Almost Ready:How Leaders Move
August 16, 2007 – 7:13 pmAt the very top of a company,a subtle sorting process reveals might become CEO and who won’t.The irony is,what makes you a winner.
by Dan Ciampa
Shortly after being elected U.S. president in 1960,John Kennedy offered Robert McNamara,then president of Ford,the post of treasury secretary.McNamara turned down the offer,saying he wasn’t qualified for the job.Then,kennedy offered him the job of secretary of defense.When McNamara demurred again for the same reason,a frustrated Kennedy exclaimed :”Bob,there is no school to learn to be president,either!”
Leadership at the top is never easy for even the most experienced people.For someone taking on the job of CEO for the first time,mastering the new skills and sorting out the uncertainties that go with the position can be an overwhelming challenge.So it should come as no surprise that the corner suite has a revolving door.The Center for Creative Leadership has estimated that 40% of new CEOs fall in their first 18 months.What’s more,the churn rate if on the rise:In a 2002 study,the center found that the number of CEOs leaving their jobs had increased 10% since 2001.As a recent report from the out-placement firm Challenger,Gray&Christmas points out,”The biggest challenge looming over corporate America [is] finding replacement CEOs.”
That’s problem for aspiring chief executives.Look at what we know about the experiences of designated CEO successors-talented and hardworking executives who were successful at each stage in their climb to the number two position.Research comducted in the 1990s(by Michael Watkins,of Harvard Business School,and me) showed that ,when promoted from within an organization,less than half the people who reached the number two spot expecting to win the CEO title actually ended up in the position.We also asw more organization going outside their own ranks to hire designated successors-but disturbingly,once hired,only one-quarter of these candidates were successful at either being named CEO or at staying in the CEO job for more than two years.
Clearly,there is an urgent need for CEOs and boards of directors to have an efficient and effective succesion process,but few do.While HR department should be driving the process,most have neither the skills to translate best practices nor the credibility with boards to make an impact.Many corporations-even family-owned businesses,where the financial security of generations is at stake-don’t even get as far as having a plan.A 2002 survey by the MassMutual Finnacial Group and th George and Robin Raymond Family Business Institute showed that altough 40% of the polled chairmen and CEOs planned to retire within four years,55%of the ones age 61 or older had not settled on a succession plan.
