Could your company survive a new CEO?

From Starbucks to Cartier, 2024 has been the year for naming new CEOs. But are CEOs prepared for what that change in leadership means for employee morale and operations? 

According to career coaching firm Challenger, Grey & Christmas, 622 CEOs announced their resignations in the first quarter of 2024 — a 50% increase compared to the previous year. Household brands like Papa John's, Victoria's Secret, Hugo Boss and Walmart have appointed new CEOs, likely in a bid to move their businesses forward. However, changes to leadership at the very top of the C-suite will likely come with some growing pains. 

"The CEO is there to lead and deliver on the commitments they made to the market, employees and stakeholders," says Christine Greybe, president of DHR Leadership Consulting. "But there's uncertainty and it may impact employee morale and productivity. If you're a publicly listed company, you can have stock price volatility. You have to make the right decisions from the start."

Read more: How Canva's 'Skills Passport' initiative is supporting internal mobility

Employees can expect some level of disruption with a new CEO. One study from Harvard Business Review found that involuntary turnover among employees was four times higher when a new CEO was brought from outside the company versus no change in CEO at all. Even when the CEO is hired internally, involuntary turnover is nearly two times higher. 

Ultimately, a new CEO may not be perceived as a positive move to the rest of the workforce. But if leaders know they will be appointed as CEO, then they have time to plan a successful transition, stresses Greybe. 

"You have to institute a succession journey within your organization," she says. "You pre-identify metrics and processes that will allow you to outline what success looks like for different roles throughout the organization. Then, you start to create talent retention."

New CEOs should place some emphasis on employee upskilling and development if they want their vision for the company to be realized, advises Greybe. Sometimes, a new CEO means new expectations get lost in translation, leaving talent less connected to their work and more likely to leave, whether they are laid off or quit. 

Read more: Bad boss or lack of training? Why middle management needs more support

Greybe suggests that 70% of career development should be on-the-job training, 20% should be intentional learning opportunities like mentorships, coaching and feedback sessions, and 10% should be formal education from workshops or classes. This may mean restructuring workflows to build in time for development and eliminating unnecessary assignments or meetings that are burning through employees' time. 

"If you really want to build a strong bench of talent and have a culture of growth that allows you to promote from within, then you need to provide people with opportunities to grow," says Greybe. "You can invest in individual coaching and run leadership development programs — but it takes planning and commitment from the top of the house."

Read more: From teacher to tech exec, this CEO wants her teams to feel valued

Greybe suggestions that to have a successful leadership transition, it starts with hiring a CEO who not only has a vision but a plan on how to realize it with the talent that's already at the company.

"The best thing to do is to start by getting your profile right for your new CEO," says Greybe. "What is the strategic intent of your business? What are three to five objectives you're trying to accomplish? Have a very clear understanding of what's required and what the mandate of the [business] is."