The Problem One-third to one-half of new CEOs, whe
The Problem
One-third to one-half of new CEOs, whether they’re hired from outside or from within, fail within their first 18 months, according to some estimates.
Why It Occurs
Newcomers misread the political situation or overestimate the organization’s willingness to abandon old behaviors. Meanwhile, boards and key executives fail to grasp the complex nature of CEO succession or set one-dimensional expectations of the new leader.
What Can Be Done
A comprehensive succession process begins when a candidate accepts the position and lasts for several months after his or her arrival. The outgoing CEO, the chief human resources officer, and the board should all have roles in helping the newcomer navigate company culture and politics.
The mood inside the boardroom was celebratory. For months the directors of this multibillion-dollar industrial and consumer-goods company had been searching for a successor to their longtime CEO. After interviewing multiple candidates, they’d unanimously voted to make an offer. The outside recruit—let’s call him Harry—had an exceptional record of growing sales while running a large division of a multinational known as a training ground for world-class CEOs. In interviews he was polished and poised. He asked insightful questions about the company’s strategy, raising issues the board hadn’t considered previously. His references were effusive. To the directors’ delight, Harry, who was simultaneously in the running for two other CEO jobs, accepted their offer—largely because he felt that this company offered the most autonomy and upside. The board announced the appointment at the annual meeting, in April; shortly afterward, the outgoing CEO departed, and Harry started. The directors congratulated themselves on a job well done. The arduous work of succession—their most important duty—was complete.