CEO Transitions: From Shared Accountability to Culture Change Success

ceo transitions, change culture

There is nothing more exciting than the moment a new leader is announced. Employees Google her/his name, wondering what she/he will do to change the organization. A new leader brings new ideas. She/he offers a new vision. They may even help the organization imagine better ways to remain relevant and thrive in the future.

CEOs transition into organizations thousands of times each year across for- and not-for-profit sectors. How often new CEOs arrive, their tenure, and the rate at which they succeed in achieving a new vision versus failing to meet board expectations have been well-reported and even studied in academia—the results are stunning.

Studies suggest two out of five new CEOs fail to meet their objectives in their first 18 months. Even CEOs who thrive in their first 18 months face an average tenure of 7.6 years, down from the global 9.5-year average in 1995. The outlook is grimmer for outside CEO hires, who take twice as long to ramp up as those promoted from within. C-suite executives report that only one in five CEOs hired from outside are considered high performers at the end of their first year, while nearly half leave within the first 18 months.

Such systemic failure has nothing to do with competence, knowledge, or experience, but instead ties to how the CEO transition was orchestrated and whether major steps were missed.

The Reality of CEO Transitions

THRUUE has worked with dozens of CEOs in transition, and the stakes are always incredibly high for both the organization and the reputation of the incoming CEO. While it does not guarantee success, a programmatic approach to new executive transition can increase the odds and shorten the timeframe in which success is likely to be achieved. Peter DiGiammarino, CEO, professor, author, and Chairman of THRUUE’s Board of Directors, recommends objectives that hold an entire leadership team accountable for the success of the inbound CEO. This is critical because a CEO without leadership team cohesion is like a moon without a planet.

The objectives outlined below are easy to read but often difficult to achieve without previous experience, diligence, and sustained focus. For a successful transition, these goals should be to:

  • Raise the incumbent leadership team’s individual and collective consciousness as to what the entering executive seeks to accomplish and her/his definition of success in the first six months, first year, and beyond.
  • Turn incumbent executives from observers to stakeholders so their energy, wisdom, insights, and ideas are channeled constructively and can contribute to (rather than evaluate) success.
  • Accelerate the entering executive’s learning curve and integration into the organization’s leadership network.
  • Promote interest in and commitment to the entering executive and her/his vision for the organization’s future.

We have organized what we have learned about CEO transitions into four key program areas on which incoming CEOs should focus. Each works toward accomplishing the above goals and, when implemented, increases the probability of success.

These areas are:

  1. Vision: Define what you seek to do (change vision) and translate this vision into a reality your team can understand, appreciate, internalize, and commit to doing their best to achieve.
  2. Alignment: Secure leadership team cohesion and alignment around a shared plan to achieve the vision.
  3. Accountability: Establish a clear, unambiguous rhythm of accountability.
  4. Culture: Get a baseline picture of the culture you have inherited, formally or informally, using measurement techniques. An inherited current culture has the ability to enable or disable every vision and strategy you and your leadership team seek to achieve no matter how experienced and talented you are.

Translate Your Change Vision from Interview Pitch to Reality

Transitioning from a vision sold to the board in the interview process to on-the-ground traction and reality is one of the first steps for an incoming leader, and it begins with asking the right questions.

THRUUE has guided dozens of new CEOs to answer and act upon the following series of questions, which results in action and enables a successful CEO transition. Entering executives should not only answer these questions but also explicitly gain leadership team alignment around them—a critical yet often overlooked step in a CEO transition.

      Vision to Action Questions:

  1. As the new CEO, what do you need to rapidly learn about the organization and its people, history, and culture to validate or enhance your vision?
  2. Do all or some members of the current leadership team share your vision, and how much time will you commit to gaining alignment and cohesion?
  3. How will you listen to the voice of the entire organization? (Asking the right questions at your first all-staff meeting—what is most important NOT to change, what do you most look forward to changing, and what will make that change difficult—is imperative.)
  4. What was the previous CEO’s vision for the organization, and how can you build on it or chart a new course without re-litigating past mistakes?
  5. How will you bring the voice of your customers or key constituencies into the vision? How will you make time to meet with customers so their input is woven into the change agenda?
  6. How will you co-create an 18-month plan (focus areas, work streams) with the leadership team to achieve the first steps toward your vision? (New leaders must define tangible first-year milestones that show clear progress toward the vision. If nothing is written down and agreed upon, then leadership team members will likely self-synchronize to old ways and priorities.)
  7. How will you align and communicate with dozens, hundreds, and possibly thousands of employees around the shared vision? (In THRUUE’s experience, leaders and leadership teams under-communicate their vision for the organization by an order of magnitude of ten.)
  8. What role will the board play in enabling your change vision, and what are their expectations for change and strategy that must be factored in?

The above questions assume both the new CEO and the organization fully understand and can answer why their organization exists and why anyone should care. If you don’t know your “why,” “mission,” or “purpose,” then your vision will be rudderless. We encourage new CEOs to ensure the organization’s “why” is clear and compelling. If it is not, they must convene a session with leaders and the board in the first 120 days to define the “why” and ensure the mission is clear.

