A recent survey of 402 CEOs from 11 countries, who together run businesses with $2.6 trillion in sales, has found that while CEOs felt ready for the business aspects of their leadership roles, they felt much less prepared for the interpersonal components of leadership.
68% acknowledged that, in hindsight, they were not fully prepared to take on the CEO role and 47% felt that developing their senior leadership team was surprisingly challenging. Half of the CEOs who participated in the survey thought that driving cultural changes was truly challenging and so was finding time for self-reflection.
Surprisingly, only 28% of respondents stated they were adequately prepared for the job, which signals that there is something fundamental missing in the internal hiring and development process. Addressing this problem can not only improve the CEOs performance on a personal level, but will also positively impact the performance of their companies.
Focus on succession planning
Each year about 10% to 15% of corporations must appoint a new CEO, whether because of executives’ retirement, resignation, dismissal, or ill health. Yet, despite these trends, most boards are unprepared to replace their chief executives. The failure to plan for CEO transitions has a high cost – a study of the world’s 2,500 largest public companies shows that companies that scramble to find replacements for departing CEOs forgo an average of $1.8 billion in shareholder value.
CEO succession planning is a critical process that many companies neglect and they often treat the CEO succession as a one-off event triggered by the abrupt departure of the old CEO, and the succession is therefore reactive and divorced from the standard system of leadership development and talent management. This approach brings significant risks, such as companies gaining a damaging reputation for not developing their management ranks or for potential talent being overlooked.
A challenging transition
The transition to the top is demanding, with 40% of CEOs failing within the first 18 months of being promoted or hired. For some, this high profile leadership transition is more that they bargain for, with 61% of executives being unable to meet the strategic challenges they face in their role. This is an especially common risk for leapfrog leaders – executives who skips levels when they are elevated to the top leadership role.
Success comes from adopting a mind-set of constant personal growth, particularly in an environment of rapid change. CEOs are often reluctant to ask the board or their company directors for help and internally selected CEOs have even more concerns than external ones about adjusting to their new leadership role, as they face the added complexity of leading their former peers and they need extra support when making the transition.
At Acumen, we pride ourselves in offering development that gives leaders at all levels practical tools to help solve real life challenges. We offer an extensive menu of courses, workshops and coaching programmes, ranging from presentation skills through to customer service events and executive leadership development to prepare your future leaders to their next transition. For more information, contact firstname.lastname@example.org.