How a company and its board of directors announce a leadership change matters just as much as who is chosen. The ideal successor, announced incorrectly, still looks like chaos. Conversely, a well-handled messy CEO transition is a barometer for board credibility.

Do the groundwork early

Communicating a management change begins long before an actual announcement. Constructing the right leadership team and ensuring an appropriate breadth of talent is a core board mandate, and how that is messaged should be baked into ongoing IR practices, not assembled once a transition becomes real.

To gauge how plugged in it is, corporate boards should be asking themselves a few hard questions:

• Do board members participate in shareholder meetings with index funds and top active holders?
• How often does the board get direct temperature checks from the CFO or – equally as important – the IRO?
• Does the Street know who the logical #2 or #3 to the CEO is?
• Does the board feel prepared if it had to execute a transition plan in short order?

Beyond board involvement, getting the Street accustomed to seeing and hearing from fellow executives, not just the CEO, as part of normal course IR events (earnings calls, roadshows, and investor days) pays off double: it provides a view into the bench of talent supporting the CEO, and it preps the C-suite for interfacing with the Street before they may be asked to do it under pressure.

Sound human

People (and reporters) are getting better at spotting canned or AI-sounding language. Generic phrases (think: “transformative leader” or “beloved by the team”) read as empty corporate-speak.

Specific, honest details – as well as acknowledging any difficulties that may exist – land better with all audiences and can reduce speculation about the board’s intent.

Map and sequence priority audiences and take action to engage them in ways that feel tangible. High production values can cut both ways: while it may come off looking well-orchestrated, is there a cost to authenticity? An employee town hall with real access and Q&A can help ease concerns, and personal phone calls to key stakeholders can help build confidence in the new leader.

And, in the case of a founder transitioning out of leadership, followers of the story will want as much transparency on what the founder is doing next – even if it has nothing to do with the company – as they will want to know who is taking over.

After Day One, keep going

It takes a lot of work to get to an announcement, and then the real work begins. Keep a tight feedback loop with investor relations on how the announcement is landing, build out a robust 100-day plan that touches all stakeholders, and prepare (and pressure test) for their first earnings as CEO. Finally, ensure the chosen leader is ready to answer: 1) For internal successors: You already have the playbook, what do you intend to change as CEO? Or 2) for external candidates: What are your unvarnished observations and what’s your plan to address them?

Ultimately, the board owns the leadership transition. And while shareholders only see the public communication, they expect that a board dedicates real time to the topic. How it plays out publicly is how they’ll judge the effectiveness of that process.

Jim Golden is a Founding Partner at Collected Strategies. Over his 20+ year career, Jim has counseled hundreds of public companies with high-stakes crises, contested annual elections, management turnover, and M&A. He regularly advises companies on short attacks and shareholder activism threats. Jim was named to PRWeek’s 40 Under 40 list in 2019. He can be reached at jim@collectedstrategies.com.