High Stakes - Good Bets: Strategies for Keeping New Executives

Article by Matthew S. Turner, Partner - Leadership Development Resources

The recent job losses and budget cut-backs that have accompanied the economic downturn may lull many into thinking the proverbial war for talent is on hold; this is not the case - turbulent economic times only amply the need for effective leadership.  The stakes of the game are higher than ever and well placed bets matter more now than ever.

While leaders at all levels are being asked to ante up, the demands placed on leaders new to their role are particularly acute.  External hires face a compressed and steep learning curve centering on organization systems, the capability of their team, relationships with key players and the nuances of organizational decision-making and culture.  Those promoted from within must adjust their approach, learn new skills and manage new products/services or markets.  Both face the challenge of energizing their team, finding the proverbial early win and quickly integrating into the existing leadership team.

While most organizations recognize that these challenges exist, few go beyond a brief new leader orientation followed by an almost random "check in on the new guy" approach.   This is the organizational equivalent of playing roulette with other people's money and careers.  While the actual rate of executive turnover is not precisely known, there is general agreement that it is high.  Downey, March and Berkman (2001) report that half of all newly hired US executives will quit or be fired with the first three years.  Similarly, a 2003 Corporate Executive Board study cited data from the Center for Creative Leadership indicating that 40% of external hires fail with 18 months.  Of the 60% that don't fail, performance often lags expectation.   The costs of failure, for both the individual and the organization are significant.  According to a 2006 study by Bauer, Erdogan, Linden and Wayne, the cost of each failure can be in excess of $500,000 dollars.

To protect their bets on new talent, organizations should implement a disciplined process for acclimating new executives to their role and the broader organization by facilitating:

• Key Stakeholder Meetings: Within the first 30 days, the new executive should have scheduled meetings with any key leader within the organization on whom he or she must rely to optimally fulfill the role. For example, key stakeholders for a new marketing executive will likely include executives and business unit leaders from the organization's various sales and operations areas, as well as finance and planning. Several topics beyond relationship building should be discussed including; the nature of their interdependence (no effective executive operates in a vacuum), a review of existing working relationships and rub points between their respective departments and any critical initiatives currently in progress. These meetings have important practical and social benefits which help the new leader understand the rules of the game.
• Functional Team Integration Session: Most executives have about seven direct reports. In an effort to get their bearings and foster individual team member engagement, most new executives will set up a series of one-on-one meetings to review current projects and initiatives. These meetings are needed in order to partition incoming information into digestible doses, however, style can often trump substance and functional and dysfunctional relationships among direct reports may not be made apparent. New executives can greatly accelerate their understanding of the teams' functioning by initiating a team retreat within the first 30-45 days. Oftentimes done in partnership with an internal or external organizational development professional, the meeting agenda centers on team capability and interaction, clarifying expectations and goal-setting.
• Executive Team Integration Session: A new executive will have had the opportunity to interact with a wide range of leaders throughout the organization within the first 60 days. In order to cement productive relationships or course-correct less than optimal ones, organizations should initiate a session similar to the Functional Team Integration Session described above. Meeting attendees should include the new executive and his/her key stakeholder group. Done correctly, a session of this type helps the new leader and his/her peers get their chips on the table early in the game and minimizes the impact of chance and luck on having a winning hand.
• Transition Coaching: Leaders in new roles face many pressures in the early phases of their employment. Organizations can help new executives manage through these pressures by engaging a transition coach. The coach can serve as a confidential sounding board for key decisions, advising on relationship development efforts and other common transition issues. Transitional coaching can be intensive or minimal depending on the new leader's needs.
• Six Month Review: Human beings function better with feedback; executives included. A formal six month review by the new executive's superior (CEO or Board Chair) is essential. Being a member of the executive team is a pivotal role for any organization and a six month review allows the new leader to receive important feedback about his or her performance.

At the conclusion of a successful search, decision-makers often exhibit a range of emotions. They feel confidence that a thorough vetting process has identified the best possible candidate for the role and the organization. They are excited about the selected individuals' skills, competence and ability to lead. They are optimistic (and expect) that the selected individual will have both an immediate and long-term impact on the organization.  To beat the odds, this confidence, excitement and optimism needs to be paired with intentional effort and a disciplined new leader integration process.

Citations:
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Downey, K., March, T., & Berkman, A. (2001): Assimilating new leaders: The key to executive retention. New York: AMACOM

Corporate Leadership Council. (2003). Models and methodologies for on-boarding programs. Washington, DC: Corporate Executive Board.

Bauer, T.N., Erdogan, B., Linden, R.C., & Wayne, S.J. (2006). A longitudinal study of the moderating role of extraversion: Leader-member exchange, performance and turnover during new executive development. Journal of Applied Psychology, 91, 298-310.

Coleman Lew & Associates, Inc., founded in 1979 and headquartered in Charlotte, N.C., is a international retained executive search firm that recruits board members, officers, and senior level executives for national and international companies, academic institutions and non-profit organizations. The firm also provides customized leadership development services to organizations seeking to maximize corporate performance. Member, Association of Executive Search Consultants (AESC).