Organizational renewal during crisis: impact of CEO succession and SHRM as change agents

In recent years, unprecedented changes have threatened the long-term survival of organizations by transforming established practices, altering working conditions, disrupting industries, and remapping competitive landscapes (Issah et al., 2023; Maharani et al., 2024; Müller et al., 2025). To prevail in increasingly dynamic and unpredictable environments, organizations need to engage in renewal activities, wherein resources and activities are strategically aligned to tackle shifting environmental conditions (Issah et al., 2023; Järvi and Khoreva, 2020). However, successful organizational renewal depends on the severity of crisis modes experienced during periods of decline (Mone et al., 1998; Nystrom and Starbuck, 1984). For instance, while any organizational decline entails erosion of a firm's resources, the degree of crisis will vary based on the availability of uncommitted resources that can be allocated to combat further decline (Mone et al., 1998) as well as the speed of environmental change, stakeholder legitimacy pressures, and reputational dimensions of the situation. The severity of crisis situations, as well as the kind of strategies that are used to adapt and respond to crisis is key to organizational survival (Coombs, 1995, 2022; Buhagiar and Anand, 2023; Zhou and Ki, 2018). Correspondingly, organizational renewal and strategic actions to combat decline, will assume different forms based on the assessment of crisis severity.

Leadership scholars have emphasized that top executives, especially CEOs, play a dominant role in determining and implementing strategic actions within an organization (Hutzschenreuter et al., 2012; Westphal and Fredrickson, 2001). Indeed, studies in the organizational renewal literature have underscored the importance of decisions made by CEOs and their influence on strategic actions taken during organizational renewal (Maharani et al., 2024; Mone et al., 1998), and how they play a key role in building commitment and adding legitimacy to the change process (Jacobs et al., 2013). However, the key decision regarding retention or replacement of the CEO during organizational renewal and change remains understudied, a significant gap given that CEO succession decisions are considered critical turning points in organizations (Berns and Klarner, 2017; Kavadis et al., 2022; Manzoor et al., 2018). Decisions to replace a CEO lead to additional debates regarding the new CEO's origin, whether the new CEO should be promoted from within the organization (contender succession), from outside (outsider succession), or whether a former CEO/founder should be reinstated. Given that top management replacement has strategic consequences for organizations (Barker and Mueller, 2002), we propose that CEO retention/replacement decisions during varying crisis modes will result in different strategic actions and SHRM emphases that promote organizational renewal. This is especially salient given that crisis management (from an internal perspective) focuses on the actions undertaken by organizational leaders in the aftermath of a crisis, especially regarding the roles of organizational culture and structure (Bundy et al., 2017).

Furthermore, although CEOs serve as a significant impetus for implementing strategic actions, the success of strategic initiatives depends heavily on the design and implementation of a firm's strategic human resource management (SHRM) practices (Chadwick et al., 2015). SHRM practices need to be responsive to renewal and revitalization efforts that enable employees to adapt to changing business needs, especially when they must embrace evolving routines and expectations during periods of organizational change (Lengnick-Hall and Lengnick-Hall, 1988). Critically, effective organizational renewal is not solely a top-down executive exercise; it requires genuine engagement from employees at all levels, supported by Human Resource (HR) systems designed to facilitate readiness for change, learning, and behavioral adaptation (Armenakis and Bedeian, 1999; Kotter, 1995).

Based on Müller et al.'s (2025) call to take into consideration the development of flexible crisis plans and purposeful leadership to navigate crisis situations, the research questions explored in this paper are twofold: (1) How do different CEO retention/replacement decisions and corresponding strategic actions act as change agents during varying levels of crisis characterizing organizational renewal? (2) How do specific SHRM activities enhance the effectiveness of strategic changes associated with these CEO retention/replacement decisions to bring about effective organizational renewal?

This paper contributes to the extant strategic management literature in several ways. First, extending the literature on the role of CEOs in organizational renewal, we identify various CEO retention/replacement options corresponding to different degrees of crisis severity. Although succession type has been shown to influence post-succession performance, studies have shown inconsistent findings regarding insider vs. outsider succession (Kesner and Sebora, 1994; Shen and Cannella, 2002). Within insider succession there are two distinct types, followers and contenders, and the return of a former/founder CEO represents a third distinct category. Considering these succession types within crisis severity levels can clarify the mixed results in the literature. Second, in organizational renewal research, crisis has been raised but not elaborated. Based on Zhou and Ki's (2018) work, we suggest that crisis varies in severity and that different crisis levels call for different CEO succession types and strategic actions. Third, we contribute to the SHRM literature by delineating how CEO succession during organizational crisis shapes the design of HR systems to enable employee-level implementation of renewal strategies.

Most of the research in crisis management has studied crisis severity from a unidimensional perspective, with most of the crisis management models and frameworks failing to consider the numerous attributes that are crucial to overcome different crisis contexts (Buhagiar and Anand, 2023). Through demarcation of different levels of crisis (based on Zhou and Ki, 2018), as well as consideration of numerous elements in the organization that are involved in overcoming crisis, this paper addresses the paucity of research in understanding multidimensional crisis situations. Additionally, most studies have researched crisis severity as a supplementary construct to other studies but have not paid much attention to theoretically examining how and why crisis severity influences other variables (Zhou and Ki, 2018). This study represents the first attempt to integrate the theoretical domains of organizational renewal, CEO succession and strategic actions, and SHRM toward effective organizational renewal. We substantiate that claim by demonstrating that no prior framework has specified the contingent relationship between crisis severity, succession type, and SHRM system design at the intersection of these three bodies of literature. The following sections elaborate on relevant background research, the methodology, theoretical propositions, and implications for theory and practice.

