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Suddenly CEO.

An interim CEO may face a whirlwind of changes in a short period of time. Three executives offer advice on approaching transitional management.

Imagine that the staff position of chief executive officer at your organization suddenly becomes vacant due to unforeseen circumstances, personal or professional. Someone must fill in until a permanent replacement can be found. Maybe an outside consultant will be hired, or someone within the association will be asked to shoulder additional responsibilities during the CEO search. No matter which scenario, chances are that the interim CEO won't have much time to prepare for the role.

Whether you're a staff person bumped up to CEO for the interim only or a potential candidate for a full-time CEO position, this article provides a range of perspectives and some advice about what to expect during transitional management. Three individuals who served as interim CEO share suggestions for getting the most out of this temporary role--and for being of greatest assistance to the association during a time of transition. These suggestions can also benefit you if you are new to a permanent CEO position. If you are suddenly CEO at a new association, many of the transitional lessons discussed here no doubt will apply.

Taking charge temporarily

After four years with the American Health Lawyers Association, Washington, D.C., Wayne Miller, CAE, was asked to act as CEO until a full-time replacement from within the health industry could be found for the outgoing chief staff executive. Miller would take on the additional responsibilities for several months, in addition to performing his regular duties as director of finance and administration.

"My expectations were to keep things running and to work with the senior management team to keep operations of the association continuing in an uninterrupted way during the transition," he recalls. "It was a lot more work than I thought it would be, but because we had a strong senior management team, I think it went very smoothly."

Miller, who served in this capacity for six months, points out the benefits of acting as interim CEO within an organization, even when there's no possibility of a promotion to the full-time position. "I was able to learn more about the other areas of the association and how they interact with the board," he says, adding that he enhanced his relationship with other committees as well as the board. "From an association management perspective, it was a good opportunity to broaden my education and expand my experience for future opportunities."

In Miller's case, the process was amicable because his colleagues were involved in selecting him for the interim position. There were no feelings of ill will on the part of the staff about his being chosen.

Double duty

Miller cautions that accepting the responsibilities of CEO in addition to your existing duties can be overwhelming. "I was anxious to catch up with the work I had to leave," he admits. He underestimated the increase in his workload, which was fairly significant.

On the other hand, there can be great benefits. Miller mentions that the opportunity to take on new challenges led him to think about ways to broaden his responsibilities in the future. Another benefit he cites is the flexible nature of the temporary role. "I knew I could experiment," he says. "I was able to take more risks than I could have if it had been a longer-term type of assignment."

Lightening the load

When the permanent CEO came on board, Miller, along with the rest of the senior staff, spent time orienting their new top executive. "It's been a very smooth transition," Miller says, made easier by the fact that the new CEO can turn to Miller with any questions.

Miller advises individuals in a similar situation to be as open as possible. "During the first six months to a year, it is extremely important for the CEO to know who to turn to on staff to keep particular functional areas going," he says, "especially while the new CEO learns how all the activities operate and interrelate."

Miller also points out the learning period needed for the new CEO to understand each person's role within the association. "Morale issues usually exist with the changing of CEOs, and it can be difficult for staff to adapt to a new leadership style," he says. "The new executive should take early steps to put staff at ease and help them look to the future in a positive way."

Moving on up

When the CEO of the American Physical Therapy Association, Alexandria, Virginia, resigned, the organization turned to a longtime employee to fill the role temporarily. Frank Mallon, who was senior vice president for health policy and the in-house counsel at the time, had been on staff for 12 years and would act as executive for six months while the association conducted a search for a permanent chief staff executive. "At the time, I wasn't thinking about anything except the interim role, but then in the next month or two, I decided to apply," Mallon says, noting that he recognized the opportunity to step into a different position of leadership.

Mallon believes that coming from within the organization gave him an advantage in the competition for the permanent position. "I was familiar with the issues and the leadership, and that made a big difference," he says. "If somebody had come in from the outside, that person wouldn't have been in the same position I was in terms of knowing how the organization works." Continuity was also an important factor--the association was running well and wasn't in need of drastic change.

