Senior Advisor Noah Hanft is joined by Bart Schwartz, partner at Wilkie Farr & Gallagher and former General Counsel of Assurant, Inc., and Susan Blount, former Executive Vice President and General Counsel, Prudential Financial, Inc., in an online forum. They discuss the special challenges faced by GCs when a new CEO comes on board, and the best way to establish a strong working relationship right from day one.
Below are highlights from the webinar. To learn more, the video recording, and podcast are available on this page.
The average tenure of a CEO is 10 years and the average tenure of a General Counsel is six years, so many GCs are likely to face a CEO transition during their time in an organization. However, surviving a new CEO is not a given. Research indicates that executives and senior management are vulnerable when a new CEO takes office, and aside from the Chief Marketing officer, the General Counsel is the next most vulnerable member of the team. Here are steps you can take to make a CEO transition a win-win for both you and the CEO.
Some boards are not subtle in showing their frustration with the CEO, but the General Counsel needs to distinguish between occasional friction and real warning signs.
“The General Counsel needs to be a keen observer as to what's really going on at the board level.”
— Noah Hanft
Recognize that there is a certain sensitivity about the relationship between a CEO and their board, particularly with the chair or lead director. When there is tension, a General Counsel should get involved. Find a way to moderate the differences.
“If you're not sure if the board is reading the CEO correctly, or vice versa, but you've had the benefit of quietly watching the two sides sparring in the boardroom, I think it would be malpractice - using that word colloquially - not to, at a minimum, talk to the CEO and find a way to enter into that conversation.”
— Susan Blount
CEOs can get their feelings hurt, too, so be diplomatic when raising the issue and be sensitive to the timing of your conversation. Diplomacy and mediation skills really come in handy in these types of situations.
A CEO tells you in confidence that they are looking to leave and actively interviewing. Or, the lead director tells you confidentially that because of the CEO’s failure to make management changes, the board is dissatisfied and is considering a change. In these situations, do you remain loyal to your boss, to the CEO, or to the board?
“This has to do with much of the relationship between the board and the CEO, and the General Counsel is kind of in the middle. Professionalism, openness, transparency within the limits of what's appropriate, and promotion of that between the board and the CEO - to me that was the only way to go. And I had pretty good success with it.”
— Bart Schwartz
A strong board can conduct a search without the GC in the room and work with other executives, but a GC that gets involved early in conversations with the board chair and the head of HR can become the management liaison. The GC, however, has an additional obligation to serve in a counseling role. They must:
Once the search process is underway, there are often internal candidates that the GC may like and respect. During this process, the GC can be friendly but needs to keep them at arm’s length. For example, never give an internal candidate the impression that they, or anyone else, have the inside track, and never have offline discussions about the CEO selection process with others in the C-Suite. It is a tricky process, but even-handedness and professionalism are paramount and probably understood by those you’re close to without the need to articulate the rules of the road.
Once the new CEO is named, reach out to begin building your relationship. With an inside placement, you can offer your congratulations and schedule a meeting as you likely already have a relationship. For an external placement, do some of your own research on them, introduce yourself, and let them know how you can be helpful to them during the transition.
When a new CEO starts, lots goes through the mind of a GC including:
Orienting the new CEO can be an important role for the new GC. An internal candidate has never been a CEO before and even if they have interacted with the board, they don’t have knowledge of the underlying mechanics of the board process. The GC can provide that background and explain how it relates to strategy and legal compliance. Strive to make the new CEO look as good as possible in front of the board. This transition gives the existing GC a real opportunity to show the new CEO the value of their support.
The quickest way to earn the confidence of the new CEO is to focus on them instead of yourself. Help the new CEO understand their biggest challenges and make it clear that you're trying to assist them in any way you can. It is a very important time to establish trust and assurance that you're there to work with them and help them serve the company. Embrace their vision for the company, establishing right off the bat that you are a team player and that they can rely on you.
A recent study by BarkerGilmore, The Role and Value of Today’s Modern GC: The CEO Perspective, found that CEOs want more from their General Counsel. They want their GC to be a strategic advisor. Download your copy of our study today and learn how sitting General Counsel are meeting CEO expectations.
Noah Hanft and our team of professionals are happy to help accelerate the initiatives that you're already pursuing or to supplement your current strategic thinking to help you realize your vision. Please reach out if you or your organization may benefit from our recruiting, coaching, or advising services.