Trusting the New Leader

Almost daily, the business media reports on organizations announcing searches for, or the appointment of, new C-suite leaders. Sometimes this is prompted by the prior leader’s long-expected retirement or movement to another role. But often the vacancy reflects the emerging need to improve financial results and to bolster trust in their brand and the products and services they provide.

Whether public or private, government or non-profit, each organization survives and thrives based on the level of trust that stakeholders have in their leadership team. And the board, owners, or others with oversight, are ultimately responsible for ensuring they’ve identified the right talent to place into those roles. Their selected candidate must quickly build trust, which is the foundation of every leadership appointment.

Steven Covey identifies character and competence as two crucial components of trust in leadership teams.1 Character reflects the leader’s intent and integrity. Competence reflects the leader’s capability and results. Both must be solidly in place for the leader to be successful.

Stakeholders’ Expectations

Building trust with stakeholders in these key areas is the first priority for new leaders. Boards recognize this and carefully construct the leadership announcement to highlight the new leader’s relevant experience and accomplishments. That person generally steps into the role with a mandate to correct, improve, and transform whatever issues were identified in the past. Stakeholders immediately dig into their background to understand their style, experience, and perspectives, looking for early signs of the way forward.

  • Investors – For publicly held companies, an initial lift in the stock price is the first public inkling of trust in a new C-suite leader. But the best evidence of that trust is the longer-term stock trajectory, after observing the leader’s performance over time.
  • Leadership team – The first and second level direct reports to the new leader look for signs that their expertise will be acknowledged and respected. They don’t want to be a casualty in the leadership shakeups that sometimes occur in the first year. They want a leader who understands the business model, the industry, and brings valuable experience to the role. One who will take time to understand why things operated as they did in the past and consider the downstream impact of any changes because that will affect the next important group of stakeholders.
  • Supply chain business partners – Companies in the supply chain and related businesses are directly impacted by decisions from the new leader. They want to know if there will be a shift in business strategy, and how it may impact their business. A prime example is the connection between automotive companies who are shifting more of their product lineup to electric vehicles and the resulting impact on the supplier community; and relatedly, the impact on suppliers if EV sales end up lower than expected. Suppliers want to be able to trust the decisions made by the companies that they rely on for their business.
  • Customers and clients – Every organization operates based on a promise to provide goods and services, or something of value to a target population. Sometimes this is in exchange for a form of payment, other times it’s based on demographics, geography, or some other identifying feature. Failure to deliver on that brand promise for whatever reason results in missing business goals, bad relationships, and a lack of trust. Brand image must be fiercely protected.
  • Employees – They want the same assurances as other stakeholders that their jobs are secure, that the organizations for which they work will treat them and others with respect and will communicate truthfully. They are generally the first to know what is and is not working well in the organization.

Building Trust

To quickly build trust with these stakeholders, new leaders need a strategy to communicate with them and to address their needs.

Starbucks provided a good example of this in their August 2024 announcement of Brian Niccol as their new chairman and CEO. It stated that the prior CEO was stepping down effective immediately, and Niccol was welcomed and celebrated for his successful leadership of Chipotle and Taco Bell. He was given the full support of Howard Schultz, Starbucks founder and chairman emeritus, and he expressed gratitude to the board for their commitment.2 Other news media detailed Starbucks’ operational struggles and the challenges Niccol would be facing. Once on board, he spent several months learning about the organization, visiting stores and talking to stakeholders.3 In late October, following the results of their fiscal fourth quarter financial results, he posted a video message highlighting the path forward. His repeated trust-building theme in that message is getting “back to Starbucks.”4

One of the most important goals when leadership changes is to build trust in the new leader. This is the foundation of business, the currency of leadership.

1Covey, Stephen M. R. The Speed of Trust. Simon & Schuster, 2008.

2Starbucks names Brian Niccol as Chairman and Chief Executive Officer. 13 Aug. 2024, about.starbucks.com/press/2024/starbucks-names-brian-niccol-as-chairman-and-chief-executive-officer/.

3DURBIN, DEE-ANN. “Starbucks Hires Brian Niccol as New CEO as It Struggles to Define Itself.” AP News, 8 Sept. 2024, apnews.com/article/starbucks-ceo-brian-niccol-f2b918d9862a329d7f0ba3373ebbc444.

4Niccol, Brian. Video message from Brian: The path forward – about Starbucks. 22 Oct. 2024, about.starbucks.com/press/2024/video-message-from-brian-the-path-forward/.

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