.
Some Boards, however, prefer parachuting in a new person, fearing internal elevation may mean continuity of the past. It is assumed that anyone who has grown under the departing leader will follow the same path, bringing no new initiatives.
When a leader is brought in from outside, the incumbent CEO is often not consulted. A flawed and thrill-seeking local management culture tends to surprise the leader that a replacement has already been found. What could be beneficial instead is an open, consultative dialogue with the current leader on who and when the Board intends to appoint a successor.
In Pakistan’s corporate culture, especially in family-owned organisations, leadership transitions are often done surreptitiously. Sometimes, it feels like a painful stab in the back by the very Board that once eulogised the leader’s performance. All philosophies of a caring, family-oriented corporate culture vanish in an instant.
Most management gurus believe the best time to change a leader is at the end or beginning of a financial year. Both incoming and outgoing leaders then get fair opportunity — the latter to take credit for past performance, the former to own the new accounting cycle. There is, however, no fixed rule; some organisations make changes mid-year, usually in response to unforeseen events.
The nominee must also prepare adequately to gain the support of not only the nominating Board but also the staff, and have a standing of repute with the relevant regulator.
In rare cases, Boards replace a well-performing CEO to avoid becoming hostage to one person’s influence — a malaise typical of owner-operated entities.
Transition plans should be discussed openly with senior management to ensure acceptance across the hierarchy. An enlightened leader ensures there is no witch-hunt or Spanish inquisition against loyalists of the outgoing head.
The handshake between the outgoing and incoming leaders must rest on grace, decency, respect, and mutual regard. Anything less deeply affects the organisation’s culture and morale. If the incoming leader arrives with a victor’s mindset, casting the outgoing as the vanquished, it breeds silent resentment — to the ultimate peril of the institution.
While leadership transitions are inevitable, their outcomes remain unpredictable. It is therefore vital to monitor and orchestrate the change carefully — to keep the music going.
The writer is a Senior Banker & Freelance Columnist.