Organizational renewal entails 'a quantum shift in strategic thinking and organizational culture' (Acar and Winfrey, 1994: 165), a timely change in managers' mental models when faced with environmental changes (Barr et al., 1992), shaking off organizational inertia (Dougherty, 1992; Barr et al., 1992; Spender and Grinyer, 1995), engaging in higher-order learning (Acar and Winfrey, 1994; Barr et al., 1992; Dougherty, 1992; Spender and Grinyer, 1995), and focusing on product innovation and customer orientation (Dougherty, 1992). Accordingly, organizational renewal can be broadly described as a process that entails a significant change in managers' mental models and strategic direction, facilitating value creation during times of organizational crisis and thereby reversing declining performance.

Implicit in any discussion of organizational renewal is the concept of “crisis” (Acar and Winfrey, 1994; Leavy, 1997; Starbuck et al., 1978). Consistent with Soares (2022), this paper focuses specifically on strategic and organizational renewal during periods of performance decline, as distinct from reputational renewal following communication crises, which constitutes a related but separate domain. A crisis, in our context, is an unstable or crucial situation that threatens the organization's survival, requiring serious rethinking of existing beliefs, procedures, and even organizational foundations (Bundy et al., 2017; Starbuck et al., 1978). Boxall (1998) asserts that renewal crises may result from a new round of technological or organizational innovation within an industry sector, or from more general external threats such as a global pandemic, a worldwide economic recession, or a major environmental disaster.

In this paper, we suggest that organizational renewal can be better understood by examining various degrees of crisis severity. This approach avoids a vague characterization of crisis and enables a more targeted approach to determining the strategic actions required to address it (Marsen, 2020). Zhou and Ki (2018) The degree of crisis is deemed relatively low when organizations face stagnant growth that could potentially lead to decline and thus need to reverse performance erosion, and relatively high when organizations experience long and sustained periods of declining performance that impose a need for organizational turnaround (Arogyaswamy et al., 1995; Hofer, 1980).

It is important to note that this low/high distinction serves as an analytical heuristic for conceptual development, not an assertion that crisis states are discretely bounded. In practice, crisis severity (Coombs, 1995) forms a continuum, and the precursors of high crisis frequently appear within ostensibly low-crisis contexts (Pearson and Clair, 1998). A low crisis in organizational structure and systems can simultaneously trigger a high crisis in workplace culture, employee wellbeing, and stakeholder confidence (Sopow, 2020; Zhou and Ki, 2018). Organizations should therefore apply the diagnostic logic of this framework dynamically, remaining attentive to escalation signals even during periods of apparent stability.

While research has explored how firms have evolved when faced with crisis situations, there is still a research gap in understanding why firms undertake specific innovative actions in times of crisis (Montes et al., 2024). Based on Upper Echelon theory (Hambrick and Mason, 1984; Hambrick, 2007), top management is often associated with a firm's strategic actions or commitment to the status quo (McClelland et al., 2010). Therefore, changes in leadership, specifically CEOs, in organizations undergoing crisis will influence subsequent responses to engineer renewal (Barker and Mueller, 2002; Simsek, 2007).

The dynamic nature of organizational crises has been well documented in the crisis management literature. Pearson and Clair (1998) define organizational crisis as a low-probability, high-impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly. Contemporary scholars have further distinguished among types of organizational crisis, including operational crises (failures of internal systems or processes), strategic crises (misalignment with the competitive environment), reputational crises (loss of legitimacy with key stakeholders), and legitimacy crises (fundamental challenges to an organization's right to operate), each of which may require different leadership and HR responses (Seeger et al., 2003).

A critical insight from the crisis management literature is that organizational crises rarely emerge without warning. Rather, they typically develop through a progression from latent issues to full-scale crises (Heath and Palenchar, 2009). Organizations that practice proactive environmental scanning, stakeholder engagement, and issue management, consistent with the framework of the Issue Management Council, are better positioned to intervene at the issue stage before conditions escalate into existential threats. Sopow (2020) illustrates how disconnects between external and internal organizational environments, particularly in areas of workplace wellness and organizational culture, can create conditions of chronic low-level crisis that, if unaddressed, accelerate into high-level performance decline.

The concept of crisis severity was proposed by Coombs (1995) and has gained a lot of traction in the organization management and crisis management research fields. The concept of crisis severity was defined by Coombs and Holladay (2002, p. 169) as “the amount of damage generated by a crisis including financial, human, and environmental damage”. The main theories that have been studied with respect to crisis severity are Attribution Theory (Weiner, 1985), leading to the concept of crisis responsibility (Coombs, 1995), which is the degree to which an organization is blamed for a crisis event by its stakeholders (Coombs, 1995), Situational Crisis Communication Theory (SCCT), which has focused on determining which crisis response strategy, based on severity of crisis, best protects an organization's reputation (Avery et al., 2010; Coombs, 2007; Zhou and Ki, 2018), and Defensive Attribution Theory (DAT), which has been used to explain how stakeholders may attribute responsibility to organizations based on severity of a negative event such as a crisis when affected at a personal level (Shaw and McMartin, 1977; Zhou and Ki, 2018). Zhou and Ki (2018) delineated crisis severity into two types – high crisis situations and low crisis situations and found that the levels of severity had differing effects on crisis responsibility, and attributes towards accountability and intentionality. They suggest that further investigation into these topics is warranted.

