The markets have not been calm in recent months, as continued government failure to manage a spiralling cost-of-living crisis has all-but guaranteed a period of recession. Recessions are testing times for businesses of any stripe, and resilience against these shocks is key for survival – which brings us to our topic in question: the figurehead for resilience and business direction, otherwise known as the CEO.
Replacing a CEO is not a minor event. It is a major undertaking with meaningful consequences for stakeholders, staff, customers and even the wider industry; if your business is public, in particular, a change in CEO can see a remarkable market reaction beyond your business’ share price.
But this does not preclude CEO replacement from being a necessary endeavour, sometimes. Indeed, there are times at which such a tough decision needs made for the future of the business. But what are some of the hallmarks you as owner should look out for before embarking down such a route with your board of directors?
Company Growth Has Stagnated
In times of recession, every business will experience some form of growth stagnation or even decline in profits – making this a little harder to track than in better economic times. However, a trend of business downturn can often count against the efforts of your CEO, and indicate that remedial measures are necessary. This assertion, however, does need backing up with comprehensive data on business performance – with specific regard to decisions made by the CEO.
The CEO Does Not Reflect Your Company’s Values
Some of the clearer indications that a CEO needs to go relates to said CEO’s conduct or reflection of company values. If your CEO has acted improperly, immorally, or even illegally, whether or not with direct respect to your company and its culture, this could present new legal, regulatory and PR issues for your business. Investigations must be undertaken properly to ascertain any impropriety, but otherwise, reflecting poorly on your business is a clear sign of unsuitability.
A New Opportunity Beckons
Lastly, a sign that it may be time to replace your CEO may simply be that you’re thinking of replacing your CEO at all. Usually, these thoughts emerge as a result of the above explored ideas, but the prospect can arise as a result of, essentially, seeing a better fit for the future of the company.
Whether a partnership deal presents the opportunity to take the business in a new direction, or networking has pointed you in the direction of some fresh blood that could offer new insights, you and your board of stakeholders may be of the opinion that it is essentially time for change. A gut feeling alone should never be enough to justify changes to the most important post in your business, but can be a good primer for finding your way through your feelings towards your business.