This is the third in a series addressing the imperatives and challenges CEOs face through the entire spectrum of the role—from preparation for the job to exit. Here’s part one and part two.
CEO succession gets the headlines. Identifying and placing the “right” executive in the role brings optimism, and is often reflected in the stock price of publicly traded companies.
But the real success of the CEO succession process is not just contingent on identifying the best candidate to shepherd the company going forward. Success depends on handling the transition and integration into the role effectively. There are a number of challenges that must be met to accelerate the integration of new CEOs and allow them to thrive early on. Here’s a look at the key issues, and some strategies for tackling them:
Board-CEO Partnership. Clarity on performance objectives helps to make an explicit connection between critical issues and the new CEO’s focus. Prior to Day 1, the board and CEO should agree on what good looks like in terms of performance and translate that agreement into specific performance objectives and agree on how they will monitor and track progress against objectives. Alignment and clarity on objectives help set up an effective board-CEO partnership and allow for more open and constructive strategic discussions in the boardroom.
Revising Strategy. Most CEOs want the autonomy to react and make decisions as needed, and don’t want unnecessary interference from the board. The board’s fiduciary duty is implicitly tied to strategy, and boards no longer want to be merely a rubber stamp to strategic decisions. Alleviate unwanted churn between board meetings by being explicit about strategic decision rights with the new CEO. Identifying the handful of topics that need proper board discussion before decisions are made helps a new CEO understand what issues to bring to board meetings—and what they can handle alone.
Senior Team Performance and Strategic Execution. Team members passed over for the CEO role or loyal to the outgoing CEO may not be on board with the new CEO’s leadership and direction. Senior team members energized by the new CEO and support the shift in direction may not have the skills or capabilities required for success. In both situations, the sooner the new CEO builds an aligned, high-performing team, the better off the organization will be.
A new CEO must also shape the operating culture appropriately to accelerate adoption, coordination, and performance. Defining new ways of thinking, behaving and working together by examining the strengths and gaps of how work gets done (the operating culture) can facilitate strategic execution.
Early Wins. A new CEO has the added pressure of meeting expectations of investors and analysts. Although a shift in strategy may be the appropriate move long term, any dips in short-term performance are likely to be magnified. It is important for a new CEO to achieve some quick wins that signal the revised strategy is working or that progress is being made on the most critical issues identified by the board. The board can help in this regard by understanding what drives investor confidence.
Specifically, the “early wins” that investors look for are subtle in nature: Does the new CEO have a grasp of the company’s challenges and opportunities? Is there a clear vision and strategic plan? Coaching the CEO to find different ways to communicate this information to the street can ease the external pressure and strengthen the partnership that forms between board and CEO during the transition.
CEO transitions can be fraught with unexpected challenges and pitfalls. Setting the new CEO up for success can be the difference in the first year’s performance. Positive momentum in the first year in terms of company performance is likely to reinforce support for bigger or broader changes that may be needed in the future. The message is clear: CEO succession is much more than finding the “right” leader—supporting an effective integration of the new CEO is equally important.
Chief Executive Group exists to improve the performance of U.S. CEOs, senior executives and public-company directors, helping you grow your companies, build your communities and strengthen society. Learn more at chiefexecutivegroup.com.
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1:00 - 5:00 pm
Over 70% of Executives Surveyed Agree: Many Strategic Planning Efforts Lack Systematic Approach Tips for Enhancing Your Strategic Planning Process
Executives expressed frustration with their current strategic planning process. Issues include:
Steve Rutan and Denise Harrison have put together an afternoon workshop that will provide the tools you need to address these concerns. They have worked with hundreds of executives to develop a systematic approach that will enable your team to make better decisions during strategic planning. Steve and Denise will walk you through exercises for prioritizing your lists and steps that will reset and reinvigorate your process. This will be a hands-on workshop that will enable you to think about your business as you use the tools that are being presented. If you are ready for a Strategic Planning tune-up, select this workshop in your registration form. The additional fee of $695 will be added to your total.
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.
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.
