Navigating the next wave of C-Suite changes – Melissa Reed

There is no doubt at all that 2021 will be recorded as one of the most turbulent in recent memory, but brace yourself now as the biggest wave of C-Suite change is about to start, as the final piece in the talent jigsaw – the CEO – starts to move.

Recent months have given us some stark contrasts of how well (or not) this has been handled by boards. Back in June, Burberry CEO Marco Gobbetti resigned suddenly, taking the fashion label by surprise and leading to an 8.7% drop in share price as the markets responded to an unfinished turnaround and no obvious succession plan. A hastily put together search concluded several months later with the well-received appointment of Jonathan Akeryod from Versace and so the musical chairs began with the appointment of Cedric Wilmotte as Interim CEO, as a search for Akeryod’s permanent successor plays out.

A similarly unexpected, albeit no less abrupt, announcement occurred in October with the exit of Nick Beighton, long-term CEO at Asos and a resulting 17% drop in share price which left shareholders reeling. This was not a masterclass in how to handle a CEO exit and the exit of a popular CEO both internally and externally at that. Falling between a change in Chairman – the situation quite rightly attracted a lot of market attention and speculation. Despite the outgoing Chair, Adam Crozier commenting, “there is never a good time to make a change like this,” a lack of an obvious internal successor or advanced search process would clearly suggest this was indeed a bad time to make a change.

Further disarray can be seen in the boardroom over at Clarks (again) with the sudden exit of Victor Luis who had been in place less than a year, creating yet more instability at the footwear retailer. Contrast this with the seemingly orderly announcement and exit of FTSE250 CEO Peter Pritchard over at Pets at Home, with a robust search process and sedate planned transition.

Whilst there are many reasons for CEO changes both individually and corporately – what is clear is that many companies are likely to face a similar challenge in the coming months.

In early 2021, there were unsurprisingly fewer moves at c-suite level than in a non-pandemic market. Whilst the phenomena of the “great resignation” has been impacting companies without discrimination, this has typically been below c-level unless you happen to be a Chief Digital or Chief Financial Officer, in which case your skills have never been in greater demand.

On the whole, boards have looked to protect their leaders during the dark days of the pandemic as they needed strong corporate knowledge and experience to provide consistency and stability in the most unstable of environments, as well as sending signals of trust to the wider organisation that they are a business that looks after its people.

Equally, company leaders remained loyal to lead their businesses through the crisis – many delaying making a planned change, while also being put off by the increased risk of making a move in an uncertain market.

Now the immediate crisis is passing, operating model changes and resulting restructures have been implemented, the domino effect is now reaching the most senior of boardroom conversations. There is a recognised need to augment certain key functions which were exposed during the height of the pandemic and moving on leaders who haven’t sufficiently rescued business performance as boards demand.

With a rewriting of strategic business plans, CEO’s have to decide whether they are prepared to commit for many more years to see altered plans through, or to use this as an opportunity for change. Whether that’s a rebalancing of work and lifestyle, an opportunity to relocate back home (an increasing trend amongst the previously globally mobile), moving to a plural portfolio career or just taking on a new executive role, we know that 2022 is going to see yet more significant organisational change. It is also worth bearing in mind that with a single CEO change comes a ripple effect as they look to create their own teams and structures.

Will there be a new war for talent with the best more in demand than ever?

The short answer is yes. CEO’s who excelled during the pandemic can point to tangible results and recovery, whilst bright new stars have stepped forward and become more visible.

There will also be more first-time CEO’s appointed as businesses search for freshness and a new dynamic, in part because the pool of experienced, available CEO’s, is likely to decrease their options.

Armed with this knowledge what can companies do to mitigate the effects of this tidal wave of turnover?

• Building internal succession is key, yet many companies still fail to be proactive and give themselves options in the wake of resignations. Every search conversation should ask “can this person be a future CEO?”.

• Prioritise good communication when a leader exits as it can destabilise an entire organisation and trigger others to consider their own positions.

• Focus on retention and ask these questions – do you have credible, achievable development plans in place? Is your compensation structure evolved to be competitive and is your culture one that people genuinely want to be part of? Otherwise you make it easy for them to pick up when the phone rings.

These measures are simply good practice in good times and in bad but it’s easy for them to slip off the agenda in the current pressured atmosphere. But with an unprecedented number of CEO moves likely to occur over the next few months, it’s the hottest seat in town.

Please feel free to contact me directly to discuss any of the topics in this article.

Melissa Reed