Executive transitions has been saved
It’s not uncommon for top companies to spend hundreds of thousands of dollars to recruit C-suite execs—but the failure rate is high. Ajit Kambil spoke with Tanya Ott about the 90-day myth, and the three main areas newly hired C-level executives need to focus on to be successful.
Most CEOs we talk to expect their executives to spend 60–70 percent around the strategy. Usually when a person comes in, they get pulled down into playing this operational leadership role, and if within a year, you don’t cross the chasm of getting your time out of the operator-steward role in the strategist-catalyst role, you risk being an ineffective executive.
TANYA OTT: We’re talking leadership in the C-suite today. What do you need to know to succeed at the top of the corporate ladder?
I’m Tanya Ott, and this is the Press Room, Deloitte University Press’s podcast on the issues and ideas that affect your business today.
It’s not uncommon for top companies to spend hundreds of thousands of dollars to recruit chief financial officers, chief information officers, and other C-suite execs. But the washout rate is high. Research suggests 40 percent or more of executives fail in the first 18 months of promotion into their role—whether they were promoted from within the company or coming from an outside organization.[i]
Almost a decade ago, Deloitte launched a CFO Transition Lab to help execs make the transition—and to figure out why so many flounder. Ajit Kambil is global research director for the CFO Program. He says they discovered that the recipe for success depends in part on how a C-suite exec got her job.
AJIT KAMBIL: For the internal promote, it is really expanding their perspective of the job that they have to do, giving up their old job, if you like, and really taking on the mantle of the new role that they’re assuming. We often find some of the internal promotes still doing their old role and not really attending to the strategic needs expected of them in their new role.
For the executive coming in from the outside, it’s about really getting to understand the company, building the relationship capital with key executives within the company, and then working effectively with them to drive change. People are hired not usually to just maintain the status quo—especially in the dynamic world we live in. They’re really hired to drive change and performance, so, in order to do that, they have to win the consent and collaboration of a number of different peers.
TANYA OTT: I did a scan of some of the best-selling business books—you’ve got titles like The New Leader’s 100-Day Action Plan or The First 90 Days. Now that is a lot of pressure to put on anyone in the workplace. When you see titles like that, what do you think?
AJIT KAMBIL: The first thing I always say is it’s the myth of the first 90 or 100 days, because many of the executives who come into our transitions labs come from very large corporations. It takes some time to really understand that issues that the company’s facing; to get to learn the organization, the team, and the capabilities that they’ve inherited; and even to really connect with other key executives in a meaningful way to frame an agenda. So all of these things that set these deadlines of 90 or 180 days, it’s a bit of mythology. The real thing is within the first year you’ve got to do a number of things to be successful.
TANYA OTT: So let’s break down those days—and I don’t want to necessarily tie us to the 180 days, or break it down month by month—but what’s the first thing that a newly promoted or newly hired C-level executive has to think about when they walk into an organization?
AJIT KAMBIL: We often say that there are three things that they need to focus on. One is how they manage their time and their team’s time, and what are the priorities that the organizations engages in that they lead.
The second thing is they have to really quickly understand the team and the talent in the team they have—and then repair it if it needs repair. They have to ask: Is this team going to get me and my organization to deliver the results that the company expects of us? And they’ve got to make changes quickly because there’s the trade-off, which we call the time/talent trade-off. If you have the wrong team and talent, your time is going to be wasted. You’re not going to be successful as an executive.
And then the third thing they really have to focus on is relationships: How do they get to connect with key executives in the C-suite, as well as more broadly, often even in the field, so that they get a real understanding of what’s going on and how their organization can work with these executives to be successful.
TANYA OTT: So that initial chunk of time is spent meeting people, listening to people, assessing what the current situation is, and what kind of changes you might need to implement. What comes after that?
AJIT KAMBIL: After that it’s beginning to say, OK, I’ve got this quick assessment. It’s framing an agenda, “here are the critical priorities that I’m going to focus on,” and getting them socialized with the organization. Then it’s almost simultaneously beginning to test the team if you have doubts about particular folks and their skills and their capabilities. Test them with specific assignments, and then decide, are you going to replace certain people (and make those choices early), or are you going to put effort into helping them reskill or change their behaviors or judgment or approaches to decision making so that they can be an effective member of your team?
TANYA OTT: You mentioned deciding new things that you need to do, or new ways that you need to do the things you do. But sometimes that, at a basic level, just means killing things that you’ve already been doing as an organization. How do you manage that process? Because that can be pretty tricky.
