A recent article in the Harvard Business Review (HBR) reviews the findings of interviews with 20 current and former CEOs, where nearly half said the job was not what they expected. The study set out to find the biggest new CEO challenges and best practices they can apply when stepping into the role.
Interestingly, the challenges mentioned were consistent between successful CEOs and those who didn’t have a long tenure in the role. This may help explain why, “the median tenure of chief executive officers at S&P 500 companies was only five years at the end of 2017, down from six years in 2013. During that five-year period, more than 280 chief executives in the S&P 500 left their positions.” Let’s look at the three most mentioned challenges.
The longer a CEO is in the role, the more they understand the need to keep an eye on their energy levels. And it’s not just how they are spending their time, they also need to focus on their attitude. For example, when dealing with the board, don’t think of it as an obligation, but an opportunity to gain insight. A CEO in the study said, “It took a real mindset shift on my part but turning engagements with the board from an energy-draining exercise into a source of support and advice contributed greatly to my personal success and to the feeling that I had advocates around me.”
Some of the obvious culprits include reports and presentations that are too long, meetings without thoughtful agendas, and trivial decisions that pushed up. Another less obvious energy drain is dealing with the disloyal or weak direct reports. A final thought on managing energy is to establish a strong senior team quickly. Don’t take on additional responsibilities when you have an opening, get the position filled.
CEOs spend half of their time on their relationships with the board, investors, the media, and relevant government contacts. And half of that time, or 25% of their time is spent on board relationships. Those CEOs who didn’t cultivate strong relationships with their board looked back in hindsight and wish they had.
When the board has a lack of information from you, they look to other investors and the media for information. And if they don’t completely understand your business strategy, this can be dangerous as they are influenced by others who may be motivated by short-term results instead of creating long-term value. Obviously, the most successful CEOs dedicated time to their board and cultivate on-on-one relationships with each director.
Building relationships with your external stakeholders and investors requires more effort. Per Bill Winters, CEO of Standard Chartered, “this process often involves ‘singular’ exposure for the CEO, who cannot rely on the help of other executives. But the payoff can be considerable.” These relationships can also serve you in a win-win capacity. The more time you invest, the more information you’ll learn and be able to apply to your business.
Managing Information Flow
Most CEOs will know more about their company than their board or external stakeholders. But, if pressed for information on specific business lines, they typically need to defer to their direct reports. A challenge here is staying up to speed without resorting to micromanaging.
As CEO, you no longer have all of the day-to-day detailed information for the business, you simply don’t have the time. What you need to create is a culture of sharing that ensures information makes it up the ladder and across to other departments. The key skill set required by new CEOs is the ability to provide the right context to each audience you’re sharing information with. Use logic, data, and facts that support the business objectives. Remember, stock prices are affected by the messages you’re sharing.
The idea of what got you here won’t get you there is never more true than for a new CEO. Dealing with stress, decision making, and unknown outcomes among other topics requires new approaches and self reflection. According to the article, you should be asking yourself, “Am I spending too much time on day-to-day management?” “Am I getting the information I need from the business units?” and “Am I spending enough time on individual relationships with board members?”
If you have questions on how you can identify challenges more quickly or suggestions on how to avoid some pitfalls completely, send us note. Our team of executive recruiters are standing by to help you build out your c-suite.