Most CEOs consider the transition formidable, even for seasoned industry professionals. Here are three areas they should focus on.
In taking on a new job, CEOs needs to adapt quickly, clearly outlining a personal strategy and regularly evaluating themselves against it. The demands of the role often do not match the new CEO’s expectations, and this can lead to distress and disappointment. Given the circumstances, it is not surprising that between 2013 and 2017, more than 280 CEOs in the S&P 500 left their positions.
When transitioning to the role of CEO, professionals should focus on three main areas that can pose particular challenges:
Managing energy: Among the factors contributing to wastes of time and energy are poorly designed committee agendas and missions; unnecessarily lengthy reports or presentations; and trivial decisions being referred upward.
Managing relationships “up and out”: CEOs recognize the importance of building trust and alignment with all stakeholders, primarily the board, investors, the media and government contacts. Board members often need to be steered in the right direction, as they can be easily influenced by investors who focus on short-term goals at the expense of longer-term value. Building relationships with external stakeholders is also difficult and time-consuming, but the payoff can be considerable, as support from external stakeholders is more likely to translate into positive analyst notes, media reports and investors’ support for long-term goals.
Managing information flow: With individual business lines, the key is to be informed without micromanaging, providing a culture in which information flows to the board and other stakeholders. To manage well, a CEO needs to translate intuitive business decisions into a logical framework that fits with the explicit knowledge that board members have accumulated. Board members are less likely to support a decision that appears to be based on intuition. At the same time, stock price is often driven in part by the messages a CEO communicates through engagement with investors, analysts and the media. Learning to control this information flow is vital.