Avoid the New CEO Crash: Thriving in Your First Year

Leadership is complex, and C-suite roles come with both prestige and peril. Particularly for chief executives stepping into new roles, the initial 18 months are make-or-break. In fact, research shows that 50% to 70% of executives fail within 18 months of taking on a role, regardless of being hired externally or promoted internally.

50% to 70% of executives fail within 18 months of taking on a role, regardless of being hired externally or promoted internally.

Corporate Executive Board (CEB)

This critical period can determine not just your personal success, but the trajectory of your entire organization. Even seasoned leaders often falter during this crucial time, falling prey to avoidable pitfalls. Why do so many executives and organizations stumble with leadership transition, and how can you buck this trend? Let’s explore common new leadership challenges along with strategies new leaders and boards should implement to set the stage for transformative success.

Your organization’s biggest investment and risk

Few events are as critical to an organization as a chief executive transition. Chief executives orient the organization and determine key factors such as where the organization is going, what strategic initiatives are launched and when, who leads those projects, and more. For better or for worse, a new chief executive’s actions or inaction will significantly influence the course of their organization.

High cost of poor leadership transitions

To start, poor chief executive transitions can result in significant financial losses. The total cost of a failed transition can be up to ten times the executive’s annual salary when factoring in recruitment costs, severance packages, and hiring and onboarding expenses. ​

Poor transitions can lead to costly ripple effects across an organization, impacting everything from product launches to market responsiveness. Internally, employee morale and productivity can plummet when new leaders lack (or fail to communicate) direction and cause innovation to stagnate. Externally, organizations may risk losing valuable clients/partners and market share when the public loses confidence in the organization’s stability.  

Top 4 reasons why new leaders fail in their first 18 months

The new leader is not the sole party responsible in determining whether a transition is successful or not. While much of the spotlight (and pressure) falls squarely on the incoming CEO’s shoulders, the reality is far more nuanced and involves multiple stakeholders.

Here are the top four reasons why new leaders often stumble early in their tenure:

1. Lack of proper onboarding and integration

Most new executives are expected to swoop in and start solving longstanding organizational challenges on day 1. However, little support or guidance is provided from the hiring committee to support this work.

A global survey revealed a staggering insight: 70% of newly appointed senior executives pointed to a critical knowledge gap as their primary stumbling block. These leaders found themselves ill-equipped, lacking vital intelligence about their organization’s operational landscape – from its core competencies and vulnerabilities to untapped opportunities and looming threats. This information deficit was cited as the leading cause of their early-stage struggles, underscoring a pervasive challenge in executive transitions.

2. Cultural misalignment

New leaders often assume that they have a good understanding of the organization’s culture from the interview process and general information gathering. But if they do not take (or are given) the time to get up to speed on the values, norms, capabilities, experiences, or unique politics of the company, the transition can be unnecessarily rocky. Cultural misalignment can cause even the most well-intentioned actions of a new leader to be misinterpreted, causing pivotal initiatives to falter from lack of backing, thus slowly eroding away at the new executive’s credibility and effectiveness.

3. Inadequate succession planning

Failure by the board and previous chief executive to plan for leadership succession can lead to rushed and ill-considered appointments. When CEO selection criteria are not updated to reflect the organization’s changing needs, market shifts, and strategic positioning, boards risk hiring an executive who lacks the necessary skills to propel the organization into its next phase of growth. Insufficient internal leadership development can create undue pressure to hastily hire an adequate candidate rather than an ideal one.

4. Adapting to expectations and pressure

Many new executives struggle to remain resilient in the face of intense scrutiny. Under pressure to quickly produce positive results, a new leader may choose to make unilateral decisions while underestimating the cascading effects on team dynamics, operational workflows, and their own leadership efficacy. Combined with long hours, the stress can result in many new leaders rapidly burning out.

Help your new CEO thrive: 6 tips for boards

Boards should be always be active in supporting a leader, particularly during the transition process. Far from being a spectator sport, ensuring a smooth leadership change and positioning your new CEO for long-term success is a collaborative effort between the board and the chief executive. Boards that take a proactive stance in supporting their CEOs during this time can significantly boost the odds of a successful transition, ultimately driving organizational performance, stability, and stakeholder value.

From our experience evaluating and elevating board chair and CEO partnerships, here are our top six tips to help boards ensure a successful leadership transition:

1. Effective selection process

Develop a robust and accurate set of role criteria that reflects the organization’s current and future needs, strategic positioning, and any market shifts. Closely assess candidates for cultural fit and expose candidates to diverse stakeholders from across your organization. This multi-faceted approach can provide invaluable insights into a candidate’s interpersonal dynamics, leadership ethos, and potential impact on your corporate culture.

