This topic surfaced earlier this year in a client meeting where we were discussing the replacement of a CEO that had been in the organization for more than twenty years and in the CEO role for more than eight. Such concerns are shared by many organizations that are facing a change of tenured executive leadership.
This topic surfaced earlier this year in a client meeting where we were discussing the replacement of a CEO that had been in the organization for more than twenty years and in the CEO role for more than eight. Such concerns are shared by many organizations that are facing a change of tenured executive leadership and we thought we would share some insights into this critical topic in our blog.
It is widely noted that entrepreneurial founders are often unable to scale to meet the needs of an expanding organization. Venture capitalist John Hamm documented this in an article in Harvard Business Review titled “Why Entrepreneurs Don’t Scale”. John cites four tendencies found in such leaders that make them susceptible to failure when appointed into leadership roles in an expanding or larger organization.
The first tendency is their loyalty to those who helped the founder build his/her organization. This blind loyalty works in founding mode but is a liability in a larger company.
The second tendency is task orientation. Excessive attention to detail over issues near and dear to the entrepreneurial leader can cause a growing organization to stall.
The third tendency is single mindedness. Leadership roles requiring vision, innovation and creativity will find conflict with CEOs overly committed to their own ideas. Such CEOs lack the emotional intelligence to realize some change is needed until it’s too late.
The fourth tendency involves the person working in isolation rather than engaging, inspiring and motivating others. Isolation prevents the newly appointed leader from being able to properly assess and weed out nonperformers.
Newly appointed CEOs must forge meaningful connections and credibility with the existing executive leaders and employees. It is reasonable to assume that tenured leaders will have much of their philosophical and leadership DNA embedded in the organization and its culture. A newly appointed CEO will need to have the tools to be viewed as the “new CEO” versus being seen as “an imposter”.
It is critical that newly appointed CEOs quickly get to know and understand what motivates each board member. An inability to build a connection with each board member creates fertile ground for failure.
Areas of potential conflict include:
When proper candidate screening and assessment tools are applied, such reasons for failure are mitigated.
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Notwithstanding substantial gains made in the West over the past several decades to level the playing field and bring about greater equality between men and women, pay gaps persist, and in many countries, corporate leadership remains heavily dominated by men.
Having spent many years at KPMG as a partner and finally as Head of Corporate Finance, Midlands, Richard Boot currently chairs and holds directorship of various companies associated with staffing and recruitment. He is also a former board member of IRC Global Executive Search Partners.