Contemporary crisis management scholarship also underscores the role of corporate social responsibility (CSR) in shaping crisis dynamics. Asemah-Ibrahim et al. (2022) document the terminological complexity surrounding crisis, encompassing emergency situations, conflicts, catastrophes, and various hazards, and note that CSR strategies increasingly form part of organizations' crisis management toolkits. Organizations perceived to be behaving responsibly toward employees, communities, and broader stakeholders are better positioned to mobilize internal and external support during renewal efforts. This insight reinforces our framework's attention to internal crisis communication, corporate image renewal, and employee-oriented SHRM practices as integral components of crisis response. While the necessity to engage in strategies to combat high crisis situations is quite evident, the implication for our framework is that organizations operating in what appears to be a “low crisis” context should nonetheless apply vigilant diagnostic practices to detect escalation signals early.

Change management research has evolved from early stage-based models to more dynamic process perspectives that draw on both organizational behavior and strategic management research. Early work by Lewin (1947) conceptualized change as a three-stage process of unfreezing, changing, and refreezing, emphasizing the disruption of existing equilibrium, the implementation of new behaviors, and their stabilization in revised routines. Kotter's (1995) eight-step model extended this line of thought by framing change as a leadership-driven process that begins with creating a sense of urgency and building a guiding coalition, followed by communicating a vision, empowering broad-based action, and consolidating short-term wins into long-term transformation. These foundational models have been integrated into broader frameworks that stress the alignment of change initiatives with organizational mission, vision, and culture and highlight the importance of involving multiple stakeholder groups to translate abstract models into operationalized change practices (Armenakis and Bedeian, 1999; Burnes, 2004). However, there is research that suggests that a simple definition of change may not be effective as they do not consider conflicting interests and lack of interaction between decisions and action (Saka, 2003). This has led to a broader dialogue involving the social aspects of exchange, where knowledge and shared understanding is shaped through conversations and sensemaking (Weick, 1995).

The role of internal change agents has also been emphasized, as these change agents are recognized as pivotal actors who seek to reconfigure an organization's roles, responsibilities, structures, processes, etc. (Buchanan and Badham, 1999), and who seek to use “influencing skills” to gain commitment to goals (Buchanan and Boddy, 1992; Saka, 2003) Empirical studies of change implementation show that effective change agents, such as line managers and designated change managers, align change initiatives with organizational mission and vision, listen to managers' and employees' concerns, create measurable short-term goals, and iteratively adjust strategies based on feedback, thereby translating top-level plans into local practices (Armenakis et al., 1993; Higgs and Rowland, 2011). Research on determinants of change success consistently identifies leadership behavior, executive sponsorship, and the visible presence of a change manager with a clear roadmap, strong communication skills, and coaching behaviors as key predictors of whether change initiatives are sustained (Self et al., 2007).

CEOs and top management teams operate as strategic change agents whose characteristics and succession patterns materially influence organizational renewal. Drawing on Upper Echelons theory, research shows that CEOs are central drivers and implementers of strategic change and that CEO turnover, particularly when it involves the appointment of an outside successor, is positively associated with the likelihood and magnitude of strategic reorientation (Finkelstein et al., 2009). Studies of CEO succession indicate that external successors often bring distinct experiences, cognitive frames, and external networks that can disrupt existing power structures, reconfigure capabilities, and accelerate change, whereas internal successors are more likely to sustain or incrementally adjust established trajectories (Zhang and Rajagopalan, 2010). More recent work further demonstrates that CEO origin interacts with top management team composition and faultlines to shape the degree of strategic change and subsequent performance outcomes, reinforcing the idea that CEOs and their teams are primary organizational change agents whose choices about strategy, structure, and people determine the organization's capacity for crisis response and long-term renewal (Georgakakis and Ruigrok, 2017; Wowak et al., 2011).

Additionally, human resource management (HRM) plays an important role in translating organizational goals into people-focused practices and behaviors. In Ulrich's (1996, 1998) work on the HR framework, the change agent role was suggested to be central to HR's strategic contribution, positioning HR professionals as architects of continuous transformation who help shape culture, build change capability, and support leaders in implementing new strategies. Similarly, Barratt-Pugh et al. (2013) suggested that HR managers played an instrumental role in accelerating the cultural change process through formal and informal agencies of change. Subsequent work elaborates that HR managers act as liaisons between senior leadership and employees, aligning HR policies with strategic goals, designing change management plans, and addressing resistance through communication, training, and coaching (Caldwell, 2003; Hailey et al., 2005).

A basic tenet in strategic management research is that top executives, especially CEOs, play a dominant role in directing and implementing corporate strategy (Berns and Klarner, 2017; Hambrick and Mason, 1984). Organizations, more precisely, boards of directors, choose CEOs to achieve targeted performance levels or achieve turnaround through the implementation of strategic initiatives (Hofer, 1980; Guthrie and Datta, 1997). The consensus is that CEO retention and replacement decisions are contingent on levels of crisis and renewal strategies (McNamara and Baden-Fuller, 1999).

From an agency theory perspective (Eisenhardt, 1989), the board of directors acts as the principal in a principal-agent relationship, monitoring CEO performance and using succession decisions as a governance mechanism to realign the organization's strategic direction with shareholders' interests. During crisis situations, information asymmetries between the board and the incumbent CEO may become particularly acute, and differences in risk preferences may diverge sharply, increasing the board's incentive to intervene through leadership change. This agency theory lens provides a theoretically grounded explanation for why boards make the specific succession choices we propose in each crisis scenario, with decisions driven not only by performance signals, but also by governance logic and the need to restore principal control over strategic direction.

While CEO retention decisions are relatively straightforward during periods of adequate performance, replacement decisions are more complex: organizations must choose between candidates from within and outside the organization. Some organizations have also subscribed to the trend of bringing back a former CEO or the founder. Below, we offer a brief theoretical background on the different types of CEO succession.