Success Factor 1: Make Time with the Board

In the first 120 days, we advise incoming CEOs to have explicit (weekly if needed) conversations with the Board Chairperson so the four program areas are made explicit and seen as the first component of the change agenda. Many first-time CEOs fail to understand the power of a strong partnership with the board chair in advancing the goals of the organization. Too often, CEOs implicitly drive forward, and board leaders implicitly imagine what the CEO is actually doing. CEOs must gauge and then engage in formal, ongoing conversations so the board is made fully aware of adoption or resistance to the change vision as the transition unfolds. It is our experience that when there is a mutually supportive partnership between the chair of the board and the CEO, the probability of success is exponentially enhanced.

Alignment: Build a Team of Leaders and Followers

Over the past two decades, there has been a clear evolution in how CEOs are viewed by employees. We now see more emphasis on a leader’s capacity to build and sustain an inclusive, high-trust relationship with a loyal, capable, and motivated followership as paramount to CEO success. Leadership, then, is being redefined as a relationship between leader and followers, and it requires a new set of competencies often neglected in the past. Being a leader today means winning over and convincing a mobile and demanding followership to stick around and help your organization achieve its potential for performance and growth.

Opening a wide channel of communication requires incoming CEOs to spend hours in one-on-one meetings with direct reports, where both participants are actively and equally engaged in listening and speaking. This enables CEOs to ensure the team shares the same vision that the board expects the CEO to implement. For organizations that have 5-7 direct reports to the CEO, this means 10-14 hours of conversation must first occur and then be channeled into one or more leadership team meetings, conducted offsite so as to avoid distraction and gain the necessary team cohesion and alignment.

Leaders must be competent in uncovering everything they can about who they are and how they engage with their followers. A followership is far less likely today to trust and follow those who hold command-and-control views of leading and who do not reach out for input.

Creating Shared Accountability 

It is critical to also drive accountability after rapidly creating an 18-month plan that your leadership team owns. After a vision plan is designed, CEOs must begin to immediately hold weekly or bi-weekly “check-ins” (one-on-one) with direct reports and have them report on sub-plans to syndicate the vision. It is a best practice that feedback should be clear and direct, with a constant conversation that asks:

  • What are you trying to make happen against the plan?
  • What have you done to accomplish it?
  • What happened and what did you learn?
  • What do you plan to do next?
  • What are the obstacles to making this happen?
  • What are you doing with your peers to collaborate?

Ensuring constant communication and holding all team members individually accountable for their part of the plan will further buy-in and ensure that their time is being spent on what matters, not on what they may previously have engaged in.

Success Factor II: Make Time with the Leadership Team

In the first 120 days (and for your entire tenure), we advise incoming CEOs to have explicit bi-weekly reviews of the vision and plan. Each executive will own a piece of that plan and must be held accountable for answering how her/his team is executing against it. CEO success is tied to sustained management attention. When CEOs fail to gain traction in new organizations, it is often because they failed to drive accountability and clarity about the hundreds of things that must happen to move toward the vision.

Understand the Culture

Every organization is undergoing a profound set of external threats and technology-driven disruptions that seek to consume a new CEO’s clearest vision. In addition, every organization has a deeply ingrained set of values, behaviors, and habits that can either embrace or thwart the clearest vision.

New CEOs should rapidly administer a cultural assessment so the values, behaviors, and norms in the current culture are quantified and understood. Surveys administered to employees and, when appropriate, the Board as well, enable you and your leadership team to identify the gaps between the current culture – “the way things are done around here now” – and the ideal culture – what people believe it will take for the organization to succeed. Diagnostics can also help you understand the systems, processes, and structural elements that reinforce current behaviors and norms. This provides insights on the functional changes that can be made to improve workplace culture and remove roadblocks to the ideal culture. Measuring cultural change also reveals your organization’s strengths: the cornerstones upon which your vision for transformation can be built. Even if you choose not to use a formal survey to diagnose what’s happening within the culture, new CEOs should spend time in small “focus group” settings and immerse with dozens of employees in understanding what norms and behaviors are alive inside the organization. Without question, the Board also has a role in understanding the culture, particularly in modeling the values of the organization and holding the CEO accountable for fostering a healthy workplace culture.

Final Thoughts 

With two out of five new CEOs failing in the first 18 months of their tenure, it is clear that organizations and leaders need to invest in well-executed transitions. THRUUE has partnered with many CEOs to increase their chance of success. Culture will “eat your vision for breakfast” unless you measure and manage what is happening in your new organization. Use the reflection questions and insights in this post to evaluate your transitions, identify improvements, and increase the likelihood of success.

 


This post is co-authored by Daniel Forrester and James Williams.

JamesWilliams_smCo-Author James Williams

James E. Williams, Jr. served as the president and chief executive officer of Easter Seals International for 24 years. During his tenure, he led the organization through years of unprecedented growth, achieving total revenues in excess of $2 billion with services provided to more than two million people annually. As CEO, Williams stressed the importance of innovation, disruptive renewal, and continuous reinvention as a means of achieving exponential growth and relevance. Easter Seals became the 7th largest charity in America under his leadership.

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Daniel Forrester, THRUUE founder and CEO, is an author, speaker, strategist, and expert in corporate culture with more than 20 years of experience who helps leaders drive transformative change. He has interviewed hundreds of top leaders in organizations, learning about the gaps that leaders confront head-on. Daniel is also a contributing writer for multiple publications, including FastCompany, Monster, BusinessWeek, WashingtonPost, and Entrepreneur, and he just launched his first podcast series, “The Culture Gap,” where he sits down with leaders across industries—both commercial and nonprofit—to learn how they are closing the gaps between their business visions and the culture of their organizations.

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