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Leadership transition – how to make it work

Leadership + Management

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Hardly anything that happens at a company is more important than a high-level executive transition. By the nature of the role, a new senior leader’s action or inaction will significantly influence the course of the business, for better or for worse. Yet in spite of these high stakes, leaders are typically underprepared and little supported during the transition to new roles, states the management consultancy McKinsey.

Hence, studies show that two years after executive transitions, anywhere between 27 and 46 per cent of them are regarded as failures or disappointments. Organisational politics are the main challenge, and 67 per cent of leaders wish they had moved faster to change the culture. These matters aren’t problems only for leaders who come in from the outside: 79 per cent of external and 69 per cent of internal hires report that implementing culture change is difficult.

The consequences of transitions are huge, though: nine out of ten teams whose leader had a successful transition go on to meet their three-year performance goals, say the consultants. Moreover, the attrition risk for such teams is 13 per cent lower, their level of discretionary effort is two per cent higher, and they generate five per cent more revenue and profit than average. But when leaders struggle through a transition, the performance of their direct reports is 15 per cent lower than it would be with high-performing leaders. The direct reports are also 20 per cent more likely to be disengaged or to leave the organization.

Despite those challenges senior-executive transitions are increasingly common: CEO turnover rates have shot up from 11.6 per cent in 2010 to 16.6 per cent in 2015. Nevertheless, only 29 and 32 per cent of U.S. and global leaders, respectively, feel that their organisations support new leaders in a meaningful way: As many as 74 per cent of U.S. leaders and 83 per cent of global ones consider themselves unprepared for their new roles. 

But what can leaders do to make transitions work? Ask questions about five basic dimensions of leadership – the strategy and operation of the business or function, the corporate culture, the team, the leader herself or himself, and other stakeholders that need to be managed, is the advice of the consultants. And: “Beware of generic answers because every leader’s starting point is different.”

Read more on www.mckinsey.com

 

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