Summary: This article covers the costs and causes of executive transition failure, the typical approaches to onboarding, what is actually needed by executives in transition, and the benefits of a successful transition
The statistics on executive failure are astounding.
There’s a 50% chance that a new executive will fail or leave the organization within their first 18 months whether hired externally or promoted internally. 1
That’s why it’s important to understand the causes of these failures and how to prevent them as you transition, onboard, and integrate an executive to a new role.
Table of Contents
The costs of transition failure
The cost of an executive failure is 10 times the executive’s salary – sometimes more.1 Executive failure costs come from the impacts to the performance of the organization and teams the executive leads when a transition failure happens. Turnover, engagement, goal achievement, and revenue are affected.
Ninety percent of teams whose leader had a successful transition go on to meet their three-year performance goals, the attrition risk for such teams is 13 percent lower, their level of discretionary effort is 2 percent higher, and they generate 5 percent more revenue and profit than average. But when leaders struggle through a transition, the performance of their direct reports is 15 percent lower than it would be with high-performing leaders. The direct reports are also 20 percent more likely to be disengaged or to leave the organization when their leader is struggling with transition. 2
Other tangible and intangible costs come from the company’s reputation being impacted, uncertainty increasing, morale suffering including worries about who will be fired next, and innovation stalling as people wait for the new leader to be in place.
Finally, a failed executive starts the costly cycle of recruiting and hiring over again.
1 HBR The Biggest Mistakes New Executives Make by Sabina Nawaz May 15, 2017.
2 CEB Blogs, “Corporate finance: The cost of poor leadership transitions,” blog entry by Kruti Bharucha and Nitika Dial, October 29, 2013
Causes of executive transition failure: Onboarding and integration
The cause of most transition failures is not poor selection or gaps in technical and managerial competence, but rather what happens during onboarding and integration. This stage in the executive hiring process is too often less intentional and strategic than the hiring decision, and often relies on the new executives to successfully navigate assimilation into their new role and organization.
Three-quarters of executives consider themselves unprepared for new roles. 2
And only 30% of global executives are satisfied with their onboarding experience while 32% of executives rate it as poor or below average. 3
1 HBR The Biggest Mistakes New Executives Make by Sabina Nawaz May 15, 2017
2 Matt Paese and Richard S. Wellins, Leaders in transition: Stepping up, not off, Development Dimensions International, ddiworld.com; and “Ascending to the C-suite,” April 2015.
3 Pomeroy, A. (2006). Better executive onboarding processes needed. HR Magazine, 51(8), 16.
How many companies approach executive onboarding
Often organizations approach onboarding an executive as a series of events and do not create a structured program with processes for communicating culture and expectations, evaluating progress and providing feedback, and providing leadership development. Many organization’s efforts to onboard their executives include providing administrative support; providing company documents and plans; arranging a series of meetings with peers, subordinates, and senior executives across the company; and standard employee or leader orientation sessions.
These efforts are not enough to prevent executive transition failure.
While many companies have established comprehensive onboarding programs for their employees, the onboarding of executives often is even more critical because of the high-performance expectations executives face and the impact they have on the overall performance of the organization.
With robust executive onboarding efforts, the average amount of time to reach executive full performance can be reduced by a third. 1
The most common executive transition failure causes
The most common causes of executive transition failure are shared between the executive and the board/hiring manger/sponsor.
Top executive failures causes are:
- Organizational politics. They don’t read the political situation well enough to build necessary relationships and alliances.
- Cultural fit. They fail to understand and adapt to the cultural norms and practices.
- Unclear performance expectations and lack of feedback on missteps.
- They fail to build teamwork with staff and peers and overestimate the willingness or the capacity of the people they inherit to abandon old habits and behaviors.
- Culture change. They don’t achieve the cultural changes their strategic and operational agendas require.
Boards, hiring managers/sponsors, and organization failures in the onboarding process are:
- They do not have a strategic, formal process to assimilate executives into the organization
- Fail to grasp the complex nature of succession and assume that executive handoffs are as simple as those at lower levels
- Fail to carefully consider the cultural and political aspects of the company that will be problematic for the new leader in the early months. Don’t actively help executives adapt to the cultural and political climate.
- One-dimensional or generic expectations of the new leader—in particular, emphasizing only operational goals
- They aren’t effective at facilitating alignment between new leaders and their teams
Learn more about the most common mistakes made in executive onboarding and transition.
Learn more about the top challenges executives face during transition.
Sources:
Patricia Wheeler, “Executive transitions market study summary report: 2008,” The Institute of Executive Development, 2008; “Ascending to the C-suite,” April 2015.
Corporate Leadership Council (now Gartner)
What support is cited as needed by transitioning executives
When executives and their hiring managers are asked what support helped during transitions, they agreed that the interventions that had the biggest impact during onboarding had to do with
- helping the transitioning leaders understand integration challenges and what the focus should be in the first 90 days
- getting feedback at the 30-day mark and throughout the first 90 days. 1
When executives were asked what would reduce failure rates, they emphasized
- constructive feedback
- help with navigating internal networks
- gaining insight into organizational and team dynamics. 2
Research has shown that some onboarding methods—for instance executive coaching and customized assimilation plans—have been shown to double the likelihood of success, but only 32 percent of organizations use them. 3
1 Joint Gensis Advisers/Egon Zehnder 2016 survey
3 Patricia Wheeler, “Executive transitions market study summary report: 2008,” The Institute of Executive Development, 2008
Ultimate Benefits to Successful Executive Transition
Successful executive transition avoids costly failure and business impact. Additionally, having fewer transition failures increases employees’ confidence in the company’s ability to plan succession moves, making it easier to persuade internal candidates to enter new roles. Robust onboarding enables internal talent mobility, an important competitive advantage in our volatile uncertain world.
Learn more about Avenue to Executive Transition Success Program that accelerates executive integration.
Learn more about executive onboarding and transition
Executive onboarding and transition timeline, toolkit, plans, and templates
Learn more about the most common mistakes made in executive onboarding and transition
Top challenges executives face during transition
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