Reflections: The Challenges of CEO Succession

As an executive coach, I work with new CEO's to support the transition process to the chief executive role. Transitions can be challenging for everyone at every level and for CEO's the stakes for succession integration are high. Well navigated transitions require a willingness to learn, an openness to new perspectives, an ability to suspend assumptions, ask open-ended questions and demonstrate a learner’s sense of curiosity. Many companies I’ve worked with are intentional about at least on-boarding new CEO's and some go further by integrating them into the new organization.

How well the CEO assimilates is a very public process. A newly hired CEO from outside the company, although she or he may have been a CEO previously, has many things to learn about the new company, including its competitive advantage, business strategies, operational processes, senior leadership team, board members, key stakeholder relationships and many cultural nuances. The new externally hired CEO may be somewhat aware that there are many unknowns within the new company and that first impressions may easily be misinterpreted. Previous experiences can bias the chief executive’s perspectives. A hyper-awareness about the need to learn, observe, reflect and ask questions, while starting to get results, is essential to ensure success. It is truly a developmental process, no matter where a successor has worked previously.

As CEO integration is such a tricky business to do well, one would think that internal CEO transitions would be easier than external ones. For one reason, internal successors already know a lot about the business environment, the many challenges ahead, its key stakeholders, the people and the unique variables of the company culture.  However, some recent studies have shown that regardless of succession from outside or inside the company, about 68% of new CEO's report they were not prepared well enough to assume the new role. Chief executives site challenges such as understanding the nuances of the company culture and working adeptly within it, assessing and developing the new senior leadership and managing their expectations of success as some of the toughest challenges. With a bias towards action, many CEO's say there was not enough time (or they didn’t take it) to reflect, interpret and understand what was happening in the first year to adapt, change course, explicitly learn or try something new.

Some of the hardest transitions can be from successors inside the company. New internal incumbents are highly unlikely to see the need to re-frame or change previously held perspectives. He or she may not think to fully evaluate work priorities, refocus his or her time on the strategies that only the CEO can handle, or renegotiate relationships with previous peers who are now direct reports. With a drive to go quickly and with the same impact as in past roles, new CEO's from within the company walls, must in some ways abandon previous ways of working that they were rewarded and known for.  In essence, they must assume they’ve arrived in a strange new world as an external candidate might do. The nature of the transition as a developmental process may seem farthest from this new CEO's awareness.

Jill, whose name has been changed to protect her privacy, is the new CEO of a non-profit organization. She’s been in her new role for a couple of months after assuming the reigns from a long-standing founder and charismatic former CEO. With almost two decades within the non-profit organization herself, Jill brings a lot of upside in being able to understand key partners, stakeholders, programs and the political ecosystem in which she will operate. Even so, Jill has astutely asked for additional help from an executive coach, external advisers and board members to make this important transition.

In the handful of weeks Jill has been in her new role, she’s been surprised by the complexity and highly charged nature of some of the big decisions she now owns. One of the toughest aspects of her role is being seen as the chief executive to employees who know her well. She has opened her doors for office hours so employees know she is available to listen to what might be on their hearts and minds. She’s wisely listening to her new advisors' to help balance or modify previous perspectives, check her assumptions, and test what she might already know, or thought she knew. One of the hardest early decisions Jill made was to let a newer member of the senior leadership team go, as that leader was unable to provide the operational leadership required in a critical area. If Jill had delayed this decision, she would spend an inordinate amount of her valuable time digging into internal operational issues.

In making this decision quickly and thoughtfully, Jill has been able to turn her attention to vital external priorities such as long term strategic planning, fostering new board relationships, building credibility with board members, engaging with community leaders and directing annual fund-raising efforts to lay the foundations for financial and program success in the coming years. Jill is mastering one of the biggest challenges for an internal successor, that is to manage a group of leaders who were previously her peers. This work with her leadership team will be a central focus area in the coming year, as Jill sees one of her top priorities as building leadership capacity.
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Balancing positivity with risk mitigation and learning is the first real job of this CEO successor. In our work, we’re using the wisdom of emotional intelligence to create greater awareness about Jill’s default reactions and relationship management modes, so she can experiment with more effective leadership behaviors required of someone in her position. She knows it will be hard going, for the first year at least, and perhaps for the first three years as a new CEO. There’s a growing awareness within her, that knowing what she already knows about the company and its people, could be as asset or a liability as an internal successor.