Taking over for a founder-CEO presents a rare opportunity and is a challenging type of succession. It’s hard enough to replace a CEO, but there’s an extra degree of difficulty when you’re a new CEO following immediately in the footsteps of a founder.
5 Things to Deal With When You’re the Second CEO
- Building trust with employees.
- Creating and communicating a plan for the company.
- Deciding what, if anything, to do with the leadership team.
- Prioritizing your health.
- Coping with changes in your social life.
The difficulty in pulling this off involves elements of personality, culture and history that can easily derail the entire transition if they aren’t handled well. If the founder is going to continue to be involved in the company, the resulting dynamic can be even more challenging.
Many founders are dynamic, charismatic, engaging and inspiring — seemingly larger than life at their company. They are a tough act to follow. But many aren’t classically trained in running a business. In fact, part of their DNA is the ability to start a business and solve a problem. Many of them often wish they didn’t have to operate and manage the company they started. But what they lack in training they make up for in vision and ideas.
The growth and success of the company hinges on getting this transition right. Jobs, work relationships, financials, business success and the stress on the families of those involved are all more fragile than you might think, and succession makes them all extremely vulnerable. When you’re following a founder as the new CEO, you will encounter several transitions. Here are five to expect and strategies for dealing with them.
Building Trust With Employees
What you say and how well you listen and learn are huge factors in the process of establishing trust — a must in your first few months as CEO. People won’t follow someone they don’t trust.
In your early days, it’s a good idea to embark on a listening tour. You should be asking five questions for every statement you make because it’s too early to claim expertise on anything. Your listening tour involves learning what your employees, customers, board members and even the competition think about your company.
The intention is not to change anything (yet) but to get the lay of the land. You’re going to have structured conversations with each functional leader and present what you’ve learned. You want total transparency about what you’re doing and what’s going to happen with their input and the wisdom they’ve accumulated. They need to know you’ve heard them.
After your first 90 days as the new CEO, you should know the company’s values and have a better awareness of its culture. In the process of learning those things, employees will feel like you've gotten to know them better and understand what they care about.
Devising a Plan for the Company
If you are an internal candidate promoted to CEO, it’s easy to overlook having a plan. You know the founder and you’ve seen them work, so you think you know the job, but watching someone do something is different from doing it yourself.
Having a plan as the new CEO is essential, whether you’re an internal or external hire. Everyone needs to know you have a plan for the first year, what that plan is and how it can make the company better. The company’s values might need to be revised. A key part of your transition into the CEO role is learning what you need in a team, which might be different from what the founder needed.
You need to execute in a way that supports relationships and professionalizes the business while accelerating scale. These days, it’s far more important to be a CEO people want to work for than it was in the past. What kind of culture do you want to create? If you’re an internal hire, how are you going to handle the relationships you had with coworkers now that you’re their boss?
It’s common for CEOs who were promoted from within to feel a shift in the way people speak to them compared with before. It’s your job to be as disarming as possible. You don’t need an inauthentic environment where people want to be on their best behavior. Look at yourself as just another team member with different responsibilities. CEOs must be able to provide people with the means and opportunity to bring their best selves to work.
Rethinking the Leadership Team
It’s not the worst thing for an incoming CEO succeeding a founder to choose a new leadership team or to replace some of the current team. Some newly minted CEOs focus on swapping out every person immediately, and some don’t prioritize that for good reasons. The reason for the immediate swap is: Why waste time getting into a groove with people who aren’t your people?
Furthermore, starting with a clean slate prevents gossip carryover from the founder’s tenure, which can be toxic and time-wasting. For now, realize that if the leadership team is going to be there for a while, integrating a new person takes time and energy. Relationships don’t always magically settle into a healthy groove.
Prioritizing Your Well-Being
Transitions take mental, emotional and physical energy, and you can easily get run down after the initial adrenaline and dopamine wear off. If you don’t have good sleep hygiene, prioritize that, as few people can function optimally when they are under-slept.
In my first year as a CEO following a founder’s exit, we had a debt payment due every month, and I felt this massive amount of pressure that negatively affected my sleep. I would wake up at 2 a.m. with 37 things on my mind and thinking, “I gotta do this, I gotta do that.” It was awful. You have to have something you do to decompress and center yourself. Otherwise, it can really be tough on your mind and body.
Dealing With Your Changing Social Life
Be on the lookout for things to change for you socially. You have a new peer group. New people come out of the woodwork when you become CEO. You’ll be invited to exclusive events, you’ll be contacted by nonprofits and other CEOs will reach out for a variety of reasons. It all might feel good and make you feel important, but don’t allow yourself to get distracted by all the new attention.
Business leadership isn’t a marathon; it’s a relay race. The first person to hold and pass the baton is the founder, and that person is qualitatively different from the successor CEO. Whether the handoff is done well is largely based on how you, the second CEO, handle it.
