Note: This article is second in a series talking about how Boards can position their new CEOs for success.
Assuring the success of your new CEO adds tangible value for your organization. At the least, it avoids the cost of conducting another CEO search within just 18 months of closing the first one. That’s how long it takes for one-third to half of new CEOs to fail. Boards can improve that statistic by managing the hand-off from outgoing to incoming CEO mindfully.
One study by Patrick Wright at University of South Carolina, found that 40% of outgoing CEOs stay on after a CEO transition. Whether or not the departing CEO or an interim successor stays involved in the organization after the new CEO takes the helm,
that hand-off from old to new is critical – and not always managed well.
Ideally, Boards actively engage the departing CEO to help with the transition and facilitate the interaction. Working with both CEOs, the Board defines clear roles during the transition and ensures that the CEO-elect shares substantive responsibilities with the outgoing CEO. The Board also helps the new CEO to understand how decisions are taken today; of course, the new CEO may change this, yet she/he must understand the starting point. Finally, set a clear timeline for the transition, including evaluation by the Board regarding progress in shifting responsibilities and accountability.
Unfortunately, not all sitting or interim CEOs have the skills or the nature to manage the hand-off successfully. In that case, Boards can step in themselves or hire an external coach to support. Either way, set aside specific resources – time and dollars – to allow an effective hand-off and launch your new CEO.
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