Leadership change in an organization

By on September 11, 2012

Leadership is a vital management function and the life-blood of today’s corporate sector. The leader plays decisive role in shaping up the future of an organization. Effective leadership takes the organization to the heights of success while an ineffective leader brings stagnation to the organization’s growth. It is the leader who convinces others to align their individual goals with the organizational goals making the whole organization work towards a shared vision. However it is not a single day event, leadership is a process. Both the leader and the followers take time to understand and cope up with each other and work as a team. But what happens when a leader or personal from top management of the organization quits and what may be the reasons that they leave?

Reasons behind change in leadership in an organization

Top management of any company holds the critical business areas and as such retaining them is of utmost importance. The organizations pay them heavy and empower them to take decisions, yet fail to retain them for long leading to leadership change. Attrition at top can take the form of resignation, retirement, death, and sometimes termination also. The most common among top management is resignation due to better opportunities elsewhere. There are also many incidences of power struggle at this level; a war for holding maximum power in the organization leads to resignations. Personal issues like spouse transfer, prolonged illness and family conflicts also cause resignation. Apart from resignation, even termination is getting popular now days. The companies are now less tolerant to any non-productive activities and unethical acts of fraud or manipulations by top management. Thus, moral failure and leader’s inefficiency are the major reasons behind termination at this level. Apart from this, leadership change also occurs when the firm goes for restructuring or any merger & acquisition (M&A). However, retirement is a planned departure so does not lead to sudden leadership change.

Impact of leadership change

Whatever may be the reasons behind leadership change, the impact on organization is always huge. It is human nature to avoid change because it causes inconvenience to their routine especially during the transition stage. The same thing applies to business organizations.  Every new leader brings a new vision, new strategies, and new leadership style which make it very difficult for others to adapt instantly. Many times, the employees fail to connect with the new leader. In such cases, the employees’ morale gets negatively affected. This may also mark the beginning of organizational conflicts. Mostly it is also observed that a change in leadership is followed by mass resignations in the organization resulting into higher attrition rate. When the leaders handling key business areas quit the organization, it causes disruption in normal working and leaves the organization into depressing situation.

How to control the situation?

The losses of sudden leadership change can be minimized only when this change is planned or when the organization is ready with the substitutes. This is possible through a sound succession plan in place. A complete leadership pipeline must be created which can immediately replace the departing ones. Experts provide that it takes around 6 months to replace a person from the top management. Hence it is important to decide the heir and train him/her to take up the responsibility by the time the leader quits. However, the succession plan should not only be made according to the hierarchical seniority but also for the top talents and key business areas of the organization. This would minimize the disruption into organization’s working due to leadership change keeping the situation under control.