Handover Process for Leaders During Crisis

The senior management handover process can either mitigate or exacerbate any type of crisis in the government sector. Whether due to internal or external causes, or both, a crisis is a tremendous challenge to promote a seamless and stable process of leadership transfer. Research on private sector leadership transfers shows that a lack of formal processes and procedures can lead to costly setbacks and needlessly long periods of transition (Gabarro, 2007). Within the public sector, and particularly within specific institutions like central banks, leadership transitions can have lingering, lasting, and meaningful effects on the geopolitical landscape and the global economy.
An effective handover process begins with strategic planning. Change management needs to be proactive rather than reactive, going beyond merely anticipating threats and actually building into the organizational structure the means by which to change and adapt (“Why Change?” 2005). To construct a proactive change management strategy, the organization needs to refer first to its mission, vision, and guiding principles. The values upon which the organization was founded, and to which it ascribes, will help determining the purpose and vision for the intended leadership change. Moreover, the change will be driven by principles and values, allowing for the selection of leaders that can better align practices, policies, and organizational culture with mission and vision. Central banks frequently face ethical dilemmas during handover processes, due to their uneasy alliance of public and private sector interests (Mishkin, 1998). During the handover process, senior management needs to make decisions that concur with the financial institution’s obligations to stakeholders, and not just investors.
The second step in the handover process should be a consideration of what leadership traits are most valued during the transition period and to fulfill short term objectives. Concurrent with an analysis of leadership traits, senior management would also need to outline the core financial, political, and strategic objectives a new leader needs to fill. Some of the functions that the transition team would need to address would be those that immediately help to resolve the crisis, whether it was related to fiscal instrumentation, inter-bank or intra-bank communications and settlements, currency circulation issues, or government banking service provisions (“Why Change?” 2005). The skills and background of the deputy governor need to be matched well with these and any other future goals. Matching the leader’s skill sets to organizational objectives is preferable to selecting a leader who might maintain the status quo, due to the ongoing need for being a learning organization that is adaptable and responsive to crises.
Third, the central bank should come up with a reasonable timeline for the deputy governor handover process. In a case study of the Central Bank of Ireland, for example, a leadership transition phase lasted for three years and during the transition, the entire leadership team focused on organizational culture issues as well as financial and political objectives (Brennan, 2018). During a crisis stage, like those experienced by the Bank of Japan or the People’s Bank of China, the financial organization may experience internal and external pressures to rush the transition period, but hasty transitions without cogent strategic planning can backfire (“Central banking leadership flux looms as global economy facing combustible challenges,” 2017). A focused, and goal-driven transition period will help the organization weather crises far better than an ad hoc approach to leadership change. Each stage of the transition process needs to be broken down further, with structural changes naturally occurring later than the initial responses to the immediate crisis (Gabarro, 2007).
Fourth, it is important to align crisis management strategies with leadership transition. Crisis management may include communications and public relations as well as forming strategic political alliances. The full gamut of considerations involved during crisis management will be guiding issues in the process of leadership transition within the organization. Communicating openly with partners will help to align the central bank’s vision with its stakeholders. Similarly, the process of transition needs to include the methods by which the outgoing leader can communicate formally as well as informally with the replacement.
Finally, the handover process needs to proceed according to measurable outcomes. Assessment and feedback tools will help the members of the leadership team understand how to make improvements and change their approach to addressing the crisis. The handover process also needs to proceed in accordance with democratic principles including freedom of information, offering maximum transparency without sacrificing state secrets, national security, or data integrity (Mishkin, 1998). Central banks, and any other crucial government sector agency, need to retain the ethical tenets of the political climate in which they operate, be responsive to the public and the media, and willing to make structural changes that prevent crises from occurring again in the future.
Depending on the situational variables and the type of crisis, the methods of leadership transition within a government agency will vary considerably. Security breaches, public relations crises, and political upheavals will all warrant specific responses and unique strategies for planned strategic change. In any case, having a well-designed process for handover for senior management during crises in government will help to minimize harm and possibly even promote constructive change that can drive the organization forward to embrace change. The process for handover should include overall assessments, crisis management, strategic planning, and ongoing assessments.






References

Brennan, J. (2018). Leadership improvement needed in Central Bank, governor tells staff. The Irish Times, April 7, 2018. https://www.irishtimes.com/business/economy/leadership-improvement-needed-in-central-bank-governor-tells-staff-1.3396548
“Central banking leadership flux looms as global economy facing combustible challenges,” (2017). Financial Post. 18 Oct, 2017. http://business.financialpost.com/news/economy/corrected-rpt-as-the-quartet-breaks-up-central-banking-leadership-flux-looms
Gabarro, J.J. (2007). When a new manager takes charge. Harvard Business Review. https://hbr.org/2007/01/when-a-new-manager-takes-charge
Mishkin, F.S. (1998). Central banking in a democratic society. Columbia University. https://www0.gsb.columbia.edu/faculty/fmishkin/PDFpapers/DEMOCRAT98Z.pdf
“Why Change?” (2005). MendHurst. http://www.mendhurst.com/central-banking/why-change/