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departing leader

The Impact On Company Culture When A Leader Departs

Most company founders, owners, or long-standing CEOs are the authors of their organization’s culture. Either they intentionally crafted the culture they wanted their employees to demonstrate, or the culture evolved organically because their staff simply followed their example.

The culture a leader establishes by design or default dictates how things operate while they’re at the helm. This common thread that binds their organization together is the primary factor driving employee engagement and customer perception.

But what happens when the leader steps down?

culture operating system

Since the person at the top lays the foundation for the culture, their departure can rock the organization when they leave. But with a preemptive plan to preserve the culture they instilled, they can help the company continue to thrive under new leadership.

As the authors of a ReasearchGate article concluded, “A powerful culture protects the organization from the environment changes and confers the stability necessary for long-term survival.”

How A Leader’s Exit Affects Employees

Even if their exit was long-planned and expected, it’s generally unsettling for employees when a company’s founder, owner, or CEO is no longer in charge. If the departure is sudden, the impact is even greater. Someone new will assume leadership, but the figurehead everyone associated with the business no longer casts a shadow. As a result, the staff and the company can suffer from an identity crisis.

Some of the reactions employees can have include:

  • Feeling rudderless
    The former leader established long-term goals and guided the team in pursuit of that vision. Staff may be concerned that the new boss won’t have the same drive or will change course.
  • Not being sure what to do
    People may start to question whether current projects will be revamped or scrapped.
  • Waiting for the next shoe to drop
    Staff may wonder who’ll be the next to leave now that the leader is gone and how these departures will affect their role.
  • Question why the leader left
    Employees often wonder what was behind the departure and start to fill in the blanks with negative assumptions.
  • Fear the new leader won’t see their value
    People in established roles may worry that the new boss won’t acknowledge their past contributions.

The same unsettling scenarios can play out on a micro-level when mid-level managers move on. All the above reactions can disrupt workplace culture and create an unstable environment.

Exit Strategy

Leaders planning their departure can take steps to prevent an upheaval in their company’s culture. And even those who aren’t thinking of leaving should have a strategy for preserving their culture in case something should happen to them. In fact, leaders should consider insulating their company’s culture to be their most enduring legacy.

Define The Culture

Their first step should be to codify the culture they’ve built. If an owner, founder, or CEO intentionally developed their company’s culture, they should document it so that it won’t be misinterpreted in their absence. And if the culture merely evolved via the example they set, they should determine how to define and describe it clearly.

Leaders shouldn’t confuse culture with the mission and core values they established for their organization. The behaviors that bring these concepts to life compose their organization’s authentic culture.

A good practice is to create a “common language” to clarify what these behaviors should look like as people perform their jobs. Then they should devise a process to reinforce this conduct so that it is
“the way things are done around here” whether the leader is present or not. Part of this process is helping employees understand their role in perpetuating the culture, regardless of who’s in charge.

why core values aren't enough

Succession Planning

Long before they plan to step down, a founder, owner, or CEO should consider who can ultimately fill their shoes. Ideally, they can cultivate a short list of senior executives already committed to the culture that makes the company special.

Documenting the culture and its effect on the organizational success is even more critical if there isn’t an obvious successor or the company might conduct an external leadership search. Doing so will give any new leader a clear picture of the culture and why it should be preserved. If set up correctly, new leaders will perceive the existing culture as their most valuable asset.

Proactive Communication

A leader who plans to retire or move on to another opportunity can prevent significant turmoil by preparing their team for the transition. Being transparent about their imminent departure will go a long way toward reinforcing their employees’ trust and peace of mind. And they can alleviate many doubts and questions by explaining the steps they’ve taken to sustain the company’s culture after they’ve gone.

But communication shouldn’t be one-way. Leaders should open the dialogue and provide answers to their people’s questions and concerns. They should help their people understand how their culture can remain intact despite the inevitable changes that will come with new leadership.

The departing leader should also maintain an open line of communication with their successor. Whether they’re an internal promotion or new to the organization, the former leader should offer them support throughout the transition. Doing this also provides another opportunity for the original leader to demonstrate the relevance of the company’s culture.

When A Bad Leader Leaves

When departing leaders leave their companies with a robust culture, they ensure the organization’s continued success. But what about when a company jettisons a toxic leader, or a bad boss walks away?

Let’s face it. Some top executives foster a negative work culture, prioritizing profit or their ego over their people. In those situations, the leader’s exit is the perfect time to turn a poor workplace culture around. As Resologics founder Mark Batson Baril optimistically notes in Forbes: “Change can be an opportunity to create, adjust, or improve the current culture.”

The new boss must act swiftly to avoid being caught in the wake of their predecessor’s negative culture. They shouldn’t let things ride during the first months of their new role. Any residual counterproductive conduct isn’t likely to dissipate on its own. What they choose to tolerate, they condone—and they will have to live with the poor culture already in play.

To get things started, they should observe and listen to a cross-section of their team to gain insight into the existing environment. Then they should assess which counterproductive behaviors should be rooted out and work to replace them with constructive ones. Focusing on rebuilding a healthier work culture will give them the best chance for success in their new role.

The Long Haul

When someone launches a company or leads one for an extended period, the organization is largely associated with that individual. But most leaders expect the lifespan of their business to exceed their tenure.

By forging a supportive, resilient, and high-performing culture, they ensure the longevity of the enterprise where they devoted so much time and energy. And the culture they build will perpetuate the company reputation they worked so hard to establish.

Book a call with a CultureWise specialist to learn more about building an exceptional workplace culture that can transcend leadership succession. And stay abreast of the latest insights on culture with a complimentary subscription to our weekly newsletter, Culture Matters.

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