What unique transition challenges do new CEOs face? How can they optimise high performance in the crucial first few months?
Recently on The Science of Personality, cohosts Ryne Sherman, PhD, and Blake Loepp spoke with Ty Wiggins, PhD, who is the lead for the CEO and executive transition practice at Russell Reynolds Associates. He is the author of The New CEO: Lessons from CEOs on How to Start Well and Perform Quickly (Minus the Common Mistakes).
Ty was inspired to write The New CEO due to his extensive work on the underexplored topic of CEO and senior leadership transitions. He interviewed 35 new CEOs for insights on navigating this challenging process.
Keep reading to learn the goals for a first-time CEO’s first six months, what personality characteristics support CEO success, and three variables that can make or break a CEO transition.
The First Six Months for New CEOs
The first 90 to 100 days for most new CEOs are often overemphasised in terms of the impact CEOs can have in that period. Ty suggested that their time is better served by listening, learning, and avoiding major errors rather than making significant or radical changes. Instead, one of the key priorities of the first six months of a new CEO—especially a first-time CEO—is to assess the true state of the business.
Ty asked CEOs what surprised them about their first few months. “One of the top responses was that the state of the business was a negative surprise in that it wasn’t quite what was written on the can,” he said. Other priorities within the first six months are to align the senior executive team, build relationships with the board to gain support, and understand the company culture.
The New CEO’s Senior Executive Team
“The top regret is always, ‘I would have moved faster on that executive team,’” Ty reported. “Getting the team right is a key lever for a CEO’s ability to perform, change, and deliver.”
Data from The New CEO indicate that it took an average of 2.8 months before the CEO made the first change to the executive team. It took 9.2 months before the final team was in place. It took 11 to 14 months before the CEO considered the team to be high performing. A common CEO error is to work hard to recruit the right people for the team but overlook development. According to Ty, “When CEOs double down on team development activity early on, they tend to shorten that timeline to high performance.”
Now, these averages don’t often align with expectations from CEOs and their boards about how long it takes to get an effective senior leadership team in place. “This reinforces the opportunity for CEOs to use psychometric data and assessments early to get an objective read on the individuals’ capabilities and potential,” Ty said.
CEOs particularly need to execute a mindset shift around their new role in creating culture. Before, on the senior executive team, they were culture carriers, but now as CEOs, they are the mastheads of organisational culture. New CEOs should also recognise that changing an organisational culture takes a long time, far more than that first six months.
The Personality of a Successful CEO
A successful first-time CEO has good judgment, particularly as it relates to risk. “At the level of CEO, often the judgments that they need to make are the ones that only they can,” Ty pointed out. Their ability to consider long-term risk is crucial. “CEOs are rarely judged today on the decisions they made yesterday. They’re normally judged in two, three, five, 10 years,” he added.
CEOs should be constant learners. How quickly and how easily they learn contributes to their ongoing success. There is also a component of humility in their learning agility—are they able to learn from a variety of people, or do they tend to assume they already know? Recognising that they may never have all the answers keeps a CEO curious and openminded.
A first-time CEO also needs to have empathy for the organisation, recognising the anxiety that comes with leadership change. “You should have empathy for the people that have been there before you in those senior roles, diligently working with best intentions for the betterment of the organisation,” Ty said.
Stress Tolerance and Resilience
Navigating the stress and high expectations of the new CEO role is a key challenge. How the CEO tolerates stress can impact their effectiveness in the transition. New CEOs may feel pressure to prove themselves quickly. “The pressure on the CEO to be the right choice is high,” Ty said. This perceived pressure can work against them in the early months when they should be focusing on learning the business, not making hasty decisions.
First-time CEOs can be susceptible to confirmation bias by looking for the problems they expected to find rather than discovering the real state of the business. One symptom of this pressure for first-time CEOs is to have frequent, short meetings; more experienced CEOs take longer meetings of one and a half to three hours to focus on gaining nuanced knowledge about their people and culture. Consequently, they should reserve their opinions and stay curious about the organisation.
Three Variables That Influence CEO Transitions
Every single CEO was a first-time leader at some point in their career. First-time CEOs need to address each of these three variables:
- Internal vs. external succession – Is the new CEO internal or external? Internal CEOs have inherent knowledge of the business and culture but may struggle to lead their former peer group. External CEOs have objectivity but may take longer to learn the company and establish their reputation.
- The outgoing CEO – Where’s the outgoing CEO now? Whether the former CEO is chair, board member, shareholder, or no longer associated with the organisation impacts their level of involvement. As well, perception of the outgoing CEO as a hero or villain strongly affects the transition of the new CEO.
- The state of the organisation – Is the business performing or underperforming? Either condition will determine speed of action, making decisions with limited information, making constant adjustments, and pressure from the board or the senior executive team.
The CEO position is inherently isolating, making robust support networks crucial. Without strong relationships with board members and team members, the CEO’s decision-making and performance could suffer. “Once you step into the role of CEO, if you’re not well equipped with support, loneliness can result,” Ty said.
He advised new CEOs to approach the role with humility and to recognise they will never be fully prepared. They should expect surprises during the transition because leadership challenges will likely be more complex and demanding than anticipated. “It will be different than what you expect, so don’t be shocked,” he said.
Listen to this conversation in full on episode 113 of The Science of Personality. Never miss an episode by following us anywhere you get podcasts. Cheers, everybody!
*This blog was originally published on Hogan Assessments
