Note: This article is first in a series talking about how Boards can position their new CEOs for success.
“One-half to one-third of new CEOs fail within their first 18 months.” Wow. That’s a costly mistake that goes well beyond the cost of hiring a new CEO. During that CEO’s brief tenure, the organization typically loses ground, resulting in lower performance and loss of key staff. And that statistic applies equally to internal successors and to external hires. Yet, according to a 2012 study by RHR International, only 35% of new CEOs surveyed said their Boards were sufficiently involved in their transition. Instead, Boards give new CEOs some ‘space’. Rather than allowing the new CEO to settle in and find their footing, however, that lack of involvement makes it harder for the CEO to succeed. That suggests a clear opportunity for Boards to improve the odds for success – and drive measurable impact for their organizations.
So what’s a Board to do?
Start the transition early. Success requires more than financial and operating skills. Indeed, it’s more often the soft skills and leadership style that make or break a CEO, particularly in the early days. Before the CEO is hired, know where the organization is (or should be) headed. Then, consider how the political and cultural aspects of the organization may be challenging for the new CEO. During interviews, screen for the competencies and experience that will serve the candidate well in navigating these nuances in your organization.
Once the deal is inked, the Board Chair should assign a key point of contact for the CEO-elect; that board member helps to guide the new CEO so that she/he hits the ground running on Day One. Then, include individual leadership objectives alongside the financial and operating goals you set for the new CEO. That puts soft and hard skills on equal footing among the Board’s expectations for the new CEO. Even better – develop the leadership agenda jointly with the new CEO, including his/her expectations for the Board’s involvement.
Always, set a clear timeline to review progress and make adjustments. Consider not only what the CEO has done to enable his/her own success, but also, what the Board can do to maintain the momentum.
Next in this series: Hand-offs.
PS: Ask me about the Rethore Rapid CEO Assessment™. Identify a few key actions to enhance your new CEO’s success.
©2019 Tara J. Rethore