2. Leadership integration, not just onboarding

On behalf of the board, the board chair should ensure that the new chief executive has an in-depth understanding of the organization, including its strengths, weaknesses, opportunities, and threats. Brief the new leader on things not usually found in the employee handbook – existing culture, organizational norms and values, unique politics, and decision-making processes. The chair should also help identify the organization’s key stakeholders and help foster external connections and relationships.

3. Secure a high-level mentor

Providing your new leader with a competent, high-level mentor to support their transition and growth is paramount. Whether it’s an external coach, peer networks, or an internal mentor, offer your executive support in navigating their new role and responsibilities.

4. Be a sounding board for your CEO

The board should have a sound knowledge of the organization’s strategic goals along with the changing business landscape that they are operating in. Jointly, the board should be ready to listen and act as a trusted sounding board for the CEO, and be ready to adapt to best support your new leader.

5. Give the chief executive time

Give your new chief executive time to dive into the operations of the organization and build strong relationships with their peers and stakeholders. Unless a decision is critical, give them the space to fully consider and communicate their position and actions before acting.

6. Be clear about expectations and conduct regular performance evaluations

Boards should be clear their expectations of the CEO. This includes “soft” skills as well as technical skills – for example, expectations around communication, stakeholder relationships, performance against strategic goals, etc. Conduct regular check-ins and annual performance evaluations to promote alignment between CEO and the board, and set up action plans for the outcomes of said evaluations.

Successful leadership transition: top 3 dos and don’ts for new CEOs

Stepping into the role of CEO marks a pivotal moment in any executive’s career. As a new leader, the first 18 months are critical, setting the tone for your tenure and influencing long-term organizational success. To navigate this transition effectively, new chief executives must balance assertive leadership with thoughtful integration. Here are our three essential dos and don’ts to help you navigate and succeed in your first year.

1. Spearhead operational excellence

DO: Dive into examining and deeply understanding your organization’s strengths, weaknesses, opportunities, and threats. Connect and listen to your team to understand the organization’s positioning and why certain decisions were made along with individual capabilities. Use this opportunity to build your credibility by demonstrating your awareness of important operational issues, ability to accurately delegate projects and roles, and to identify and solve urgent problems.  

DON’T: Unilaterally impose decisions in a vacuum without considering the cascading effect on team dynamics, operational workflows, or existing decision-making processes. Operating like an autocratic leader will not win you any support and only foster resentment and place barriers when you need to gain support for future strategic or operational changes.

2. Clarify expectations and cultivate a safe learning environment

DO: As a new leader, take this unique opportunity to evaluate your team objectively before biases inevitably start to form. Gain context about individual performances so that you understand the skills and capacities of employees and can delegate or redistribute responsibilities accordingly. Establish a learning culture, supporting open communication to allow for clarity around expectations, set distinct achievable goals, and encourage individual ownership around work and decisions. Lean on your mentor(s) and/or coach to find your footing, and gain more skills and perspective. Fostering early team trust will empower you with the confidence to make pivotal decisions and assurance that your team can be relied upon to implement them.

DON’T: Skip communicating with staff outside of major change announcements (e.g., announcing two departments merging). Poor communication promotes confusion and allows for misunderstandings and resentments to form and fester. Similarly, being conflict averse and ignoring problems between staff in order to not “rock the boat” will only undermine your authority as chief executive as your staff will perceive that you cannot be trusted to resolve problems or create a safe and equitable workplace.

3. Align your stakeholders and communicate strategic change

DO: Collaborate with your board to identify key stakeholders, prioritize meetings, and strategize approaches. Gather first-hand information on what their individual perspectives, concerns, and goals are for the organization. Use this opportunity to deeply understand and establish alignment with your key stakeholders and take their insights to give additional context in defining your organizational strategy. Whether its adjusting KPIs or pivoting into new strategic areas, communicate your vision and intent with these change-makers for feedback and support. Building strong relationships with these change-makers who can influence attitudes and help implement change will help align the organization as a whole and encourage engagement with future initiatives.

DON’T: Put stakeholder meetings on the back burner in favour of focusing on other operational tasks when you come on as a new CEO. Similarly, do not let the biases (positive or negative) of others, including your board or executive committee, pre-determine your interactions and relationship with stakeholders. Leverage your position as a leader coming in with a fresh set of eyes and neutral perspective to listen, build rapport, demonstrate stability, and align your stakeholders with your new leadership. 

Next steps

The journey of a new CEO is fraught with challenges, but is also ripe with opportunities.

Remember: a successful CEO transition is a shared responsibility. Whether a new CEO succeeds in their new role and makes it past the first 18 months isn’t solely dependent on that individual – boards also play a vital role in securing a successful leadership transition. For boards, being proactive in securing mentors for your new CEO and offering a fulsome orientation experience can help set up your incoming executive for long-term success. For new CEOs, balance assertive leadership with thoughtful integration.