Supporting a time-sensitive senior executive exit
Client Persona & Context
The clients are the Chair and the CEO of an organisation with a high public profile. An executive member of the organisation’s board (the executive) has resigned to join another organisation. This executive has agreed with the new organisation that they can make an announcement within 48 hours. However, the executive has also proposed that they should leave their current employer with an exit package as they argue that 12 months earlier they had responsibilities removed from their remit which amounted to constructive dismissal. The HR Director has only been in post for a few weeks and has not dealt with a complex senior exit case before.
The 3XO engagement team discuss the facts with the Chair, the CEO and the HR Director. The 3XO engagement team meet with the organisation’s legal advisors and consider the merits of the case for constructive dismissal and the treatment of leavers under the remuneration arrangement operated by the organisation. They consider guidance which the organisation’s stakeholders will consider and precedents.
Options are presented to the Chair and CEO by the 3XO team, HR Director and the organisation’s legal advisors. These include an option that takes a legitimate but broad interpretation of the remuneration arrangements which would allow ‘good leaver’ status; and an option that takes a stricter view, that the matter is for the organisation’s board and that as a resignation there is no need to pay any compensation. They advise that the stakeholder reaction is likely to be negative if any payment is made beyond what is strictly contractually necessary. It also sends a negative signal within the organisation as the executive’s behaviour could be seen to contradict the organisation’s values.
The CEO and Chair are concerned that, given the executive’s profile, their organisation’s interests will be damaged by the announcement by the executive’s new employer. This will be exacerbated by the suddenness of the executive’s exit and the lack of an immediate succession plan. The 3XO team, HR Director and legal advisors propose that the Board threaten to hold the executive to their full notice period of six months but offer to shorten this to two months subject to a delay of two weeks before the announcement. 3XO support the Chair, CEO and HR Director with speaking points for conversations with their counterparts at the executive’s new employer, explaining the need to delay the announcement. A 3XO principal joins the HR Director for conversations with the executive and their respective legal advisors.
Working with the HR Director and their legal advisors, an exit agreement is agreed, including exit date, and agreed internal and external announcements, which include the organisational changes which will follow the executive’s departure.