- 21 - peers whose productivity is enhanced because they depend on the executive leader and additional business opportunities that are generated, the ripple effects of executive transitions become truly magnified. Lastly, CEB’s rich database suggests that any large organisation has 70 senior executives on average. With about 12% being replaced annually, this results in eight senior executive transitions each year. Despite this predictable pattern, many organisations approach CEO transitions like mergers and acquisitions. We know one of the most commonly identified factors when it comes to failed deals is ineffective post-merger integration. Similarly, most executive transitions fail because of poor ‘integration’ of the CEO into the new role in an organisation. Put differently, what would be the upside of getting CEO transitions right? The best organisations truly understand the ripple effects (both positive and negative) and orchestrate a structured and externally supported CEO transition process. This process would mobilise internal resources and apply innovative tools and systemic approaches to assist the newly appointed CEO with a set of high-impact transition activities. Significant research has been conducted to evaluate the benefits of successful onboarding and executive transitions. Many studies have focused on benefits related to the CEO in transition. However, the benefits are threefold, benefitting at least three distinct groups of stakeholders. Allowme to elaborate on each stakeholder group further. Benefits for the CEO A successful transition has proven to reduce the likelihood of derailment by up to 50% (Wheeler 2009). A structured and supported CEO transition also mitigates key transition challenges and associated risks. In return, enhanced role satisfaction is a clear benefit for the CEO. The other benefit that should not go unnoticed is that baseline productivity levels are reached in a shorter period. This has been measured in many studies and the results are an accelerated transition that is up to 50% faster than with the peer group who did not get the structured transition support. Lastly, it becomes obvious how successful CEO transitions will pay a dividend in an area that has not been mentioned yet: the future trajectory of the CEO’s career, such as a higher likelihood to be promoted externally after one or more successful transitions. Benefits for the Organisation The most obvious benefit is that successful CEO transitions reduce the risk of high-stakes placements and potential costs related to mishiring. Studies show that mishiring at the executive level is highly costly, with an estimate of somewhere between 10 to 30 times the salary cost of an executive. Corporate Executive Board (CEB) research suggests that successful CEO transitions demonstrate that 90% of leadership teams whose CEO had a successful transition go on to achieve their three-year performance goals. In those teams, the attrition risk is 13% lower than the rest. A successful transition also suggests the organisation is making better—if not the best—use of the CEO’s unique talents and potential. It is a strong and clear demonstration of the commitment to the executive and their professional development. Furthermore, if part of the mandate of the new CEO is to change the organisational culture, then a structured THE CEO INTERVIEW
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