Under normal succession events, a key type is insider-follower succession, involving executives promoted from within the firm following the predecessor's retirement. These successions are also termed heir-apparent successions, as the predecessor would typically have groomed the new CEO to continue existing strategies (Hambrick et al., 1993). Because this succession type closely mimics incumbent CEO retention and is unlikely to occur during crisis, it is not discussed further in this paper.

In certain situations, incumbent CEOs face power contests initiated by other top-level executives (Shen and Cannella, 2002), and an insider succession occurs following CEO dismissal. This typically occurs when the firm has exhibited poor performance and the contender seeks to convince the board that their strategic perspectives can outperform the incumbent's (Ocasio and Kim, 1999; Ramachandran, 2018; Shen and Cannella, 2002). Contender CEOs can initiate strategic changes without the encumbrance of the status quo, while their firm-specific knowledge allows them to avoid hasty decisions in TMT restructuring.

In low-performing organizations, outsider CEOs are brought in mainly as change agents (Kesner and Sebora, 1994). Research has demonstrated that boards appoint outsider CEOs after dismissing incumbents during sustained decline (Shen and Cannella, 2002; Weisbach, 1988; Zhang and Rajagopalan, 2010). Deep performance decline represents a “frame breaking” experience (Weick, 1995) signaling that present strategies are insufficient for the required organizational reorientation. Outsider CEOs may be better positioned to align the organization with the environment and improve performance (Ndofor et al., 2009; Zhang and Rajagopalan, 2010). However, as we elaborate in the propositions below, outsider succession carries genuine risks, including cultural unfamiliarity and heightened employee resistance, which must be managed through careful SHRM design.

The return of a former CEO or founder to rescue a failing organization has not been systematically addressed in the succession literature. Although evidenced in corporate practice, notably the returns of Michael Dell, Steve Jobs, and Howard Schultz, researchers have studied succession primarily through the insider/outsider dichotomy. Former CEOs and founders understand core competencies and organizational culture, giving them a frame of reference for setting performance-recovery goals (Baron et al., 1996; Beckman, 2006). While this type could be treated as a form of insider succession, the returning leader's prolonged absence creates conditions of organizational unfamiliarity that justify treating this as a distinct succession type.

SHRM perspectives advocate that human resource management must be dynamic and aligned with the evolving requirements of organizational strategies (Wright and McMahan, 1992). While the SHRM literature has focused on how programs, practices, and procedures support organizational requirements at different developmental stages (Baird and Meshoulam, 1988), comparatively little attention has been paid to SHRM during decline and renewal.

Notable exceptions include Lengnick-Hall and Lengnick-Hall (1988), who identified a “redirection quadrant” in their SHRM model for firms in declining industries or with obsolete products. Boxall (1998) further noted that firms surviving renewal do so either by dominating the direction of industry change or adapting to it, both requiring employees who are capable and motivated to embrace change. To effectively navigate the renewal phase, organizations need core employees to endorse major change without excessive resistance; leaders must determine which competencies to cultivate and which mental models to abandon.

Critically, the change management literature reinforces that organizational renewal is not solely an executive-driven exercise. Armenakis and Bedeian (1999) demonstrate that employee readiness for change, a function of perceived need for change, organizational capacity, and perceived personal valence, is a fundamental determinant of change success. Kotter's (1995) eight-stage model of change underscores that without broad employee engagement, short-term wins, and sustained reinforcement, even well-intentioned strategic initiatives fail. These insights position SHRM not merely as an implementation instrument of CEO strategy but as a co-constitutive force that shapes employees' willingness and ability to enact renewal.

This article employs an integrative conceptual research design to develop a framework for organizational renewal during crises, examining how crisis-contingent CEO succession decisions and SHRM approaches interact with strategic emphasis to influence organizational renewal effectiveness. This design allows us to synthesize research from multiple theoretical domains and address a significant gap: the lack of a unified contingency framework connecting crisis severity, CEO succession, strategic action, and SHRM in organizational renewal. Using this approach, we prioritize theoretical coherence and build a theoretical framework from convergent insights of varied bodies of scholarship.

Search Strategy - The literature search was conducted using Business Source Complete (EBSCO), PsycINFO, and Web of Science, as well as Google Scholar. Primary search terms included: organizational renewal, strategic renewal, CEO succession, executive succession, strategic human resource management, organizational crisis, turnaround management, and organizational decline. Boolean combinations (e.g. “CEO succession AND crisis”; “SHRM AND organizational renewal”) were used to identify literature at the intersections of the three focal domains. Searches were conducted without a date restriction to capture both foundational theoretical contributions and contemporary empirical work, with preference given to peer-reviewed articles published in Management, Strategic Management, and HRM journals.

Inclusion and Exclusion Criteria – Included sources comprise peer-reviewed conceptual and empirical articles in English that address at least one of the three focal domains (organizational renewal, CEO succession/succession, and SHRM); contributions that provide theoretical frameworks or empirical evidence related to crisis severity, leadership change, or HR system design during decline or turnaround; and older but foundational works that establish the conceptual base for current scholarship. Excluded sources include practitioner-only (non-peer-reviewed) reports, studies that do not employ an organizational-level lens, and work focusing solely on reputational or communication crises without implications for strategic or organizational renewal under performance decline. Applying this search and screening criteria, we conducted a theoretical analysis of the core literature streams: organizational crisis and crisis severity, CEO succession and strategic leadership, strategic action under adversity, and strategic human resource management (SHRM). These streams were selected because they collectively address how leadership, strategic decision making, and HR architectures can enable or impede renewal in turbulent contexts and are central to contemporary work on organizational change.

