COMING UP FAST: WHEN A KEY DIRECTOR RESIGNS

COMING UP FAST: WHEN A KEY DIRECTOR RESIGNS - One of your fellow directors has resigned. It's a disaster: she's a lynchpin of the business and the press will have a field day when they find out.

by ALEXANDER GARRETT
Last Updated: 31 Aug 2010

One of your fellow directors has resigned. It's a disaster: she's a lynchpin of the business and the press will have a field day when they find out.

Customers will be upset, and her department will fall to pieces. Worst of all, you feel so angry. What should you do?

CALM DOWN. Good people do move on, and it needn't be the end of the world.

According to Andrew Kakabadse, professor of management development at Cranfield School of Management, the average tenure for company directors is just three years. 'There is a plentiful supply of good executives who can run companies,' he points out. A departure should be perceived as a big problem only if it will affect the image of the company or if the person has expertise that cannot be easily replaced.

ASK WHY. Don't assume that your colleague's mind is made up. 'People sometimes build up a relatively small issue into a huge problem that seems insoluble,' says Stuart Tunstall, a director of Hay Management Consultants.

'You should ask if there is anything that will persuade the person to stay, no matter how far-fetched or crazy. A proportion of resignations never happen and if you get into a dialogue you may find you can keep them.'

HARNESS THE GOODWILL. It's best if the departure is handled amicably on both sides. If you ostracise or humiliate the person leaving, they may try to damage your business, says Tunstall, and you cannot expect their help in achieving a smooth transition. Kevin Chapman, communication practice leader at Towers Perrin, says companies may experience a process akin to bereavement, with denial followed by fear, anger, pleading and eventual acceptance. 'The trick is to recognise that you are going through this process,' he says.

COME TO TERMS. Establish quickly how soon your colleague will leave.

Immediate exclusion should happen only if there's a risk that their continued presence will damage the business. If you're worried that they are joining a competitor, insist they serve out their contractual notice with a period of 'gardening leave'. But be pragmatic about enforcing contracts. 'If they are going to take customers or colleagues with them, they've probably already done it,' says Chapman.

BUY TIME. Delay the news of the departure if it buys you time to put succession plans in place. 'The ideal scenario is to announce the departure and at the same time say what will take its place,' says Eileen Scholes, European partner at HR consultants William Mercer. 'The worst thing is to let a vacuum develop in which people see something is happening but you don't address it.' And Kakabadse warns against being pressured into appointing a successor too soon; far better to take time and get the right person.

CONTROL THE ANNOUNCEMENT. Don't let the people who matter to your business find out via the media. The important thing is not to favour one group - employees, customers, or investors, say - ahead of the others, says Scholes, but to identify the key individuals in each group who should be told first. Keep the message consistent and don't put a dishonest spin on the story.

TAKE THE OPPORTUNITY TO REFLECT. A senior departure may be the opportunity to re-organise your management team and redefine the role that is now vacant. Use it.

LEARN FROM THE LEAVER. Carry out an exit interview; it may provide lessons that will benefit the company in future. Consider using an independent third party.

DON'T SAY: 'John Smith has resigned from his post as a director of this company and there will be no further comment.'

DO SAY: 'John has expressed his wholehearted support for the choice of Mary Brown as his successor, and we would in turn like to wish John success in his future career.'

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