EXECUTIVE LEADERSHIP: Exit Strategy for Executive Leadership

Today I was reminded of the most valuable lesson I learned as a young executive in a rural hospital in Texas.  It had become necessary to terminate one of the middle managers for lack of performance.  It was the first time I was required to fire someone, and although I knew that it was necessary, I spent quite a bit a time in the bathroom that morning.  It was a proud moment (NOT!) when I came out of the bathroom to find the board president waiting for me.  He knew that I was struggling with the new experience of having fired someone.  He gave me the best advice I have ever received, and I have carried it with me for 25 years. 

He told me the day that it doesn’t bother me to terminate someone for poor performance or bad behavior is the day I need to step down from management.  But he also said, “You should also step down if you become too upset to do your job”.  In the past 25 years, I have had to terminate numerous employees.  Sometimes it was due to disciplinary actions or performance issues, but the hardest times were when they had done nothing wrong but I had to execute a reduction in force – a layoff.  That has become a negative but necessary action among the responsibilities of leadership.

I have learned that being in executive management means my job is not always stable, or fun either.  It can be full of politics, mergers and acquisitions, and an absolutely horrid environment.  When I have middle managers aspiring to be in the executive seat, I have the responsibility to advise them that it is probably one of the least stable ‘seats’ in a corporation. Because of this, executives always should have an exit strategy written in their strategic plan. There are some advisors who would only advise an exit strategy for business owners or partners.  However, I believe it is the responsibility of the executive leadership team to protect the organization, as well as himself or herself, in the unfortunate event of an executive level shake-up.  Below are three things to consider when creating your exit strategy.

  1. Divorce – if the executive divorces, will that affect the legal structure of the organization in any way?  What will it do to the bonus structure of the executive’s compensation? What happens to any company shares or stock?
  2. Disagreement – if the executive is forced to step down or chooses to resign, what are the implications for the organization? Is there an interim manager who will automatically move into position? Will there be a contract payout? Are there other positions that will automatically become vulnerable as a result of the executive’s departure?
  3. Death – in the unfortunate circumstance of the death of an executive, who will be the designee to immediately assume leadership of the organization? Chaos and sheer panic can consume an organization when procedures have not been established in advance to handle these types of situations. Someone must be in charge to calm and organize the staff, stakeholders, and clients.

Many corporations and individuals have suffered serious damage because proactive operational exit strategies were not identified, documented, and communicated. Life events happen that cause divorce, disagreements, and untimely deaths. Having a completed plan will allow as little disruption to the organization as can possibly be under those circumstances. Our reality as executives is that, as challenging and fun as our positions can be, especially for those of us who are adrenaline junkies, we have to be prepared for any stressful, unstable, politically motivated, or life altering events that may occur.


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