Boards: Choose a CEO for Long-Term Growth, Not Just a Turnaround

It seems a familiar story these days—a company on rocky ground for a few quarters suddenly finds itself rudderless as the chief executive is let go or departs for greener pastures. In the resulting vacuum, the pressure to make an immediate hire can be intense. But companies are well served to think carefully about whether they truly need a "corporate savior" who can devise and carry out a turnaround strategy in short order, or whether a long-term leader is better suited to lead the company back to market success.

Ultimately, it is the responsibility of the board to make this choice. Here are some key steps to follow to ensure the new hire isn’t part of the 13 percent of CEOs forced out of the top office every year for failing to meet performance goals.

1. Determine CEO role requirements—quick recovery or long-term performance? Hiring a new CEO from the outside who can bring the expertise, experience and relationships needed to enter new markets or launch new products is a common recipe for success following a period of poor performance. On the other hand, “home grown” executives have a leg up in providing the strategic continuity and consistency critical in today’s turbulent marketplace. In the end, what allows a leader to excel in one scenario—a turnaround—does not necessarily make that individual great in another scenario—planned growth. While boards are often faced with pressure to make a quick hire to turn around performance, they should spend thoughtful and deliberate time clarifying CEO role requirements of the future, keeping a focus on the trade-offs inherent in what is needed to achieve the long-term vs. short-term needs of the company.

“Better CEO hires often result from identifying and assessing CEOs against specific cultural competencies during the hiring and on-boarding processes.”

2. Keep culture a top priority. During periods of disruption, the right cultural fit can be transformative. Leaders brought on to drive short-term performance may focus more on “fixing the problem” than cultivating personal relationships and unifying the team in pursuit of long-term growth. Much like a body rejects a transplanted organ if the tissue is not a good match, organizations routinely reject mismatched leaders. Whether examining internal or external CEO candidates, we’ve found that better CEO hires often result from identifying and assessing CEOs against specific cultural competencies during the hiring and on-boarding processes. In our experience, if done well, improvements will be seen in CEO performance and reduced executive turnover rates.

3. Maintain transparency through performance reviews. Candid conversations about the CEO’s performance and how it is measuring up to role requirements are critical. Boards must assess whether the chief executive is evaluated against short-term turnaround goals or building company alignment on a long-term vision and then hold regular performance reviews to discuss how performance is measured against these objectives.

Sudden CEO departures can be some of the most disruptive corporate events. Yet with planned and strategic steps, boards can ensure the next hire is fit for purpose and poised to drive the change and results the company needs to move ahead and achieve market success.


MORE LIKE THIS

  • Get the CEO Briefing

    Sign up today to get weekly access to the latest issues affecting CEOs in every industry
  • upcoming events

    Roundtable

    Strategic Planning Workshop

    1:00 - 5:00 pm

    We are in a period of rapid change. Customer needs, technologies, competitors and internal capabilities require companies to review and update their strategies for the new realities. In this workshop, strategy experts Steve Rutan and Denise Harrison will show you a systematic approach to strategic planning to help you refine or redefine your business strategy and approach including:

    • Learn what you need to know to develop an effective strategic plan. Put the right players on the strategic planning team.
    • Develop strategies that leverage your company’s unique position in the marketplace. Lift your management team beyond “business as usual” thought processes and activities.
    • Translate your strategies into action. Achieve your vision for success and generate superior financial results.
    • Identify exactly what you need to do now to position your company for future success.

    To sign up, select this option in your registration form. Additional fee of $695 will be added to your total.

    New York, NY: ​​​Chief Executive's Corporate Citizenship Awards 2017

    Women in Leadership Seminar and Peer Discussion

    2:00 - 5:00 pm

    Female leaders face the same issues all leaders do, but they often face additional challenges too. In this peer session, we will facilitate a discussion of best practices and how to overcome common barriers to help women leaders be more effective within and outside their organizations. 

    Limited space available.

    To sign up, select this option in your registration form. Additional fee of $495 will be added to your total.

    Golf Outing

    10:30 - 5:00 pm
    General’s Retreat at Hermitage Golf Course
    Sponsored by UBS

    General’s Retreat, built in 1986 with architect Gary Roger Baird, has been voted the “Best Golf Course in Nashville” and is a “must play” when visiting the Nashville, Tennessee area. With the beautiful setting along the Cumberland River, golfers of all capabilities will thoroughly enjoy the golf, scenery and hospitality.

    The golf outing fee includes transportation to and from the hotel, greens/cart fees, use of practice facilities, and boxed lunch. The bus will leave the hotel at 10:30 am for a noon shotgun start and return to the hotel after the cocktail reception following the completion of the round.

    To sign up, select this option in your registration form. Additional fee of $295 will be added to your total.