How To Prevent Outgoing CEOs From Sabotaging Their Successors

Gradual transitions where the predecessor serves as a wise elder statesperson and mentor are not impossible—and boards can help by encouraging these Ambassadorial CEOs to follow three key rules.

It may seem that Baby Boomer generation CEOs Jeff Bezos of Amazon, Frank Blake of Home Depot, Lloyd Blankfein of Goldman Sachs, Ken Frazier of Merck, Bob Iger of Disney, Indra Nooyi of PepsiCo, Ginni Rometty of IBM and Mark Weinberger of EY have little in common beyond their shared cohort. In fact, they share many leadership qualities. They all led their iconic enterprises to historic peak performance, and they all stepped out at the top of their games, with soaring reputations and in great personal health.

They also remained engaged with their old businesses while mentoring strong successors from within. While these independent-minded successors may have considered some strategic departures from some of the directions of their predecessors, there was no risk of a move to return to office or revert to past paths. Instead of any danger of boomerangs from these boomer bosses, new leaders enjoy terrific trusted relationships with their predecessors, who encourage them to objectively assess new priorities with shifting strategic contexts. They see the success of their successors as one of their greatest legacies as leaders.

Governance reformers worry about the haunting board presence of such retired octogenarian entrepreneurs as Phil Knight of Nike and fashion entrepreneur Ralph Lauren, which seem to undermine the effectiveness and independence of successors. After Michael Ruettgers departed as CEO at EMC, he sparred with his successor Joseph Tucci while staying on as chairman.

The media offers regular reminders of the dangers of elderly, long-reigning CEOs who remain on the board, subverting successors such as Sumner Redstone of ViacomCBS, who controlled 70 percent of the company’s voting stock until his death at age 97 last summer. In 2016, after decades of succession drama, following a court-ordered examination by a geriatric psychiatrist, Redstone reluctantly surrendered the chairmanship of CBS and Viacom at age 92, after challenges over his mental competence. And then there was Sheldon Adelson, who clung to the chairman and CEO role at Las Vegas Sands Hotels for more than a year while fighting cancer before stepping down and subsequently succumbing last month at age 87.

As far back as 2010, Chief Executive published a review of a portion of the interdisciplinary research on CEO succession and best practice advice of governance consultants on the wisdom of retaining past CEOs on the board, and the advice was mixed. A decade earlier, I chaired the 1998 Blue Ribbon Commission on CEO Succession of the National Association of Corporate Directors when two dozen of its fellow members grappled with the same argument.

Our group agreed on virtually all the principles over the board’s primary duties in the grooming, search, identification, timing and transfer of power—except the role of the exiting incumbent CEO. Many wanted to keep the hands of the CEO out of the process of identifying a successor and for the departing executive to make a clean break.

But as described in my book, The Hero’s Farewell, gradual transitions where the predecessor serves as a wise elder statesperson and mentor are possible. We have seen this Ambassadorial pattern work across industries. In technology, Andy Grove of Intel, Jerry Sanders of AMD and Bill Gates of Microsoft provide great models. In professional services, Marvin Bower of McKinsey stepped down as managing director at age 64 but remained as a director for the next 25 years and was associated with McKinsey until his death at age 99. In manufacturing, Charles Adams provided great continuity of leadership, remaining on Raytheon’s board long after stepping down as CEO. Similarly, in finance, David Rockefeller’s global network was a priceless asset to his successor as he continued on the Chase Manhattan board long after retiring as CEO.

Boards can help by encouraging Ambassadorial CEOs to follow three key rules:

1. Avoid external grandstanding. A CEO’s successor must be the standard bearer representing the enterprise to the world at large—which means his or her predecessor must rein themselves in. Bob Iger, Indra Nooyi, Lloyd Blankfein, Mark Weinberger and Bill Gates are careful to always emphasize that they do not speak for their former companies when they engage on societal concerns.

2. Prevent internal confusion. Outgoing CEOs should avoid moves like that of former Pfizer CEO William Steere and ITT’s Harold Geneen. Steere continued to lunch and work out at the company offices, where his past lieutenants sought him out to embroil him in political intrigue, while Geneen undermined successors by actively courting dissenting disciples.

3. Provide constructive coaching—quietly and when called upon. President John Kennedy sought out President Dwight Eisenhower for useful confidential “tough love” feedback with long walks around Camp David following the Bay of Pigs fiasco in Cuba.

To the extent boards are able to guide former leaders who retain a company role toward mentoring rather than meddling, they can manage a tricky feat—retaining wisdom without inciting rancor.

Jeffrey Sonnenfeld is senior associate dean, leadership studies, Lester Crown professor of leadership practice, Yale School of Management, as well as president of the Yale Chief Executive Leadership Institute and author of The Hero’s Farewell and Firing Back. You can follow him at Twitter @JeffSonnenfeld.