Any transition is difficult. You enter a new paradigm with different expectations and dynamics. You need to observe, learn and adjust.
The leadership transition is for sure not easy. You start operating in a new context, working with new content. If you undermine the change which all constituents go through during a senior leader transition, say appointment of a new CEO, the cost could be very high.
Approximately 40% of newly appointed executives, including CEOs, fail within their first 18 months in the role. This statistic highlights the challenges of leadership transitions, where issues such as cultural misfit, unclear expectations, and difficulty in building teamwork are common causes of early exits.
Still, we tend to undermine the difficulty of leadership transitions. The leader tends to have overconfidence in their skills and experiences, feels the need to project confidence and competence all of the time, lacks situational self-awareness, underestimates the new complexity, misjudges the capacity of the organization they inherit and downplays the importance of culture. The organization tends to miss establishing internal alignment of what they expect from the leader, does not create role clarity during the transition, falls short in explaining and connecting the leader to the organizational realities and resists the change.
If not managed intentionally, leadership transitions do not live up to expectations and totally miss on providing the potential upside for all.
For real success in leadership transitions, the three steps of effective succession management should be followed with intension, clarity and diligence.
- Alignment
- Selection
- Onboarding
While each step is critically important, in practice we observe that most of the effort goes to the second step. Organizations spend a disproportionate about of time in searching, assessing and contracting with the new leader. While these efforts are critical, they only yield success at the end if they connect well with the alignment and onboarding steps.
Aligning on following elements would secure a focused and effective CEO search, in fact any key senior executive search, and increase the likelihood of selecting a leader who can meet the company’s current and future challenges and opportunities.
- Future Direction: The board should have a clear understanding of and alignment on the company’s vision and strategic goals. This also includes whether the company needs transformational leadership or stability, focus on growth and innovation or operational efficiency and cost control.
- Leadership Expectations: Boards must establish a clear profile of the ideal CEO, including leadership style, experiences, competencies and cultural fit in line with the future direction the company wants to pursue.
- Consideration of Internal and External Candidates: Both options offering possible advantages and risks, e.g. cultural affinity vs fresh perspectives, the board should discuss the pros and cons of both approaches and their implications.
- Selection Process: Process steps, timelines and role clarity needs to be established. If there’s an existing succession plan, the board needs to evaluate its viability. They should define clear metrics and objective methods for evaluating candidates.
- Communication Plan: A well-thought-out communication plan considering all stakeholders, including shareholders, investors, leadership team members, employees, and key clients and partners, is crucial to ensure confidence in the selection process and maintain company stability.
Celebration of a seemingly perfect appointment can be too early at times. Effective onboarding is critical for success. Every new employee requires onboarding, but due to the complexities involved, the process of introducing and integrating a CEO, and any other C-Suite executive, requires a unique approach.
- Strategic Alignment: 360 degree understanding the company’s purpose and vision on the part of the newcomer to the role and establishing stakeholder expectations creates clarity and confidence for all.
- Cultural Integration: Building cultural awareness and engaging with employees across all levels early in the process builds rapport and establishes a connection with the workforce and the business.
- Relationship Building: Engaging effectively with stakeholders is half of the job of any senior executive. Starting to build those strong relationships during the onboarding stage is a priority. Building strong relationships with board members helps clarify roles and governance expectations and establishing trust with the executive team is essential for cohesive leadership and effective decision-making.
- Operational Understanding: Understanding business dynamics, financials, market conditions, and key partnerships is critical for effective decision-making. Early and timely involvement with key decisions can demonstrate leadership presence and inspire confidence.
- External Presence: Proactively managing external communications helps shape the key external connections as well the public image. Regular updates and transparent communication with investors are vital for maintaining their trust.
- Continuous Feedback Mechanism: Ongoing evaluation of the transition effectiveness and regular feedback from the board, executive team, and key stakeholders helps the leader adjust and refine their approach over time.
You might be the incoming leader, or you might be part of the inviting committee. There is a shared responsibility for success. It pays off if you grasp the complex nature of leadership transitions and manage the process with intention, clarity and diligence.
Remember: Align. Select. Onboard.