This Growing Company Realized It Was Time for the Founder to Step Aside. Here's How They Made It Work. While no two companies are exactly alike, there is a somewhat systematic way to approach a leadership change.
By Wade Burgess and Eddie Lou Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
Changing the nameplate on your top executive's door is never easy. Even more difficult is when the previous CEO is also the founder and has a strong emotional connection to the company's mission and history. And far more complex is navigating that change while maintaining a sharp focus on customer relationships and company culture, all while continuing to please investors and move the business forward.
Related: What Happens When Founders Are Fired
Today we're happy to share that we're on the other side of that decision -- Wade Burgess, as the new CEO of Shiftgig, and Eddie Lou, as the founder, former CEO and current executive chairman.
While no two companies are exactly alike, there is a somewhat systematic way to approach a leadership change. In its simplest form, it boils down to three things: when, who and how. When is a leadership change necessary? Who is the right person for the job? And how can the process be seamless for both internal and external stakeholders?
When
When do you need to reconsider your CEO? Here are three places to start.
- The CEO's strengths don't match the company's needs.
- Expertise gaps go unfilled for too long.
- The industry is changing faster than the strategy and operations of the business.
Related: When and Why Co-Founders Should Stop Managing Their Company
No matter where a company is in its lifecycle, alignment between a CEO's skill set and the needs of the business is critical. That said, it's less black-and-white than it seems. A company's growth trajectory, pace of innovation, industry, agility, business strategy and culture are all important considerations when assessing CEO fit.
Often the CEO skill set required depends upon the phase a company is in. For example, a company prepared for rapid growth would likely need different skills from the top executive than a startup, turnaround or a business optimizing for margin expansion. In Shiftgig's case, Eddie's strengths in ideation, raising capital and getting a product to market with accelerated iterations were what the company needed to establish a solid footprint. To rapidly grow the company to its next stage, Wade's skills in strategically scaling a global HR technology business made this a logical leadership transition.
No one individual can perfectly meet all business needs for a company's entire lifecycle. For that reason, the best CEOs understand at all times where they're providing the most value and what gaps might exist. This is where the rest of the leadership team comes in; in essence, to fill those gaps to ensure business continuity.
As a company grows and evolves, the entire leadership team does as well, stretching to meet new needs and demands. The right CEO can anticipate these changes, adjust the business strategy and operational alignment to pivot if necessary.
Related: Why a C-Suite Shakeup Is Exactly What Your Company Needs
Who
Once it has been established that a leadership change is in the best interest of the company, there are many different ways to go about finding a new CEO. While each search is unique -- and rightfully so -- they all should begin with the same question: Where does the company need to go next?
Finding the person best suited to lead a company to that destination isn't without roadblocks. In Shiftgig's case, there wasn't a time restraint on when a new CEO would join the company so the decision-making team had the flexibility to wait until the right candidate came along. Eddie searched for nearly two years to find the perfect candidate. However, with that came the need to be patient and make tough decisions in turning down qualified candidates with the hope that a perfect fit was out there.
Don't hire someone without a string of commonality to the business -- hire the person who has the experience to take the company to the next level. Don't get caught up in a candidate's accomplishments. They mean little if they can't be replicated from one business context to another. Don't compare and contrast candidates against the outgoing CEO. This one can be difficult, but once a decision is made to replace a leader, it's best to keep looking forward.
CEO candidates can be evaluated on any number of criteria, but there are three that stand out.
Do consider how well his or her strengths address the business needs and leadership team's gaps. Do make sure the candidate is respectful of the company's history and passionate about carrying out the vision. Do look for a new leader to have the ability to inspire others around him or her -- change is always difficult, and this trait will be key to a successful transition.
Related: 5 Reasons Why I Quit My Own Business to Work for Someone Else
How
While there are many moving parts to a leadership change, proactive, consistent communication is fundamental to the transition's success.
Today's CEOs are leading organizations that look much different than they did just a few years ago. Employees no longer stay with the same company for decades – hence the reason why Shiftgig even exists in the first place. That also means that today's employees expect more change, and are more equipped to handle it.
It's not uncommon for a new CEO to fail, and poor communication is often the culprit. A well-communicated succession plan can help secure buy-in and inspire confidence rather than instill fear within employees, customers, board members and investors. And with everyone aligned, a leadership change can even serve as a springboard for business success.
Today's currency isn't salary, benefits or vacation days -- it's relationships. Never is this more apparent than when a new CEO takes the helm. A new leader should keep in mind that younger generations -- now the majority of the workforce -- value transparency and honesty. How he or she communicates should reflect that, and share themselves and not their resume.
Related: If You Don't Want to Be Fired From Your Startup, Founders Should Remember These 3 Things
At Shiftgig the outgoing and incoming CEO jointly hosted a fireside chat a few weeks prior to the official transition, in an effort to ensure employees felt involved and valued throughout the process. We work hard to prioritize transparency and take cues from employees by doing things like holding a bi-weekly all hands meeting to update the company on where we're going as a business and open up the floor for questions and suggestions.
Now a few months after our leadership transition, we owe a large part of our success to following a systematic approach with a clear communication strategy. By sticking to the plan and staying on the same page, we were able to avoid the tumult that can accompany some leadership changes and cause them to fail.
