LIFE AFTER LEADERSHIP
Corporate leaders can set the tone for corporate culture. David Craik examines what happens when things go bad and what communicators can do to ensure there is indeed life after the leader has left
Over the last few months, many successful business creators have departed for reasons of disgrace, delusion or a desire for something new. Ray Kelvin, the founder and chief executive of clothing retailer Ted Baker, resigned following allegations of inappropriate behaviour towards staff such as forced hugging and Adam Neumann, co-founder of WeWork stepped down after a botched IPO following doubts over governance and his leadership.
Another leaver was Overstock’s Patrick Byrne who departed after making online posts about the ‘deep state’ and bragging about romantic relationships with Russian agents. Other founders left less colourfully such as Jack Ma of Chinese e-commerce giant Alibaba who departed in September to focus on philanthropy and education.
Whatever the circumstance, losing a firm’s founder can have a dramatic impact on its culture and ways of working. Given their typical confident and extroverted natures, culture is largely moulded on the founder’s beliefs and desires.
“When a charismatic leader leaves then it can leave a big hole in a business. Customers can go elsewhere, and employees moan that working life is not the same anymore,” says Aliya Vigor-Robertson, co-founder of Journey HR.
Without him or her how do businesses continue to grow and evolve? What role do internal communications play in helping maintain, change and determine culture?
Following Neumann’s departure, WeWork has devised a ‘go forward’ strategy “defining the key priorities and acknowledging the past.”
The group, which did not want to comment focused on a corporate mission to encourage energy and productivity among employees while identifying the global market opportunities and prioritising the employee experience.
Ted Baker has, following an independent investigation, has set out measures to “enhance the oversight of both people and culture matters at the board level.” This includes renewed training for all employees on acceptable workplace conduct and maintaining a confidential whistleblowing hotline. It will also be conducting internal surveys of staff about the working environment to make it an “even better place to work.” Internal communications will, like at WeWork, play a key role in its attempted cultural turnaround.
“A founder leaving will always have an impact on the organisation, regardless of how they depart,” says Rachel Miller, director of All Things IC. “If the culture relied heavily on them and there was some ‘hero-worshipping’ going on, employees can often be left wondering if the company can still function, which of course it can, but it will look and feel different. When a founder departs, it can shift the way things are done.”
Internal communications’ role should be, she adds, to help employees start to understand the change, mark the ending and affirm the current belief systems, skills and values. They need to make sure “there are listening mechanisms and two-way channels in place.”
This is how Nicole Alvino, co-founder of workforce communications platform SocialChorus, reacted when her founding partner left earlier this year. “We were very open about the reasons and when it would happen. He let our staff ask direct questions about what it would mean to the company. It is about communicating with staff regularly by written messages, videos and face to face,” she says. “If a founder leaves badly then any new elements to the culture must also come from the top and be reinforced in actions, not just words. But at SocialChorus the core of our culture and what matters still remains the same.”
Paul-Reza Afshar, global head, brand & communications at ReceiptBank, has also been busy smoothing the transition at the accounting platform since co-founder Alexis Penn left in February and was replaced by Adrian Blair.
“Alexis grew the company over the last nine years and felt it was time for someone else to come in to take us to the next level. Adrian has the experience, as chief operating officer, of helping take delivery group JustEat to IPO,” Afshar says. “The big thing for us is having a mission-driven culture. We exist to revolutionise the industry’s digital offering to small businesses, accountants and bookkeepers. That will never change no matter the leadership. Adrian’s principles, rather than him as a personality, are already embedded within us.”
That doesn’t mean however, that culture at ReceiptBank won’t need to be managed carefully as the firm moves from a growth startup phase through potentially faster expansion.
“A startup founder with a small team tends to begin with a culture of ‘We’re on a rocket ship to the moon and, as a family, and group, we’re going to get there together,’ which is a challenge to maintain as you scale and employ more people,” Afshar adds. “We have 500 staff now which will likely double over the next 12 months so you need to create a leadership cadre underneath the founder, CEO and CFO who can help manage the business with more autonomy. As part of that, they and existing staff need to ensure that the culture and sense of mission and excitement are shared with new joiners. The institutional memory can’t be lost.”
Its internal communications department is helping ensure this is carried out by being the pulse of the organisation.
Afshar says internal communicators should understand how employees feel about the business as well as how they understand the strategic direction. They can then use surveys and workshops to help feedback to leadership about the culture and its direction. He says this can give key insights into how well established the sense of mission is and how it can be expanded as the company grows.
Miller also highlights the need to be agile in internal messaging when a founder leaves. “If the founder had a distinct style, your channels may change so if they always vlogged as part of their internal comms and you have a new senior leader in place with a vastly difference communication style, then it may not be for them,” she says. “It’s important the communications team gets to know the new boss. I recommend contacting your peers at their previous company to hear their advice and know what makes them tick. If the founder is still around and their departure is a positive situation, then communicate the handover internally with them welcoming the new leader.”
Again, if the departure is planned the internal communications team should reinforce the other leaders in the organisation.
