The CEO Shortfall: Executive transition consultancies may be the solution.
Updated: Feb 23
How Executive Transition Consultancies prevent premature exits.
The CEO shortfall refers to the gap that exists when CEOs leave their positions earlier than expected — before they have had the opportunity to fulfil their long-term strategic objectives and goals for the company. The CEO shortfall can have significant negative impacts on a company, including lost revenue, decreased morale, and a decline in the company’s reputation. A number of factors can cause this, but growing evidence suggests many of them can be averted by making a strategic impact in their first 100 days.
Whether it’s a merger or acquisition, a leadership succession, or a strategic realignment, these transitions can be complex, disruptive, and risky. Executive transition consultancies work to prevent CEO shortfalls by helping to ensure a smooth transition and successful integration of new CEOs. Executive transition consultancies like ours are firms that specialise in helping companies like yours manage transitions at the senior leadership level, C-Suite and adjacent. We accelerate C-Level integration by providing guidance and support to executives as they move into their new roles.
In recent years, specialist consultancies like ours have seen a surge in demand as more and more companies realise the benefits of working with experts who can guide newly appointed CEOs through the challenges of their first 100 days.
Here are some key reasons why:
Capacity
Special Advisers increase the capacity of the team when and where it is most needed.
Although the board is accountable for CEO succession, and an outgoing CEO should direct the process, someone must attend to the day-to-day details.
Yet, capacity issues mean that around two-thirds of organisations provide only basic orientation — sharing information about company performance, team member evaluations, organisational structure, strategy, and industry KPIs. There may not be the support needed to ensure the incoming CEO has the context to understand anything qualitative.
Unlike internal support, transition consultants are not expected to offer this support in addition to our regular responsibilities. By overseeing the process from beginning to end, we minimise the impact on the workload of those involved. With our support, new team members are successfully integrated without compromising existing commitments.
Objectivity
An external consultant is uniquely positioned to provide much-needed objectivity during a transition.
The priority for the newly appointed CEO is to be fully integrated into the company’s culture.
Our surveyed executives cited organisational culture and politics as the primary reasons for failure. Almost 70% of respondents pointed to a lack of understanding of norms and practices, and a poor cultural fit was close behind. Yet, with the best will in the world, those immersed in a culture struggle to describe it as anything other than “normal”.
As executive transition consultants, we possess a unique combination of tools, traits, and approaches that enable us to gather accurate and valuable insights about a company’s culture — identifying obstacles and highlighting opportunities.
Expertise
Expertise and experience are a powerful combination.
In a changing world, best practices are constantly being reviewed.
Many of us have bookshelves overflowing with management literature. But just because we’ve read the books doesn’t mean we’ve found the solutions — the hard work still lies ahead. To build a deep understanding, we must apply the knowledge and insights gained to our circumstances. However, executive transitions are rare, and for most people, there are few opportunities to put theories into practice.
Our job includes remaining up to date with management thinking, understanding the underlying research papers, and filtering for practical information. We understand the complexities of these theories and have had the opportunity to apply and refine our understanding. Knowledge plus experience gives us, and you, a well of expertise to draw from.
Politics
Transition consultants serve as trusted political advisers as well as process managers.
Internal politics play a conscious or unconscious role in the level of support new executives are offered.
There can be complex, unspoken relationships. Existing team members may have preconceived notions or biases about potential candidates or the transition process, which can impact decision-making and create roadblocks. Unsuccessful internal candidates are needed to support the integration of their process competitor — this often creates a delicate dynamic, requiring careful navigation and communication.
As external parties, we are not bound by these internal politics and biases and can provide objective assessments of people, processes, and strategies. Plus, due to our NDA protection, we can provide an unbiased and confidential sounding board. This can be especially valuable when a company is undergoing significant cultural change, such as a merger or acquisition.
Speed
With the proper guidance, executives can accelerate their integration.
When a key executive departs, there is often pressure to fill the role quickly and minimise the impact on the organisation.
However, the succession process can be time-consuming. If the role has been vacant for some time, the new CEO may feel under pressure to make critical decisions quickly. Studies show that with the proper support, newly appointed executives can reach full performance in a third of the time — making critical decisions with the correct information and having the influence to execute.
Working with a transition consultant, CEOs can accelerate their integration. By learning how and where to focus, they attend first to the activities that will maximise their impact — rapid identification of quick wins while building the understanding necessary for longer-term strategic goals. Furthermore, they avoid common pitfalls that may result in lost time.
Risk Management
By starting early, the new CEO starts with a bespoke playbook.
Executive transitions are inherently risky.
Poor or incomplete integration support can derail performance or lead to premature terminations or resignations — unsettling shareholders and doubling the costs associated with filling the role. The failure rate of new chief executives is estimated to be between one-third and one-half within the first 18 months of their appointment. Getting it wrong in their first 90 days is expensive for both the candidate and the employer.
To effectively manage risk, planning should begin when the board’s choice accepts the position and last for months after they arrive. Adopting a day-one sink-or-swim approach can be disastrous. Effective CEO integration is a long process of formal and informal interactions, planned and impromptu. We start before they do so that we can get a head start in planning for what can be predicted and creating strategies for reacting to what cannot.
Equity
For those whose leadership is the same game but with different rules, transition consultants help level the playing field.
C-suite demographics are changing, but bias remains a problem. Most of us know the importance of diverse hiring at every level and supporting women’s advancement throughout the promotion pipeline. Still, as the glass cliff replaces the glass ceiling, new research is beginning to uncover where traditional leadership advice can be counterproductive for women.
Because organisational minorities have different experiences in the boardroom and beyond, they must work with an executive transition consultant specialising in identity politics. I am passionate about getting and keeping more women in leadership positions, which is why my consultancy specialises in gender politics. We’re on a mission to get more women in leadership, and I believe it starts with keeping newly appointed female CEOs in their roles for longer.
In conclusion, executive transitions are complex and challenging but are also inevitable. This is why executive transition consultancies like Hodology are growing in popularity because we provide a valuable service to companies facing complex and high-stakes transitions. By leveraging our expertise, objectivity, speed, and risk management capabilities, we can help companies like yours navigate the challenges of executive changes and emerge stronger on the other side.