Leading the change: Should the previous leader remain in the organization?

This topic contains 4 replies, has 5 voices, and was last updated by  Sarah 1 week, 1 day ago.

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  • #119361

    Cesar Otero Lucas
    Participant

    Dear all:

    One of the most difficult situations I had to tackle was to lead a organizational change after an integration. The process is difficult by itself, but the key point was to balance the knowledge of the previous leader and his influence in the team. It was not easy to change anything fighting at the same time against the inertia of the previous management style, but at the same time, for me was an important source of reference and knowledge. Have you ever lived a situation like this?

    Regards,

    César Otero

    #119378

    Yes – it can be a blessing and a bane to retain the previous leader. If done right, the previous leader can help to integrate the businesses, imprint relationships between the merged entities, and create a reason for key talent to remain with the business. If done wrong, there will be a cancer growing before the ink is even dry on the closure documents. If not addressed quickly and promptly, it will likely metastasize and kill the entire business. Prior to deal closure, during human capital due diligence, the risk/reward of retaining previous leadership should be evaluated. Retention should always be conditional upon smooth integration and attainment of clearly articulated measurements. The position held by previous leadership and their total rewards package should recognize the value of their prior contributions and be tied to the success of the future merged business. This will aid in motivating continued success and reduce the risk of destructive behavior. All of this should be discussed, negotiated, and agreed upon before closing the deal. Any equivocation and the transaction team should make the hard call to either remove previous leadership or walk away from the deal.

    #119511


    Participant

    It depends. If a good and respected leader, then yes. If a poor and non-respected leader, then no. As Jim Collins states in his famous business book “Good to Great”, getting the right people on the bus is priority #1!

    #119570

    Matthias Arnet
    Participant

    Agree with the opinions of the colleagues above.
    Ideally, this should all be adressed before closing the deal including the total reward package and its future contribution. In many cases, it can be better after all if the previous leader leaves the organization after a (pre)defined period of hand-over.

    #119604

    Sarah
    Participant

    In my experience, it has been more difficult to integrate with a previous leader remaining a part of the company than if they elect to leave the company after closing. Previous owners can have a hard time dealing with change and not used to not being the main decision maker any longer. I think setting the expectations early on can be a big thing if you do decide to keep a leader and being upfront about the non-negotiable items for integration into the target company.

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