Using the above search and screening criteria, we identified core contributions on crisis severity, CEO succession, strategic action under adversity, and SHRM that were conceptually relevant to renewal during organizational decline. Through in-depth analysis, we interpreted how different combinations of crisis intensity, CEO succession, strategic emphasis, and SHRM practice influence product innovation, customer focus, changes in mental models, and the preservation of organizational memory. Convergences and gaps across literatures were identified to construct the four crisis-contingent renewal scenarios that pair specific crisis conditions with particular CEO succession logics, strategic emphases, and SHRM configurations (Table 1). Further, we clarify key constructs, articulate underlying assumptions, and derive propositions that specify how retaining the incumbent CEO, appointing a contender, hiring an outsider, or re-hiring a former CEO, when supported by aligned HR practices, can enhance organizational renewal under different crisis conditions. Rigor is strengthened through transparent criteria for literature inclusion, explicit construct definitions and delimitations, and an assessment of the internal coherence and practical as well as scholarly relevance of the proposed framework for organizational change. The framework is presented as a contingent theoretical model rather than a set of universal prescriptions, acknowledging that the propositions are subject to boundary conditions that future empirical research should test.

In the following sections, we present different crisis situations that necessitate organizational renewal and discuss: (1) choices regarding CEO retention/succession pertaining to each situation and key strategic actions; and (2) SHRM practices that need to be emphasized for successful renewal.

Table 1 represents the different crisis situations and corresponding CEO retention/replacement options that serve as the foundation for strategic emphasis during organizational renewal. Four integrated scenarios are explored: (1) retaining an existing CEO during relatively low crisis modes; (2) promoting a contender CEO from within during relatively low crisis modes; (3) bringing in an external CEO during relatively high crisis modes; and (4) re-hiring a former CEO or founder during relatively high crisis modes. These scenarios are chosen for illustrative purposes, and it is acknowledged that other situations are possible and merit further exploration.

Spender and Grinyer (1995) found that, contrary to popular belief, organizational renewal is not always accompanied by the replacement of the CEO of the organization. They studied organizations that underwent marked change and discovered that, in situations where there was a negligible or very low level of crisis, the top management team was seen to create an “energizing” environment and senior and middle level managers were pushed to learn about attitudes, strategies, and practices of the organization's customers, suppliers, and even competitors. This helped managers understand mental models of external stakeholders without having to adopt those mental models themselves. McNamara and Baden-Fuller (1999) studied organizational renewal in the Celltech case, where the organization had gone through four different periods of organizational renewal to strategically reorient itself due to declining performance. They discovered that, in all the periods except one, organizational renewal took place without replacement of the CEO. While the CEO was retained during low crisis situations, the CEO was replaced only during a high crisis when the organization nearly went bankrupt.

Dougherty (1992) suggested that organizational renewal is often required in crisis situations brought about by product lines that are inferior to competitors' offerings and in poor alignment with market demands. The development of an environment that supports creative tension and higher order learning is important for product innovation (Leavy, 1997). Through processes such as benchmarking, organizations such as Intel and Coca Cola maintain a steady environment of constructive conflict as it has been shown to lead to an increase in higher order learning (Leavy, 1997). Higher order learning adds to human capital, the organization's knowledge stock represented by accumulated skills, abilities, and expertise (Dierickx and Cool, 1989) and will lead to better product innovation.

Also, during the process of organizational renewal, employees in charge of product innovation need to be cognizant of customer needs (Dougherty, 1992) and view the customer as a resource, co-producer, buyer, and user (Lengnick-Hall and Lengnick-Hall, 1999). It has also been suggested that, during organizational renewal, the needs of the customer even take precedence over those of organizational members (Lester et al., 2003). A customer focus ensures that product innovations possess benefits that customers truly value. This can be achieved by engaging in extensive collection of market-related information, dissemination of that information to all functional units, and emphasizing responses which are consistent with customer needs. Strategic HRM practices can reinforce this customer orientation by recruiting, developing, and rewarding employees for customer-centric behaviors and cross-functional collaboration that translate market insights into viable innovations.

Boundary Conditions: Proposition 1 is contingent on the existing CEO's cognitive flexibility and willingness to embrace incremental strategic change. CEOs who are entrenched in the status quo or who have been “stale in the saddle” (Miller, 1991) may be unable to catalyze even modest renewal efforts, suggesting that CEO retention during low crisis may itself be a risk factor requiring board monitoring.

When contender CEOs are hired, they are charged with a mandate to deviate from status quo and initiate strategic changes as would an outsider CEO (Shen and Cannella, 2002). However, the contender will have firm-specific knowledge gained through prior organizational experience (Shen and Cannella, 2002). Additionally, their victory in the power contest with the ousted CEO provides them with board support and this established power base and support would then facilitate the strategic changes they will want to initiate in a timely manner (Hutzschenreuter et al., 2012; Ramachandran, 2018; Shen and Cannella, 2002).

In a contender succession, the new CEO will face challenges including organizational disruption from the incumbent's dismissal. While the contender will not feel obligated to continue along the incumbent's strategic path, they must reassess the top management team. Their firm-specific knowledge enables them to do so without hasty or uninformed decisions (Ramachandran, 2018; Shen and Cannella, 2002), allowing them to identify and promote executives who can assist in the strategic changes. Strategic HRM support is critical in this process, aligning succession, assessment, and development systems to facilitate timely TMT restructuring and to ensure that leadership capabilities as well as employees' capabilities match the renewed strategic direction. Recent empirical work by Wangrow et al. (2025) confirms that TMT replacement partially mediates the relationship between CEO succession type and subsequent strategic change, with outsider succession most strongly associated with TMT restructuring and strategic reorientation. This finding underscores the importance of attending not only to CEO selection decisions but also to the accompanying TMT composition changes that enable or constrain strategic renewal.