Building relationships

As someone at the senior level who was already involved in top-decision making, Mallon says the move to interim CEO wasn't a huge jump. "Once I got into the position and looked at the possibility of applying, I felt it was something I could handle," he says. "I realized that I could contribute even more to the association."

Although your strengths as well as your weaknesses are known ahead of time, Mallon says having an existing relationship with the board was an asset in his situation. "There was a certain degree of trust and confidence that the leadership had in the decision to put me in that position," he notes, which helped make the experience a positive one.

But it takes work to maintain that trust and support. "Building relationships is a major part of a CEO's function," Mallon emphasizes. "You've got to be able to communicate on a lot of different levels, and you have to put in the time and do your homework. A willingness to do these things will strengthen your relationships and will result in the trust you need to make [top leadership] a good experience."

Making the transition

Like Miller, Mallon had dual responsibilities in the six-month interim period. "When somebody who is basically a senior vice president becomes CEO, there's a rearrangement in how people interact and relate to one another," Mallon comments. "I think we were able to make that transition occur in a way that was very effective and fairly smooth."

He cautions that accepting a new role with more authority can lead to a sensitive situation. "I was a senior vice president, and there were five others," he says. "All of a sudden, I'm their boss. There has to be openness and patience. People need time when a relationship changes that dramatically."

In addition to being aware of changing relationships, a new CEO must be able to get a sense of his or her environment quickly. "Some people feel the need to make a mark early, but if the situation doesn't require it, that can be a big mistake," he explains. "Reading the environment early on is critical."

Importing an interim

For Pat Nichols, the messier the situation, the better. Nichols acts as an interim CEO through Transition Leadership International, Washington, D.C. He seeks out organizations that are experiencing a major transition, such as a startup or a merger, and has worked for policy institutes, think tanks, trade organizations, and other nonprofit organizations.

"In my case, they'll be looking for somebody with special skills in dealing with a major crisis or transition," he explains. "They're looking for somebody who can get through a turnaround or clarify the direction of a startup or get a business infrastructure in place." As someone in a transitional management position, Nichols says it is important to reassure staff and to send a message that you expect them to succeed. He has served as interim CEO six times, with the average length of an engagement a little less than a year. Nichols's work with a startup foundation supporting innovative cancer research is a particularly good example of the types of changes Nichols tends to manage--the types of challenges that often await a new CEO, whether in an interim or new, permanent role. "My role was to help the foundation find its niche and get the foundation moving to build core relationships quickly," he says.

If you are coming into an organization cold, Nichols recommends working with the board and staff to identify expectations. "The crucial thing is to minimize uncertainty," he says.

Preparing to play the part

Although finding someone within an organization to act as interim CEO has clear advantages, Nichols says associations also have much to gain from hiring an outside leader. "They get someone who can draw on experiences from other organizations and take some of the pain away," he points out. "The [new CEO] can come into an environment in which some of the tough choices have been made, and he or she doesn't carry the baggage."

With limited knowledge of the issues when he comes into an association--just as a CEO who starts a new, permanent position would have--Nichols often prepares for his role quickly. He does so by identifying these three categories:

* issues on which there is some strategic consensus;

* areas in which it is crucial that the board arrive at a consensus; and

* issues that must be faced irrespective of the strategy.

Once that is done, Nichols's first action as interim CEO is to set short-term goals. "That conveys to everybody--from the board to the membership to the staff--that the new leader has the ability to produce movement," he says. "And it lets you build consensus around movement."

He also tries to meet with all board members on their own turf soon after he arrives. "There is an impulse to make that first meeting a show-and-tell session," he warns. "I think that's the wrong approach. For me, it works better to make that a listening session."

Handling sticky situations

With any organization experiencing transition, it's likely that roadblocks will pop up. Nichols notes that he's open with the board about any mess he finds, "and I'm careful to do it in a way that doesn't blame. Don't kick sand at the departed predecessor," he advises, "but be clear about the issues you've identified. A diplomatic but candid approach will earn you points for dignity."

Another potentially sensitive area involves discussing staff performance with board members. Nichols doesn't have any reservations about doing so, but cautions that such conversations can easily turn into gripe sessions if you don't remember to emphasize the positive.

