CEOs have never had so many ways to communicate with their employees. But despite the availability of Slack, internal newsletters, and virtual town hall meetings, organizations can still go quiet.
One of the most common culprits: Major leadership transitions, according to a recent study of 500 million emails and 80 million meeting invitations.
Shortly after a new CEO takes over, uncertainty among employees dampens communication within a company. However, after about five months, internal chatter sharply intensifies as managers start rolling out the leader’s new strategic game plan, according to research by Harvard Business School Professor Raffaella Sadun.
“A CEO transition is a major organizational event, and communication inside the company is such an important aspect of that transition.”
Sadun and colleagues describe how a CEO’s arrival creates dramatic shifts in internal communication levels in their paper, “Communication Within Firms: Evidence From CEO Turnovers,” published in Management Science.
And when corporate communication breaks down, it can lead to confusion and stress, low morale, delayed projects, and lost sales. Case in point: Ron Johnson’s brief but tumultuous tenure from 2011 to 2013 at JCPenney, where messages from top executives were so murky, the retail company was described as a place where “communication goes to die,” the researchers write, leading to rumors and distrust within the firm.
“A CEO transition is a major organizational event, and communication inside the company is such an important aspect of that transition,” says Sadun, who provides advice for avoiding communication shutdowns.
Sadun, the Charles E. Wilson Professor of Business Administration at HBS, conducted the research with Stephen Michael Impink, an assistant professor of Strategy at HEC Paris, and Andrea Prat, a professor of business at Columbia Business School.
Why communication takes a dive
The researchers analyzed millions of emails and meeting invitations at 102 companies in the United States, Canada, Europe, and the United Kingdom, all of which had gone through a CEO transition.
The researchers examined data during the months before and after the CEO change, including the average number of:
- Meetings employees attended
- Attendees per meeting
- Internal emails
- Recipients per email
The researchers considered whether emails were sent among employees within the same department, and whether the emails and meetings involved people from other levels of the organization, such as individual contributors and senior managers, for example.
Sadun and her colleagues found that during the first three months following a CEO turnover, meetings and emails declined by roughly 20 percent compared with the pre-transition period.
Why? CEO turnover tends to cause a great deal of uncertainty about whether a new leader will make big changes, like reshuffling or reducing the workforce, as well as shifting corporate strategies, Sadun says.
“The lack of information on employees’ future roles, responsibilities, and objectives may foster confusion and misalignment between management and employees and, in some cases, may even breed competition for resources within the firm,” the team writes.
Sadun and her colleagues point out that the email and meeting data they captured wouldn’t account for ad hoc phone calls, in-person meetings not recorded on a calendar, or impromptu conversations that may occur following a CEO turnover, but said the overall drop in emails and scheduled meetings was significant.
When communication returns, uncertainty abates
The researchers found that about five months after the CEO’s arrival, when the leader set expectations, redefined priorities, and shared a new strategy with the firm, employee uncertainty resolved and the alignment between managers and employees was restored. This led communication to rebound strongly; meetings and emails increased about 20 percent to above the pre-transition level. Meetings also grew bigger and longer, and many were centrally orchestrated, involving employees from multiple departments and different hierarchical levels.
“We interpret that to mean that at that point, the managers had something that they wanted to communicate,” says Sadun, noting that managers were conveying the CEO’s new strategic direction to their teams.
“There was perhaps a little bit more certainty about what would come next.”
Eventually, beginning about six months after a new CEO took charge, communication stabilized to pre-transition levels, the researchers found.
Whether the new CEO was an external hire or internal promotion affected the pattern of communication, with internal appointments leading to quicker communication recovery than external hires.
“There was perhaps a little bit more certainty about what would come next,” Sadun explains.
‘Employees cannot live in the dark’
Even if a temporary lull in communication is likely during a CEO transition, long-term silence doesn’t have to be inevitable, the researchers say, citing Satya Nadella’s ascent at Microsoft as an example. When Nadella was named CEO in 2014, he quickly announced a major strategic shift toward cloud services and invested in internal communication, including hiring a new communications director.
Sadun says all new leaders can take steps to alleviate the collective uncertainty in an organization and get communication flowing soon after taking office. She recommends that leaders:
- Be mindful of employees’ unease during a transition. “Your initial communications in alleviating this uncertainty will become very important,” she says. “If you’re not ready to say anything just yet because you’re taking the time to develop a new plan or strategy, find ways to overcome it, because employees cannot live in the dark.”
- Choose people to serve as “information brokers.” They can share updates and provide a sense of stability during the transition. “You cannot rely on just your top people because they are also not getting signals from the bottom,” she says. Middle managers may fill a critical gap here—especially since the study suggests that they are the ones who often reignite communication after the initial decline.
- Invest in meaningful ways for employees to communicate—both virtually and in person. “There is so much information that comes from synchronous interactions that you cannot get otherwise,” Sadun says, “and your decision-making depends on these inputs.”
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