Over the last several years we have had the opportunity to coach many leaders in medical affairs.
Research shows that between 30% and 40% of executives fail within the first 24 months of accepting a new leadership role. With over half of the largest companies in the US changing CEOs, and over 15,426 other executives leaving their role, in the next four years this is an epic problem that plagues companies and destroys the people that fail.
Over half of senior-leadership turnover occurs at a time when the organization or team is performing poorly. The underlying assumption is that if you change the leader that performance will improve. However, there continues to be little evidence that succession leads to increased team performance. In large organizations, the complexities of performance are often larger than what can be influenced by a single individual, regardless of position. In addition, when progress is made toward some goals, the disruption to the organization often cancels out the progress made, resulting in flat or even negative performance outcomes.
While most leaders cite that they required at least 90 days to get acclimated and six months to get up to speed, the traditional three-to-four-month “honeymoon period” has shrunk with expectations of delivering results within 30 to 45 days. As an illustration, 83% of CEOs in situations in which the stock price fell after their first year in the role were not in role by the end of the second year. This is in direct opposition to research showing that successful leadership transitions occur when the incumbent takes time to learn and understand the organization, builds meaningful relationships with stakeholders, and engages his or her team so that they desire to help the new leader and the organization succeed. When the timeline of leadership transitions is examined over a longer period, leaders who have been in role for over five years outperformed newer leaders even though performance in their first year declined as resources and energy were redirected toward the transition and away from the performance of the organization.
There is significant impact at the organizational, individual, and societal levels. The cost of a failed leadership transition can be as much as 24 times the base salary of the person hired. When a new senior-leader is introduced into an organization, it will have a negative impact toward on average 12.4 people. On a personal level, the options for those who leave the organization are not promising. After a change in CEO, of the impacted executives who leave an organization, only four percent typically move into higher-level positions or maintain their current levels at a larger organization. On average, 65% will move into very small organizations, begin consulting, or otherwise drop out of the corporate space. Individuals transitioning into new senior-leadership roles rate the experience as the most challenging and stressful life experiences, second only to divorce and only slightly higher than a major medical event.
Previous research has shown that successful leadership transitions occur when the incumbent leader takes fourteen to eighteen months to understand the organization, build supportive relationships, and engages the team around a strong vision of the future. Given the desire for long-term sustained success, new leaders are driven to slowly learn the organization and put in the necessary investments for the organization to change. In doing so, short-term performance may not improve and could even digress as resources are applied to the changes instead of maintaining current workload.
Another desire of the organization when appointing a new leader is rapid change. In these situations, the change of leader is a reaction to the poor performance where the desire is not a new leader, but that the consequences of poor performance are halted. This expectation of the organization causes a new leader to take quick and often dramatic actions to realize short-term wins, even if those same actions put longer-term sustainability at risk.
These competing demands result in structural conflict. As a new leader is faced with the need to achieve short-term wins, they start to make rapid changes. As those rapid changes begin to be implemented, signs that the organization cannot sustain those changes and will not support the new leader become more apparent. This highlights the desire to drive long-term sustainability which causes the leader to enter a mode of disciplined learning, relationship building, and planning. As resources are moved toward long-term transformation current performance begins to suffer which strains the need for short-term wins. This pattern will continue to effect behaviors and choices because as success is achieved in one, it is the cause for needing the other.
There are four Transition Accelerators that we teach to our clients who are going through a leadership change:
Leadership Accelerator #1: Establish a Transition Period
Align in advance what your transition period is. This is the period of time where you will focus more on learning and assessment than on making changes or running the business. Communicate this period clearly and frequently to help everyone recognize your priority. Make a formal transition out of this transition period.
Leadership Accelerator #2: Build Team Alignment
As a new leader you will see things differently than the existing team. Have frequent and short conversations about what you are observing to quickly evolve your thinking, test your assumptions, and to involve many people in your discovery. By the time you complete your transition period the team around you should all have very similar explanations of the current state of the team and what the top priorities should be.
Leadership Accelerator #3: Create a Compelling Vision
Teams need a compelling vision to rally around. This vision should be clear, easily communicated, and should force choice between competing priorities. There should be evidence that the vision is achievable and belief that it will be impactful.
Leadership Accelerator #4: Use Short-Term Wins to Launch a Sustainable Strategy
Leaders need to build momentum early by focusing on short-term wins. Short-term wins are highly visible, meaningful, and measurable accomplishments. These wins allow the team to figure out how to work together, builds trust with the broader team, and gives those not as familiar with the strategy a concrete way of learning more about your direction.
References:
Catalyst. 2002. Catalyst census of women corporate officers and top earners of the Fortune 500. New York: Catalyst