AJIT KAMBIL: You hit upon on the key things I often ask people coming into the transition lab: What’s on your kill list? Because the key thing is you need to create time to do the important things, and you’ve got to free up the organization from doing things that no longer are really useful or effective. So the first thing is inventory what people are doing, triage, and say, maybe these things are not as effective anymore. These reports that are generated out of finance are not as useful, for example. Stop doing the things that are not so useful to free up time.
If there is a practice where there are people who want to resist that kind of change, then you have to think more carefully about what kind of things you are going to do to persuade another group that this should be ended as a process or an activity.
TANYA OTT: I wonder if the approach to this kind of transition depends on how you’re brought in and why you’re brought in. I’m thinking of a person that I know who is known as the turnaround artist. So she is brought into organizations that have really serious problems, and her job is to go in for essentially 18 months and really clean stuff up, and then she pretty much expects to exit at the end of that. Is the approach she would need to take in that environment different from someone who is truly looking at this as, “I’m going to be here for a while”?
AJIT KAMBIL: I think in both cases the approach is actually identical: whether you’re coming into a broken organization or an organization that is working relatively well. It’s just the degree to which you drive change will be different. In a broken organization, it probably means there [are] very significant people changes [and] process and systems kinds of changes. In a functioning organization, you still probably will find that the people that got you here may not be the people who can take the organization to the next level, and you may have to modify the team a little bit. You may have to reskill people in a different way. Again, you may have to attend processes and systems to help you scale.
What I find is that executives come into all kinds of challenging situations; sometimes they’re lucky to inherit an organization that, for the most part, is working well. But in those cases, still the environment around the company may change, and they have to still guide the ship in a new direction.
TANYA OTT: What are the biggest pitfalls they need to be looking for and avoid—the things that may be done wrong most often?
AJIT KAMBIL: Let me talk about time, for example. In the case of time, I find most of the people that I work with during a transition period may work 70–80 hours a week in the first six months or so. That’s intense, and it’s, in my mind, not a totally sustainable model for them to be a high-performing executive over the long run. For example, the first thing I ask the internal promote is: Who’s doing your old job? If they’re still doing their old job, the thing is they’ve got to get rid of that old job as quickly as possible so they are freeing up their time to attend to the important things going forward. Usually, we find an executive can probably focus about half of their time—let’s say about 30–40 hours a week in the early stages—on about five key priorities in order to get them done effectively. The rest of the stuff is day-to-day stuff, and they’re going to have to be really effective at delegating as quickly as possible. You need a team you can delegate to.
You have to be very concerned about what we call the “rescue fantasy.” You have a very congenial B player in a role where you need an A player in the role. And you have to decide, well, I’m going to try to make the B player an A player. You spend six months, then a year, then a year-and-a-half, and they’re still not becoming the A player you want them to be. So whenever you have team members that are not performing at the level that you need them to perform at initially, you have to decide, how much do I invest in time to rescue that person.
People decisions are the hardest decisions we make because we’re really impacting their life. All the executives I work with really struggle often with these decisions. And there’s the trade-off as to, if I let this person go, how much tacit knowledge am I losing? What’s the risk? Can I get a better person? Is that really available in the marketplace? So it’s a very challenging set of decisions on the people side.
TANYA OTT: So overall, how do you judge if you’re making progress? You talked about a 180-day plan, perhaps even longer. How do you benchmark that?
AJIT KAMBIL: The first thing is really getting to know your team, and are they beginning to respond to you and be re-recruited to you fairly quickly. Are they really assisting you? Being open with you? Giving you the relevant information you need to be effective? That’s one area that you look at.
The second thing is you need to get out there and establish relationships with your key stakeholders. Get to really know, what are their issues? How do they perceive the brand of your team and what your organization has done in the past? What needs to be reset? In a C-suite transition, the most critical stakeholder is the CEO. What’s your connection with the CEO? How, over a period of six months, are they beginning to interact with you and to look to you as a partner and a source of counsel on critical issues?
TANYA OTT: Ajit Kambil is global research director for the Deloitte CFO Program. He’s got a lot of advice on managing an executive transition on our website, dupress.com. While you’re there, check out our interview with Josh Bersin about what HR is doing right—and wrong:
JOSH BERSIN: It sort of hit me like a ton a bricks—WOAH! This is what’s wrong with HR. We’re not thinking about the world in terms of how humans react and human motivation. We’re thinking about the world in terms of interventions and processes and programs that we can roll out and push on people.
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