“They should start to wean employees off the reliance on the founder, who should create opportunities to talk about how strong the other leaders are. Where you would normally feature the founder, feature the other leaders more in your internal communications channels. So, when they leave, there’s not a stark gap or change,” Miller says. “If they leave under a cloud, you need to be open and transparent. Internal communication practitioners have a responsibility to provide a source of truth about the situation. If you do not communicate the facts, the rumours and myths will take over. Have the difficult conversations internally and draw conclusions about how you are going to move forward as an organisation.”
Stuart Duff, head of development at workplace psychology consultancy Pearn Kandola says internal comms should talk openly about the opportunities created by the change of leadership, and then repeat these messages at every opportunity.
“Respect the past, but build for the future. Over-emphasising past successes or failures will stop people fully engaging in the changes required for the future, and at worst will cause frustration and confusion,” he says. “The second is having a clear succession plan in place and communicating this to employees, again to increase clarity and security. I have seen organisations go into long periods of uncertainty and low productivity because the new CEO has taken too long to communicate their strategy and plans. At the other extreme, communicating immediately can create resistance and defensiveness in employees who will need time to build their trust with their new leader.”
Protecting the brand is also important says Jenni Field, director of Redefining Communications. “If there is a gap between what is said outside to what goes on inside, people will leave,” she says. “Internal communicators need to ensure that their alignment to the CEO, board and external communications is solid so that the employee experience matches the customer experience.”
Alvino has worked for a business where the founder’s culture and brand turned sour – Enron. She worked as part of the CFO’s SWOT team at the energy giant, which went bankrupt in 2001 following an accounting scandal. Founder Kenneth Lay was convicted on fraud and conspiracy charges.
There is a concern that not much has changed in corporate circles since that point. According to research from marketing communications agency Clarity, only 14% of employees understand the corporate strategy, including culture, of the organisation they work for. As a result, only a quarter feel very engaged with their company.
“We found that some employees were concerned about leadership making decisions in silos or in ‘locked-door secret’ conversations which they felt were having a negative impact on culture. They felt internal comms could find a way of dealing with that and make them feel more engaged and happier,” Leigh Tymms, strategy & planning director at Clarity, says. “They wanted more than the mindless drivel of emailed newsletters about scattergun social events. They wanted communications to be more meaningful to their everyday work and to give a better sense of purpose.”
He says there is a growing need, given the rise of social media and streaming providers such as Netflix, to personalise messages to staff. “People can be spread out geographically and by function, so it is about looking at which channels certain employees prefer, what their day looks like, what their challenges are at present and how this fits in with the cultural behaviour of the business,” he explains. “The messages could also be different so that could be about focusing on customer relationships with one employee or valuing customer data with another.”
Alvino says she does this via internal communications for SocialChorus’ new hires, giving them each a presentation on its values and culture and why they matter. “It needs to be part of the DNA,” she says. “As a leader you must live and act it if you want your employees to do it as well. It is about authenticity and transparency. Everyone on the team must feel and own the culture. If they don’t then the founder hasn’t done a good job.”
Tymms says the personality of the founder can determine whether these lessons are followed. “If Jeff Bezos of Amazon took his money and ran, then you’d feel that the company would still fight another day. It is a machine, set up with corporate layers, systems and processes and a purpose driven culture,” he says. “But if Elon Musk from Tesla was to leave would a bunch of his creations come crashing down? It is a rapid, more agile company wrapped around his visionary, leadership style. It could be more problematic.”
Or it could be an opportunity argues Vigor-Robertson. “Culture constantly changes as people come and go. Sometimes it can lead to a positive change where you get healthier behaviours into an organisation,” she states. “You need to communicate the value of the founder and ask staff what they think great behaviour should look like in their organisation. It can be a time of optimism.”
Indeed, tech giant Apple survived the death of visionary co-founder Steve Jobs to become the world’s first trillion-dollar company under successor Tim Cook. He did it by keeping Jobs’ innovation, design and marketing culture and adding his own brand and management skills.
The message is simple. There can be life after the leader has gone.
‘The first time we realised the scale of it was when we were made redundant’
Nicole Alvino is the co-founder and chief strategy officer at SocialChorus, but had the experience of being a bystander to one of the most infamous periods in the history of corporate leadership and culture. Her three-year stint at Enron ended with the company’s bankruptcy in December 2001.
She says, “There’s nothing quite like having to speak to the FBI as a 25 year-old about what you thought was business innovation, which in some cases was fraud. There was a culture there of believing that we were doing something that matters, transforming the way we were doing business and changing the world. We felt connected in making that happen. However, the toxic part was the idea amongst senior leadership that we were smarter and more creative than anyone else and brazen enough to get away with things.”
She says at no point in the lead-up to the bankruptcy, despite negative press articles and a falling share price, did senior management inform employees of how bad the scandal was. “The management rallied us, telling us not to worry. They said that the media were attacking us because we are the best,” Alvino says. “The first time we realised the scale of it was when we were told we had been made redundant.”
Enron offers a worst-case scenario in corporate culture management. Shocking even 18 years later is Alvino’s account of the disinformation put out by the corporate leaders to their own employees.