How long should a CEO stay in the job? This is a question pondered by Manfred F. R. Kets de Vries, writing for the HBR.org Blog Network.
Kets de Vries divides the nature and challenges of the chief executive role into three distinct phases:
1) Entry. The author describes this as the “honeymoon period” – a time of learning, experimentation and innovation. During this phase a CEO is prepared to take risks and embark on a programme of major change.
Kets de Vries observes that the CEO is unlikely to perform at full potential during this time, as “many new things have to be assimilated”. The chief executive has to gain control over a new environment and select their key people.
2) Consolidation. Once leadership style and strategy have been established, if things are going to plan then the CEO can consolidate the work put in during the honeymoon phase. Alliances are in place with key executives and stakeholders, a good working relationship with the board has been established and good results mean the CEO is secure in their role.
However, Kets de Vries warns: “The traps here, of course, are complacency and rigidity; as they approach the end of this phase, some CEOs start to resist even minor changes.”
3) Decline. One sign that the CEO has reached this phase is if the company has few or no new products or market initiatives planned in the near future.
Another sign is if there is no new blood entering the top echelons of the organisation, with everyone falling into line with the CEO’s status quo. Cash might be accumulating but this is probably due to the top executives running out of ideas on how to invest it.
When the decline sets in, ideally the CEO will be aware of their increasing ineffectiveness and move on. However, many find it difficult to accept they’re no longer the best person for the job, meaning the board needs to take responsibility for the situation. This can be difficult, however – especially if the board is comprised of people indebted to the CEO.
Kets de Vries advises that leadership programmes can help, explaining that “the CEO can increase his self-awareness and by working in a group he can exchange ideas with peers in similar situations... Quite often, leaders who engage in this discover that they do in fact want to step down and find another job in a new environment”.