Boundary Conditions: Proposition 2 assumes that the contender candidate possesses genuinely differentiated strategic perspectives from the incumbent. If the contender's strategic vision is insufficiently distinctive, the succession may replicate the status quo under a different name. Boards must assess candidates for cognitive distance from the incumbent as well as for firm-specific knowledge.

In high crisis situations marked by sustained financial decline, organizational renewal is often punctuated by CEO replacement (Leavy, 1997). Westphal and Fredrickson (2001) suggest that board members react to high crisis by appointing outsider CEOs to initiate change. Outsider CEOs can bring fresh perspectives, new skills, and a willingness to question existing practices, creating significant changes in mental models, reinventing corporate image, and advocating new strategic directions (Grimm and Smith, 1991; Tushman et al., 1986; Westphal and Fredrickson, 2001; Zhang and Rajagopalan, 2010).

Due to heightened uncertainty caused by the new outsider CEO, including heightened emotions influencing organizational decisions (Manzoor et al., 2018), steps must be taken to reassure internal stakeholders. Strategic HRM support is essential in this context, by designing systems that reinforce the new mental models and channel employees' efforts toward the revised strategic and reputational goals. Steps are needed to increase employees' sense of belonging, encourage positive innovation, and help them view the crisis as a challenge (Genqiang et al., 2024). During this situation, internal crisis communication is especially required to communicate revised organizational goals and ensure organization-wide support for renewal strategies (Coombs et al., 2025). The external networks of outsider CEOs can also be leveraged, attracting new employees who increase external diversity (Brege and Brandes, 1993; Kang et al., 2007) and intellectual diversity (McNamara and Baden-Fuller, 1999).

Boundary Conditions: Proposition 3 is explicitly contingent on the degree to which existing mental models are entrenched and the organization's cultural openness to external leadership. Outsider CEOs face a “liability of outsidership”, cultural unfamiliarity and potential employee resistance that can slow the renewal process and trigger counter-productive internal conflict (Johanson and Vahlne, 2015). Empirical evidence demonstrates that some organizations have successfully renewed through internal leadership resources, including during the COVID-19 pandemic (Müller et al., 2025). The preference for an outsider CEO is therefore strongest when the incumbent leadership is demonstrably responsible for the crisis and when cultural transformation is a central renewal objective.

When organizations find themselves in high crisis, a new CEO is often sought to help in renewal efforts. However, neglected in research but recently observed in well-known corporations is the return of former CEOs or founders to resurrect a failing organization. The returns of Michael Dell to Dell Corporation, Steve Jobs to Apple, and Howard Schultz to Starbucks are prominent examples. Quigley and Hambrick (2012) emphasized the continuing role of former CEOs on the board of directors; we extend this by proposing that the return to the CEO role itself can be beneficial during high crisis.

Returning former CEOs or founders hold several potential benefits: they embody the organization's core values and inspire confidence in recovery (as with Steve Jobs); they are interwoven into the cultural fabric, engendering rapid acceptance of proposed ideas (as with Howard Schultz); and they are seen as the visionaries who took the organization to prior heights and can solve current problems through novel ideas (as with Michael Dell). These advantages enable returning leaders to focus immediately on renewal tasks rather than on building internal credibility.

During high crisis, the returning CEO needs to redirect strategic focus, renew corporate image, revitalize the organization, and restore employee and stakeholder faith. Leveraging both external social capital accumulated during their time away and internal social capital accumulated during prior tenure at the organization is critical (Dougherty, 1992). The primary responsibilities of returning former CEOs include pursuing renewal based on core competencies and ensuring fit between firm knowledge, core competencies, and renewal strategies. Strategic HRM practices can complement these efforts by helping re-establish a shared sense of purpose across employee groups and deliberately preserving and mobilizing organizational memory, thereby translating the returning leader's vision into collective action that supports organizational renewal.

Boundary Conditions: Proposition 4 is contingent on the returning CEO's ability to adapt to organizational changes that have occurred during their absence. Former CEOs who idealize their prior tenure and seek to restore historical strategies without accounting for how the competitive environment has evolved may repeat the conditions that led to the original crisis. Boards should assess returning candidates for cognitive adaptability and not only for their historical identity as organizational anchors.

During organizational renewal, the CEO must determine what adjustments are needed to enable the organization to maintain viability and eventually thrive. As Lengnick-Hall and Lengnick-Hall (1988) proposed, this begins with determining whether the industry is experiencing widespread decline or whether the firm is poorly positioned. Next, the level of organizational readiness for enacting a renewal must be ascertained, a human capital gap analysis addressing: (1) What is the organization's current mix of general, firm-specific, and industry-specific skills? (2) What mix is needed for the renewal effort? (3) How can any gap be filled? With a vision of what the organization needs and an assessment of current readiness, the CEO and top management team can turn their attention to the design of the SHRM system.

The HR system perspective serves as a useful theoretical framework for examining appropriate SHRM practices during organizational renewal. According to Arthur and Boyles (2007), the HR system has five components: (1) HR principles - overarching philosophies regarding what drives employee performance and how organizational resources and rewards should be allocated; (2) HR policies - organizational goals for managing human resources across functional areas such as staffing, training, and rewards; (3) HR programs - formal HR activities comprising bundles of internally consistent HR initiatives such as high performance work systems; (4) HR practices - the implementation and experience of HR programs by lower-level managers and employees; and (5) HR climate - the shared employee perceptions and interpretations of HR principles, policies, programs, and practices. This architecture is particularly useful here because it provides links between upper-level management decision-making and lower-level translations into employee behavior.