Member relations can suffer during times of change as well. "To interim management in general, one of the disadvantages is that the strategic issues tend not to get much attention," Nichols says. "You may be forcing change very quickly and not giving the organization an opportunity to adjust gradually. You may find at the end of the process that you re significantly disconnected from the members. That's a peril the CEO must be very careful to minimize."

Making an exit

Once a permanent CEO is hired, the duties of the interim CEO--whether an outsider or a staff person serving temporarily--do not end immediately. Ensuring a smooth transition is a crucial task.

If you are involved in the selection process, Nichols suggests, "make sure that the new CEO is a person who can provide continuity. The best circumstance in my mind is that the new CEO and transitional CEO are there together for about a month."

It's also imperative that you send a signal to the staff that you are no longer the boss, he emphasizes. "You have to be able to submerge your ego and not create confusion. If you stay beyond 30 days, that confusion is inevitable."

Jane Eisinger is assistant editor of ASSSOCATION MANAGEMENT.

Points to Agree Upon

GARY JAY KUSHNER

KYRA A. TODD

The key to a successful and mutually beneficial interim CEO-association relationship is a clear delineation of responsibilities and expectations up front, some careful negotiation, and a dose of common sense.

The first step is to come to a realistic understanding of the association's expectations. Is the association intending to

* hire you as the next CEO;

* hire you solely as an interim CEO while the organization searches for someone else to fill the permanent position; or

* consider you in addition to other candidates as the next CEO?

Write things down

Next, although not all association CEOs are under contract, it is important that an interim CEO negotiate a written agreement that sets forth principal duties and powers, as well as any specific limitations on the interim CEO's authority. The agreement needs to include instances in which approval from the association's governing body is needed, plus any special missions the interim CEO is expected to carry out, such as leading the search for the new CEO. The agreement also needs to spell out economic terms and benefits for the period of anticipated service. In addition to a written agreement, the governing body should officially recognize through a board resolution that the interim CEO has been appointed to that position.

The specific terms of employment differ depending on individual circumstances. If you expect to be hired and have been groomed as the next CEO, you would probably ask for the full pay and benefits of CEO from the moment you take on interim responsibilities. You may also wish to have stated in writing that the association intends to offer you the permanent position subject to contract negotiations.

Consider a bonus

If you know that you will be accepting this responsibility only on an interim basis, you might seek, in addition to the CEO salary and benefits, a bonus that would reflect the type of monetary benefits that accrue to a permanent CEO. In this situation, it is more crucial than ever to secure a written understanding, because--unlike the interim CEO who is likely to take up permanent residence--you may not be expected to carry the full responsibilities of a CEO.

Think about leaving

Because of the short-term nature of this position and the uncertainties that go along with it, the written agreement needs to provide for a severance plan, in the event that the association finds a permanent CEO sooner than expected. Likewise, you may wish to negotiate the ability to terminate the contract with notice to take a permanent position elsewhere. Or, you may wish to arrange for other employment within the association after you complete your service as interim CEO.

But what if you stay?

Perhaps the most difficult situation is the one in which the interim CEO is one of many candidates for the permanent office. As an interim CEO, you will have the opportunity to display your many talents, but you may feel restricted in taking a strong bargaining position for fear that being overly aggressive will jeopardize the viability of your candidacy.

One of the most important things to negotiate is your continued future at the association, which becomes vulnerable if the association chooses someone else for the CEO position. A new CEO may view you as a threat to his or her status. Moreover, the association's decision to hire someone else could affect your credibility within the association and in the job market. While you deserve to be compensated with the salary and benefits that come with CEO status, it is also imperative that you take steps to ensure your future employment.

Even the initial decision to take the interim CEO position can be tricky. As with any deal you negotiate, before accepting the position make sure you have a clear idea of what the association is looking for and how you can benefit from it.

Gary Jay Kushner is a partner in the law firm of Hogan & Hartson L.L.P, Washington, D.C. Kyra A. Todd is an associate with the firm.
COPYRIGHT 2000 American Society of Association Executives
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Author:EISINGER, JANE
Publication:Association Management
Geographic Code:1USA
Date:Mar 1, 2000
Words:2762
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