As the CEO of a business, you are crucial to its success. If you are reaching a point where you are considering retirement, you need to think very carefully about two points. First, how this decision is going to affect the company, and second, what you will need to do in order to leave the position in a way that is good for you and for the business.
In this article, we will look at how retiring CEOs can plan their exit from the business most effectively.
Exit planning for you
Getting the timing right
Timing is important. In fact, it is so essential that it is not uncommon for retiring CEOs to simply delay and delay because they feel that they can’t possibly retire until a certain project is completed, or until a certain senior manager is ready to step up. But, getting the timing right is also vital from a personal perspective.
The last thing a retiring CEO wants to feel is an urge to get back to work as soon as they have retired. It is a good idea to stop getting involved in new projects and simply work as hard as possible to get current projects over the line. This means when they are completed, such as a major product launch or winning a prestige contract, the CEO can retire without feeling like there is a lot of work left on the table.
Committing to a date
If you know you are going to be leaving soon, it is a good idea to fix a date rather than leaving things up in the air. This process is different for everyone and ambiguity over when you are likely to be leaving is only going to cause problems in the business. Whether you think you are going to be leaving in a matter of months, or you think it could take years, be upfront about it.
You may not be able to commit to an exact day of retirement, but simply providing a general idea of the timescale can be valuable.
Adjusting your role
It is important not to think of your retirement as a singular event, but rather as a process that takes place over time. Your role may change from having an active involvement in projects to being more of a consultant and a provider of information.
This is a good thing as it can allow you to more smoothly transition away from the tasks that take up your time.
Getting your pension in order
Anyone who is retiring wants to ensure they can maintain a good standard of living after they have stopped working. To that end, you need to think about your pension and what you are going to have in the way of finances.
“An important part of planning for your exit from a company is ensuring you have sufficient funds for a comfortable retirement in the most tax-efficient way,” says Philip Simmonds, Chief Investment Officer at Private Office Asset Management “this also involves making your assets grow effectively and this could be by looking at where it is invested.”
Exit planning for the organisation
When a CEO retires, it inevitably leaves a vacancy to fill. It will be up to the board to appoint a new CEO, and it is best practice to ensure that the board truly understands how significant a decision this is.
You should make sure to consult with the board before you make any decisions. Being a part of the conversation can allow you to bring your understanding of the role and what is needed from it. This will help the board.
You should think about the current structure of the senior management team that you have in place – do you have people in the right positions to enjoy a smooth transition? It is not always smart to be completely prescriptive with positions in the senior management team – provide people with general rules.
You should make sure that everyone in the senior management team understands their new roles and responsibilities as you retire.
It is vital to consider how sustainable your business is as you look at your exit plan. Be honest about your role in the business – some CEOs play a more essential role in day-to-day running than others.
A big part of you leaving might mean restructuring how certain parts of the business operations so that aspects of your roles and responsibilities can be moved around.
Manage the communication
Communication is a huge part of how you deal with your retirement. When a prominent figure like a CEO retires it can potentially cause confusion and uncertainty, none of which is good for the company. It is vital that you set out who needs to be told what and when.
Disseminate the information gradually so that the announcement of your impending retirement doesn’t come as a shock to too many people.
Exit planning is something that too many CEOs put off either because it involves difficult decisions or because they simply haven’t faced the reality of retiring from the business. However, a good CEO or entrepreneur understands that like all aspects of business, preparation is key.