A very high-profile credit union faces a leadership and strategic crisis that may derail the organization for decades.

Here is the situation I have observed from afar. The retired CEO disagreed with the new CEO’s direction for the credit union and won’t get out of the way. He has publicly disrupted the organization’s annual meeting, strategic future, and reputation. While retirement is typically seen as a time for a CEO to step back, enjoy the fruits of their labor, and allow the new leadership to take the helm and guide the company forward, this retired CEO became a bully and publicly disagreed with the strategic direction of the new CEO and refused to disengage by continuing to exert his influence causing disruption. Sadly, the new CEO resigned, and what appears to be a loyalist of this disruptive CEO was appointed as the successor. However, this doesn’t solve the problem because the new CEO is now caught between two very different strategic directions a team that was hired for a new direction that is unlikely to advance and a leadership team with totally different views of the future.

This is an organizational failure on multiple levels. Not only does the credit union need to come to terms with a beloved CEO retiring, but they must go through numerous leadership shifts and strategic instability. When a retired CEO disrupts operations and strategy, the board of directors must act swiftly and decisively. Still, their first obligation should have been to the vision of the new CEO, focused on something other than bowing to the loyalties of a past leader.

This article will explore effective strategies for managing disruption caused by a retired CEO who refuses to disengage:

1. Encourage External Engagements: Retired CEOs may cling to their former role due to lacking fulfillment or feeling lost. To help them transition, encourage their involvement in external activities and engagements. This could include speaking engagements or participation in industry associations. By redirecting their energies towards contributions, external to the credit union, you can minimize the disruption within the organization.
2. Evaluate the Impact: Assess the impact of the retired CEO’s continued involvement in the organization. Determine whether it positively contributes to the company’s growth and performance or causes disruption and hinders the current leadership’s ability to make decisions. This evaluation will provide a clear understanding of the severity of the issue. If a retired executive becomes vocal in the public arena or disrupts annual meetings or strategic planning sessions, action cannot wait; there must be a new sense of urgency.
3. Clarify Roles and Responsibilities: To manage the disruption caused by a retired CEO, it is important to clearly define the current and former CEO’s roles and responsibilities and communicate the boundaries between the retired executive, the board, and the current leadership team. Set expectations for the retired CEO’s involvement, emphasizing that their role is limited to an advisory or honorary capacity rather than an operational leader. By defining these boundaries, you will prevent confusion and limit the likelihood of interference. Emphasis must be on meeting the needs of the current CEO to have autonomy in decision-making and strategy execution.
4. Open and Respectful Communication: When addressing the issue of a retired CEO who won’t disengage, it is crucial to approach the situation with respect. Recognize their contributions to the company and the value of their experience. Initiate open and honest conversations to understand their concerns and motivations for remaining involved. Demonstrating empathy and active listening can create an atmosphere conducive to finding common ground and fostering constructive dialogue. Initiate open and respectful communication with the retired CEO. Express appreciation for their contributions and the value of their insights, but also communicate the importance of allowing the new leadership to take charge. Share concerns regarding the impact of their continued involvement and seek their understanding and cooperation in transitioning to a more advisory role.
5. Engage an Independent Mediator: If attempts to manage the situation internally prove unsuccessful, involving a neutral third party or mediator may be necessary. A neutral third party can help facilitate discussions between the board, the retired CEO, and the current CEO. The mediator can provide an unbiased perspective, encourage constructive dialogue, and assist in finding a mutually acceptable resolution. This can help facilitate a solution by providing an objective perspective and facilitating productive discussions. Mediation can be especially effective when emotions and personal relationships are involved, allowing for a fair and impartial assessment of the situation.
6. Establish Governance Mechanisms: Review the organization’s governance mechanisms and bylaws to ensure these mechanics and bylaws support a smooth leadership transition and clearly outline the roles of retired executives. It may be necessary for the board to consider implementing additional governance measures that clearly define the scope and limitations of a former CEO’s involvement.
7. Encourage Mentorship and Knowledge Transfer: Retired CEOs may struggle to disengage because they feel their expertise and knowledge are wasted. To address this, provide opportunities for mentorship and knowledge transfer. Create programs or initiatives where retired executives can share their insights and experiences with the current leadership team or individual employees. This allows them to contribute meaningfully while ensuring their involvement remains focused and controlled. Be cautious, however. If the retired CEO is unwilling to disengage from active decision-making, this mentorship and knowledge transfer effort may empower them more.
8. Legal Considerations: As a last resort, if the retired CEO’s interference continues to pose significant challenges, consult legal counsel to determine if any contractual or legal obligations are being violated. Review the retirement agreement and any other relevant contracts to assess the options available to address the situation and protect the organization’s best interests. In extreme cases where all other strategies fail, legal and governance options may need to be explored. Review retirement agreements and contracts to ensure compliance with agreed-upon terms and obligations. If the retired CEO’s actions threaten the organization’s stability or reputation, seeking legal advice to protect the company’s interests may be necessary.

The board must manage a retired CEO who refuses to disengage from operations and strategy, but this responsibility requires a proactive and thoughtful approach. Once a new CEO is appointed, the board must transfer its loyalties to the new leadership and vision and refrain from being bullied into regressing from their succession decision. This is done by evaluating the impact, clarifying roles and responsibilities, fostering open communication, and potentially engaging an independent mediator. The board must work towards a resolution that allows the current leadership to lead while respecting the retired CEO’s past contributions. However, in extreme cases, legal and governance considerations may be necessary. Striking a balance between recognizing the retiree’s contributions and ensuring a smooth transition for new leadership is vital for the organization’s long-term success.