How to manage executive transitions in organisations

woman shaking hands, job interview, strengths

Article by Navid Nazemian, Executive Transition Coach, PCC

When was the last time you experienced an accelerated and structured executive onboarding that was accompanied by a specialized executive transition coach?

Well, you’re not alone. Most leaders think or believe executive transitions are absolutely doable and there are plenty of processes and guidance available for executives going through a transition by their organisations.

However, research proves that 40 percent of all executives are pushed out, fail, or quit during their first eighteen months in a role (Keller and Meaney 2018).

Current state

Leaders rank organisational politics as the main challenge, and 67 percent of leaders wish they had moved faster to change the culture; hence, Dr. Marshall Goldsmith’s advice seems fully applicable to executive transitions: “What got you here, won’t get you there” (Goldsmith 2008). So, past accomplishments don’t always predict future success. Bearing in mind all of the above studies, we can see nearly half of all executive transitions fail.

Typically, organisations work extremely hard to identify and hire new executive talent—but then seem to rely on hope when it comes to making their investment successful.

Russell Reynolds Associates, one of the top ten search firms in the world, suggests 90 percent of the total cost of hiring a new executive is spent on the front end (Dineen 2021). This includes the recruitment and selection process such as search firm fees, assessment fees, cost of internal and external interviews, etc. As a result, only around 10 percent of the total executive hiring cost is spent on the back-end process such as a structured onboarding, executive transition coaching support, etc. This is a clear imbalance of the organisational investment.

Why action is needed right now

A recent study found that 70 percent of CEOs are either underwhelmed by their onboarding process or have had no structured onboarding process at all (Byford, Watkins, and Triantogiannis 2017). This is quite a surprise as the bestselling book by Michael D. Watkins, The First 90 Days, has sold over a million copies and has been translated into twenty-four languages (International Institute for Management Development 2021).

Yet, here we are, over two decades later, and many large and established organisations haven’t managed to set up a structured onboarding process for their executive leaders.

Massive cost of failure

The massive cost of failed executive transitions is several-fold and ranges from 2.5 to 30 times the executive’s annual salary. This only confirms earlier findings from a 2008 study by Stoddard and Wyckoff that puts a direct cost of failed CEO exits in the range of $12–$52 million depending on the size of the organisation and total losses to the US economy north of $1 billion per year.

Let’s face it, it may come as a surprise to some executives how lonely the top job can be. It may sound counter-intuitive at first. However, when executives are appointed into the C-suite, they are suddenly cut off from a lot of their fundamental mentorship and groups of people they used to deal with previously.

The gender gap in executive transitions

There is another cost to look at when it comes to failed executive transitions, namely that of a development opportunity gap. According to a recent study from DDI, female leaders are missing key development support (Development Dimensions International 2021).

The study has found female leaders are less likely to receive executive transition support than their male counterparts. Depending on the item that’s been identified to support executive transitions, the gap ranges from 13 percent to 22 percent; hence, it is statistically significant. What strikes me is a formal mentor or executive transition coach is made available to only 23 percent to 28 percent of senior leaders (Development Dimensions International 2021). Yet, we know how crucial that support is to all transitioning executives.

This may be surprising as many organisations are responding to the changing market dynamics and are under pressure to build female leadership benches at all management levels and in particular at senior leadership level. Partially, this is also driven by legislation in certain countries where the representation of the management board has legal requirements of a minimum representation by female leaders.

The DDI study also found there is a direct link between a long executive onboarding and the engagement level of the same executive, as we can see in the following chart displaying favourable responses (Development Dimensions International 2021). Admittedly, the executive onboarding and transition experience tends to be somewhat neglected in a number of organisations, and it is puzzling as to why that is the case.

Navid NazemianAbout the author

Navid helps executives and their leadership teams accelerate and successfully transition into new roles. He is the author of the #1 new release and bestselling book on amazon Mastering Executive Transitions – The Definitive Guide. Navid is an unparalleled expert and a thought leader in executive transitions.  You can see more about him here.

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