Executive transitions: Dealing with the passed-over rival

One topic of discussion that many incoming executives raise in our transition labs is what to do when they have a passed-over rival for their new job on their team. How should you deal with an individual who has been passed over in favor of you? In some cases, the CEO or other senior stakeholders may even want you to do your best to retain this passed-over individual on your new team.

While Machiavelli suggests executing prior princes and rivals, today we can usually avail ourselves of more civilized and even cooperative, win-win strategies. It is probably best to begin by having a direct conversation, acknowledging the individual’s loss, re-recruiting the passed-over rival to your team, and framing mutually beneficial expectations and ways of working together. Ultimately, in most cases, it is in the interest of both of you to work together to achieve mutual and individual success.

There are a couple of points that are probably helpful to consider before having such a conversation. First, gain an understanding of why your rival was passed over for promotion, and then think through ways to help the individual gain the experience necessary to be successful in the future.

As I work mostly with chief financial officers, let us consider this hypothetical case: A seasoned CEO selects you for the CFO slot, passing over the controller. On investigating why the controller was passed over, you find the CEO was not yet confident in that individual’s ability around treasury and investor relations. One way to help the controller is to perhaps offer the individual a new responsibility: overseeing treasury and investor relations functions. Ideally, such a restructuring enhances the controller’s experience while potentially developing a successor candidate for your position. As you might be recruited to bigger and better roles within the next several years, developing competent successor candidates during your tenure serves both your company and your reputation. And CEOs and boards generally expect C-suite executives to develop a succession plan for their position.

While this strategy for dealing with a passed-over rival is the ideal outcome, it is not an easy one to pull off. Implementing the suggested strategy could block other high-potential talent in your organization (as in treasury and the investor relations functions in the previous example), for instance. Where a role expansion is not feasible, collaborating with the individual to identify and engage on projects that build the relevant experiences can also be helpful. When the passed-over individual does not have a clear development role in the organization or does not want to develop the skills that are lacking, the next best strategy is probably agreeing on a retention and/or exit plan, as the individual is likely to want to leave.

Why would you want to retain a person who may want to leave? Having a retention plan in place is important when the passed-over rival has valuable, tacit knowledge and you cannot easily identify a replacement, nor a development role for the individual in your organization. A retention bonus can be structured to foster an orderly exit if your passed-over rival wants to leave, permitting your team to build the knowledge and capabilities to fulfill their role. Retention bonuses can be structured in many ways. Some are structured so half or one-third is available in the first two months, which can address the sting of a loss, with the remainder provided at the end of the first six months or the year. With proper focus, six months to a year should be sufficient time to develop interim leadership capability in the function that accumulates the relevant tacit knowledge, or to recruit a replacement candidate.

While it is generally in the mutual interest of both parties to create a reputation for professionalism and orderly transitions, sometimes it just does not work out. The chemistry between the passed-over rival and you simply may not be there, or the individual is not willing to accept your leadership. It is especially problematic if the passed-over rival is passive aggressive and undermines your leadership and the values and practices you seek to promulgate in your new organization. In such a case, the best course may be to follow Machiavelli’s advice to “take the pain over suffering” and exit the individual out as quickly as possible. In other cases, the individual may already have other career-advancing offers in his or her back pocket and wants to leave as quickly as possible. As a leader, you want to be prepared to plug any gaps created by the departure as quickly as possible.

The takeaway: Dealing with a passed-over rival at work does not have to be a challenging issue. The key to a successful outcome is to have clarity on possible go-forward solutions for yourself and that individual. A solution can be  mutually advantageous―you get to develop a successor and the passed-over rival  has an opportunity for career growth within the organization. When this strategy is not feasible, you may want to undertake a retention and exit strategy for an orderly knowledge transfer and exit. If the individual proves to be difficult, non-cooperative, and damaging to what you want to do, it may be best to move forward expeditiously, replacing your passed-over rival without further delay.