During organizational renewal, it is imperative to establish and communicate management's philosophies about how human resources will be managed during the process. Signals about renewal efforts are often accompanied by employee insecurity, fears about retrenchment, layoffs, outsourcing, and radical culture shifts, as seen in recent years in the automobile and financial sectors. HR principles must therefore be implemented to encourage employees to assist in renewal efforts, communicate growth, and prevent low-crisis situations from escalating into more serious ones.

Critically, research on organizational change consistently demonstrates that employee readiness for change, not merely executive direction, is a primary determinant of renewal success (Armenakis and Bedeian, 1999). Kotter's (1995) model highlights that creating a sense of urgency, building a guiding coalition, and generating short-term wins require active involvement at multiple organizational levels, not just top management. These insights are sharply reinforced by recent scholarship on HRM during crisis. Collings et al. (2021) demonstrate that the COVID-19 pandemic exposed a central paradox for HR systems: organizations needed to simultaneously cut costs and invest in employee support, requiring HR professionals to exercise nuanced strategic judgment rather than simply executing executive mandates. Minbaeva and Navrbjerg (2023) further identified that existing SHRM frameworks were inadequately equipped to address the novel challenges posed by environmental crises, calling for HR systems that prioritize organizational resilience and workforce adaptability. Newman et al. (2022) synthesized crisis-period organizational behavior research and found that employee psychological safety, perceived organizational support, and collective efficacy, all shaped by HR practices, are critical mediators between crisis severity and organizational performance outcomes. SHRM during organizational renewal must therefore go beyond implementing HR policies and practices as compliance instruments, and instead be designed to cultivate genuine employee engagement, behavioral change, and collective learning. This means that HR principles must be redefined to support product innovation and customer focus through employee empowerment (Wooldridge and Floyd, 1999; Spreitzer, 1995), wherein employees feel comfortable sharing ideas with managers, and through knowledge sharing enabled by social interactions and collaborative forums (McIver et al., 2013). Organizations such as Best Buy and Whirlpool have experimented with structured employee collaboration camps to surface innovative solutions to organizational challenges.

Regarding HR policies during organizational renewal, decisions on the relative emphasis on staffing, training, rewards, and job design must be explicitly tied to strategic objectives contingent on crisis level. In high crisis situations, this may require an emphasis on shifting mental models, unlearning, abandoning old ways of functioning, and embracing more efficient practices. Organizations may also need to leverage both internal and external human capital assets to support redirection of strategic objectives and rebuilding corporate image through a combination of selective staffing (retaining change-ready employees; bringing in new talent with required knowledge and attitudes) and intensive training and development (McIver et al., 2013).

HR programs and practices represent the specific choices of HR activities expected to enact the HR principles and policies and lead to the desired HR climate. These activities are designed by HR professionals, enacted in cooperation with line managers, and mediated through employees. CEO leadership is crucial for staffing the HR function with competent professionals, reinforcing the HR function's critical role in strategy implementation, and ensuring that managers and supervisors fully embrace and implement organizational initiatives. Lack of professional expertise or half-hearted acceptance by managers can dilute or destroy even the best-laid renewal plans.

The importance of calibrating SHRM practices to crisis severity is directly supported by recent empirical work. Rivera-Prieto et al. (2022) examined turnaround HR strategies in the airline industry during COVID-19 and found that SHRM decisions during crisis must be dynamic and co-evolutionary, continuously adjusted as crisis antecedents, organizational responses, and stakeholder expectations shift. Critically, their findings demonstrate that HR strategies and turnaround strategies must be jointly designed rather than sequentially applied. Complementing this, Sanders et al. (2024) showed that HR system strength along with the consistency, consensus, and distinctiveness of HR signals sent to employees, increases in response to crisis severity, but that this relationship is moderated by national cultural values. For organizations undergoing renewal, these findings imply that the design of HR systems must account not only for the crisis level but also for the organizational and cultural context in which HR practices will be enacted and interpreted by employees.

Following the severe turbulence observed across several industries in recent years, organizational renewal and recovery are likely to remain important areas of attention in both academic research and practice. As organizations attempt to revitalize themselves, recovery efforts will be measured through improvements in sales, profitability, shareholder value, and other financial metrics. Product innovation, customer focus, shifts in mental models, internal crisis communication, and rebranding of corporate image are seen as areas of strategic thrust that enable organizations to regain lost ground. As organizations strive to achieve renewal objectives, the spotlight is often on the CEO. Drawing from the strategic management literature on organizational renewal, this paper identified various CEO succession options corresponding to different crisis severity levels. Although in low crisis situations organizations may retain their existing CEOs, high crisis situations often necessitate replacement with new or former CEOs. For each crisis/CEO selection scenario, strategic actions contributing to organizational renewal are proposed.

While revised strategic directions and CEO retention/replacement decisions are critical during crisis, appropriate SHRM practices must also be implemented to manage the employees who implement recovery efforts. In this paper, we address the under-researched topic of SHRM during organizational renewal by discussing the relevance of different HR system components during varying levels of organizational crisis. It is the combination of (a) CEO leadership, (b) the strategic design of the organization's HR system, and (c) the effective implementation of HR programs by HR professionals, managers, and supervisors that works together to energize, direct, and sustain employee efforts, maximizing the effectiveness of organizational renewal. Importantly, this paper has positioned SHRM not merely as a top-down implementation mechanism but as a genuine enabler of employee readiness, behavioral change, and collective renewal capacity (Armenakis and Bedeian, 1999; Kotter, 1995).

