When Oscar Munoz, CEO of United Airlines, investors panicked, and shares dropped by three percent within the week. The company was instantly criticized by analysts for staying quiet after the attack on who will take the reins. Brett J. Hart was quickly named as interim CEO and the company stabilized in the stock market.
Twitter’s stocks similarly took a plunge by over eight percent when investors grew impatient over waiting for news of a new CEO. But once reports came in that co-founder Jack Dorsey will take over as CEO, shares spiked right back up.
The uncertainty of who’s leading at United Airlines and Twitter shook their employees and stockholders. Investors panicked quickly when they there was no one acting as the top executive at the company, causing share prices to drop instantly. Even two or three days of a CEO-less business can spell trouble for its value.
There’s a few options the company has including temporarily promoting someone in the c-suite, someone on the board steps in or bring in an outside resource that specializes in Interim CEOs. This is where we come in. We provide interim executives to keep the business running until a permanent replacement is found. As common as this is, it is surprising to some how someone from outside the company can step in at the top position and lead the company. Here are some of the most common questions we are asked:
Why would a company use an interim CEO?
Interim CEOs step in when there is a sudden leadership gap at the CEO level in a company. It can take many months for a new leader to be recruited, and disturb the workplace if another company executive like the COO or CFO takes over. Interim CEOs at Cerius are highly experienced individuals with years of C-level careers in which they have started, grown, and sold successful businesses.
There are three primary cases when a company uses an interim CEO that we experience the most:
- Some type of medical leave or sudden passing
- CEO chooses to leave
- CEO is asked to leave – often by the board
What types of companies would use an Interim CEO?
Mostly small and medium size companies. Larger companies will typically have a succession plan in place and the bandwidth in the executive suite to temporarily (or permanently) fill the position.
How quickly do companies typically need the CEO to be available?
When we get the call, it is usually needed within a week or two. When it is a family owned business looking to integrate an interim CEO as part of the succession planning process or needing outside leadership to mentor the heir apparent, then the timeline is expanded.
Why can’t just any CEO step into a role?
An interim CEO needs to not just get up to speed quickly (often in a matter of days), they need to bring an established expertise that is applicable to the company and situation. For example, you may not want someone who has only been CEO of a technology services company to step in as interim CEO of a manufacturing company. Same applies to the situation. If the company is going through some complications in the media or with the board, you want an Interim CEO to step in who is an expert in damage control and repairing relations.
How is it that these top level executives are available on such short notice?
It is a matter of juggling the right person with their availability. Many usually have a gap in-between interim roles so there is some flexibility in their schedule and can be readily available.
How does the transition work when the new CEO comes back in?
This takes on a number of forms and there is no set template for it. Lots of communication and planning is key. Working closely with the board and/or owners can make a big difference in the transition.
When describing the above, you really do get the picture of James Bond parachuting out of an airplane and swooping in to get the job done. It is a fascinating career and takes a unique individual and skill set to be able to step in as a leader of an organization, for a short period of time and be able to quickly assess and juggle the priorities; especially since the long term vision and direction isn’t necessarily up to you unless you.