ULTRAte Strategy
Your Vision ⚡️ Realized!
The Road Ahead.jpg

Thoughts_We_Write-Down

Onboarding Your New CEO: Getting it Right and Keeping it Right

Whew!

That is the feeling that board directors often express once the ink has dried on the successful recruitment and hiring of their organization’s new chief executive. What they realize soon enough, is that the hard work is only just beginning! This next big job after landing that big fish is to effectively onboard her.

Onboarding, which involves the setting of clear organizational and personal expectations, the establishment of strong CEO/Board communication flow, meaningful CEO acculturation, and the design of sound processes for CEO evaluation, are all essential activities that the board must dedicate substantial bandwidth to in the CEO’s early days.  Without this focus, the likelihood that the CEO will fail, become disaffected, and ultimately transition out of the organization, are high.

40 percent of all executives hired at the CEO or senior most level are either pushed out, fail, or resign with the first 18 months of taking their new role according to the Harvard Business School. These numbers have remained steady over the last two decades. Early and unplanned CEO and top executive transitions come at great expense to the organizations those leaders are hired to lead.  It is costly in terms of lost revenue and loss of productivity. It is costly in terms of the recruitment and hiring costs.  It is costly in terms of potentially lost customer or client confidence. And it can be devastatingly costly to employee morale.

Those are the sobering insights from Kevin Kelly, CEO of Executive Search Firm, Heidrick & Struggles, discussing his firm’s 2009 internal study of 20,000 global searches. Yet in a 2010 survey by the same firm along with Stanford University’s Rock Center for Corporate Governance, 50 percent of those organizations surveyed reported having no formal onboarding plans for their new CEOs.

The cost of CEO failure to organizations can measure between two and twenty times the CEO’s total compensation and includes both direct and indirect costs – not including the far larger and longer lasting opportunity costs.

Direct costs include recruitment, relocation, salary, bonus, severance and often consulting and legal costs.

Indirect costs include negative impacts on customer satisfaction and key partnerships, brand reputation, hits to financial performance, downtime, turnover and injury to organizational culture and morale.

Opportunity costs include the unrealized promise of the many things the executive was recruited to deliver, but were left undone.

So, the stakes are quite high.  And if you are a member of a board that is making an executive  leadership transition, there is every reason to keep it right once you get it right.

Regardless of the sector your organization operates within, we recommend that as board members, you resolve to commit the necessary energy and resources post hire, to give your new CEO every opportunity to succeed in leading your organization to new heights.

Successful CEO onboarding is an essential element of this.  We have worked with talented CEOs who have assumed the helm of organizations with complex operations, complex board governance, and complex internal cultures, all with little to no formal onboarding support.  Correspondingly, we have also seen too many of those CEOs struggle in their early days.  

New CEOs may be asking themselves a battery of questions each day like: 

  • “What should the right cadence of communication be between me and my board?”

  • “How do I most efficiently become both familiar with, and a genuine champion for the best of our company’s unique culture?”

  • “What is the decision-making landscape within my board and my organization generally?”

  • “Who are the influencers among my board of directors, throughout my organization, and among our strategic partners?”

  • “How do I build and sustain healthy relationships with all of my board members?”

These are the among the many important questions that a committed onboarding process can address, giving the new CEO the early organizational intelligence that they need for an effective start to their leadership.  No matter the size of your organization, they are your board’s only employee, the person that you have the greatest single investment in, and the person whose individual performance most influences the success of entire enterprise.  While the CEO must take ownership of their own onboarding, the board should approach it with the same degree of ownership and enthusiasm.

So, what are some of the most important elements of effective onboarding? Here are our top three:

Achieving Clarity of Expectations and a Shared Understanding of Board/CEO Roles.  Of course, your new CEO will have come into the role with experience at a high level, and perhaps even as a CEO before. However, they certainly will not have had the experience of being the CEO of your particular organization.  As a board, and as an essential part of onboarding, you should prioritize setting clear expectations for the CEO’s performance very early.  For example, in addition to the financial or productivity themed metrics the board may want to hold the CEO accountable for, you may have other, less obvious, but still important expectations of behavior. Examples of this could be a highly collaborative leadership style or a more customer facing commitment. Without clearly articulating these expectations to the CEO, you are at risk of them not being prioritized, or not even heard at all by the CEO.

Very early on the CEO and board leadership should have transparent discussions about how they will work together to advance the mission of the organization, and which roles are reserved for whom.  While it may seem obvious, depending on the balance of authority between the board and the previous CEO, the current board culture and dynamic, and the CEO’s past board experience, there may be different perspectives on where authority rests that may require clarification or redefinition.

Gaining the Commitment of Board Leadership to Support the Onboarding Effort.  Many high performing boards have the board chair and/or a small number of directors assigned to support the CEO’s onboarding process.  The organization’s HR chief is also often a committed resource in this effort because of their unique people focused role in the organization.  This support group can help the CEO understand important, but sometimes unseen board dynamics and culture, help the CEO understand the “whole job”, and introduce the CEO to key stakeholders. 

Securing External Counsel.  It is important for the CEO to have access to intelligence and perspectives about their performance and that of the organization from trusted advisors outside of the “work family”.  A small, nimble, and trusted group of advisors who can serve as an untethered and confidential sounding board for the new CEO can be extremely valuable in helping your leader maintain perspective.

There are many great resources available to provide a busy board of volunteers, and a transitioning CEO the professional support they need for a robust and complete onboarding process. Some organizations retain external consultants to advise and coordinate this process, while others choose to manage it in-house.  The tools are definitely abundant and available, but the most important part of it all, is understanding and declaring the importance of onboarding in the first place.

In summary, we encourage all board members to enthusiastically commit to do everything you can to support the success of your organization’s most valuable single leadership asset.  If you are the board chair, or a board influencer, introduce those onboarding discussions to your colleagues long before the CEO is hired and certainly before they are in place.  From day one, make it unambiguously clear to your new CEO that their board is energized, engaged, and highly committed to their successful integration into the organization that have been entrusted to lead!