Strategic change imperatives that lead to organizational renewal outcomes carry significant implications, directly influencing employment stability, organizational trust, and overall stakeholder confidence. Such decisions often trigger revised strategic directions and leadership choices that must be supported by SHRM practices enabling employees to adapt to evolving routines, expectations, and competencies during organizational change (Lengnick-Hall and Lengnick-Hall, 1988; Armenakis and Bedeian, 1999). When renewal is accompanied by transparent communication, opportunities for empowerment, and genuine engagement of employees at all levels, it can enhance perceptions of fairness, foster a stronger sense of belonging, and build stakeholder confidence in the organization's commitment to responsible behavior (Armenakis and Bedeian, 1999; Genqiang et al., 2024; Wooldridge and Floyd, 1999; Spreitzer, 1995). Conversely, poorly managed renewal initiatives can heighten perceptions of insecurity, erode trust, and dampen employees' willingness to endorse and enact necessary changes, thereby weakening both employment stability and broader stakeholder support. In addition, by shaping how responsibly organizations are perceived to treat employees and local communities, renewal decisions also influence corporate reputation, social legitimacy, and the organization's broader contribution to societal well-being.

This paper offers several practical as a well as managerial implications. To begin with, this paper underscores the importance of aligning CEO successions decisions with the intensity of crisis the organization is facing. Additionally, this paper suggests explicit pairing of the leadership choices with tailored SHRM “bundles” rather than treating the role of SHRM as an afterthought in bringing about strategic changes. For example, in low-crisis conditions, firms can use HR systems (staffing, training, performance management, rewards) to channel stability and firm-specific knowledge into product innovation and customer-focused initiatives, instead of defaulting to disruptive leadership change. Similarly in high-crisis conditions, boards that appoint outsider or returning CEOs should also mandate HR-led interventions to shift mental models, preserve or reconfigure organizational memory, and manage internal crisis communication so that employees understand, accept, and enact the new strategic direction. Further, HR analytics should explicitly factor in succession planning, so that changes in the CEO and TMT are accompanied by clear plans for capability development, reskilling, and redeployment, rather than ad hoc staffing decisions. Finally, internal crisis communication should be treated as an integrated HR–leadership responsibility, with structured mechanisms (e.g. town halls, line-manager briefings, feedback channels) to maintain trust, reduce uncertainty, and sustain employee engagement during renewal.

With regards to managerial implications CEOs should work closely with their Human Resource counterparts (for example, CHROs) to co-design renewal programs where leadership narratives (vision, strategy, crisis framing) are directly translated into HR policies on selection, training, job design, rewards, and communication. This paper also emphasizes that employees need clear guidance and tools from HR to help them cope with crisis-induced changes (e.g. coaching on sensemaking conversations, supports for unlearning outdated routines), and managers responsible for product innovation should partner with HR to embed customer-centric behaviors into roles, competencies, and incentives, ensuring that innovation efforts truly reflect evolving customer needs and do not drift toward internally driven priorities.

Future research should also explore the concept of the “ambidextrous CEO” a leader who possesses the cognitive flexibility and relational capacities to manage across crisis severity levels, simultaneously exploiting existing organizational strengths during low-crisis periods and exploring radical renewal options during high-crisis periods (cf. O'Reilly and Tushman, 2008). Such boundary-spanning leadership capacity would challenge the scenario-specific logic of this framework and raise important questions about how leadership development and board selection processes should be designed to cultivate versatile crisis-navigation skills. This represents a promising bridge between managerial cognition, organizational ambidexterity, and succession literatures.

There are several opportunities for future research to build on the ideas raised in this paper. To improve understanding of organizational renewal and CEO succession, it is imperative to further explore how the impact of CEO retention/replacement on organizational renewal is influenced by CEO, TMT, and organizational characteristics. The trickle-down effects of CEO retention/replacement decisions on executive and employee turnover represent another area of inquiry. As for the role of SHRM during organizational renewal, more clarity is needed on how SHRM approaches can be customized for different organizations during the renewal process. As organizations seek recovery, SHRM must be a flexible process, as organizational goals and strategies are likely to be dynamic; more attention needs to be focused on flexible HR systems (Shafer et al., 2001). Case studies of organizations in renewal situations will be beneficial to better understand the complexities of managing human resources during this critical period.

This paper carries several limitations that future research should address. First, as a conceptual paper, the propositions have not been empirically tested. The scenarios and propositions represent theoretical conjectures rather than empirical findings, and their generalizability remains to be determined through empirical research. Second, the low/high crisis dichotomy, while analytically useful, is a simplification of a continuous construct. Future empirical work should operationalize crisis severity along a continuum and test for non-linear relationships between crisis severity, succession type, and renewal outcomes. Third, the paper does not address how organizational size, industry context, national culture, or regulatory environment may moderate the proposed relationships, all of which represent important boundary conditions for the framework. Fourth, we have focused primarily on the CEO as the focal leadership actor; future research should examine how the board of directors, the TMT, and middle managers collectively shape the renewal process. Fifth, the SHRM propositions are presented at a high level of abstraction; empirical work using validated SHRM measurement instruments (e.g. distinguishing between intended, actual, and perceived HR practices) would substantially advance the precision of this framework.

In summary, this paper has considered the impact of CEO retention/replacement and the role of SHRM in the context of organizational renewal during crisis. Steering an organization through crisis and renewal involves many management challenges. Effectively meeting those challenges can result in an organization that not only survives but also thrives. Failure to meet those challenges effectively can result in the demise of even once-dominant players in the marketplace. Thus, understanding how organizations handle renewal situations has important implications for those who confront these challenges and for the scholars who seek to advance theory at the intersection of crisis management, leadership, and strategic human resource management.