Over drinks at a well-debated seminar on Women in Leadership Roles within Financial Services, Fidelio caught the throw-away line “unlearning CEO behaviour”. We all tend to think of career development being neat and linear. Fidelio was curious to explore the challenges and advantages of this unconventional career move from the CEO’s hot seat to being one of the management team.
CEOs typically cease to be CEOs for one of three reasons: they are headhunted to lead another, usually bigger company; they retire; or, not infrequently in these turbulent times, they are ousted. We have identified a small number of CEOs who buck this trend and choose to move from the leadership role to being one of the management team.
Over just a five year period, 70% of companies will change CEOs as a result of planned succession, the aftermath of M&A, and force-outs resulting from derailment.
– Patrick R. Dailey, ‘Why Leaders Fail’, The European Business Review, August 2011
To voluntarily move from a CEO role into a narrower position is not an easy decision to make and typically a number of factors come into play. The role on offer – be it CFO, CRO or CMO – is usually with a larger player with a bigger footprint. The increased complexity of the organisation may therefore compensate for the narrower role. CEOs become CEOs because they are driven. Thus an offer from a larger player which is also an industry leader with a global brand name plays well to the CEO attributes of ambition and drive. And finally a CEO who has achieved what he or she set out to achieve is often open to new challenges.
Fidelio wholly endorses imaginative career choices and applauds senior executives who refuse to be pigeon-holed. Nonetheless, it was clear to us from discussions with executives who have moved from the CEO role to a nominally smaller position that very specific challenges arise. How much CEO behaviour has to be unlearned for such a transition to work?
The CEO sets the tone and the agenda and ultimately it is the CEO’s neck on the line. At the end of the day the entire company is looking to the CEO for direction. The CEO is also at the nexus of complex shareholder and stakeholder relationships and it is a wise and effective CEO who discerns the multiplicity of agendas being pursued.
By vacating the CEO role, an executive can no longer expect to set the tone nor the agenda.
This can of course be turned into a virtue. As a member of ExCo the former CEO is well placed to understand the challenges and operating style of the incumbent CEO. There is much scope for supportive behaviour but this does require trust on the part of the incumbent CEO and humility on the part of the former CEO.
A successful CEO will not be attracted to a nominally lesser role unless it provides a challenge in terms of scale and often complexity. Thus leadership skills acquired from being a CEO can be well utilised in the new role. There is still scope to set the tone and agenda for the respective division or function and the company will benefit from superior leadership skills in this key role.
To succeed the former CEO must “re-dimension” the role and have a very clear understanding of the new boundaries. There will inevitably be frictions and tension. This can become particularly dangerous in times of acute pressure when decisions need to be made fast.
Here lies the greatest potential for blurring the boundaries, including often very different interpretations of what the company and employees are capable of delivering under stress.
Despite the challenges, Fidelio is firmly of the opinion that management teams can be enriched by the inclusion of former CEOs. The tensions outlined above can be very healthy if well managed.
There is also a second aspect to unlearning CEO behaviours which merits consideration. Company Secretaries are ideally placed to observe Board behaviour. Frequently Non-Executive Directors will include serving CEOs. It is interesting to note that particularly under pressure some serving CEOs revert to a mind-set of Executive leadership. This is not the role of the Non-Executive Director, nor is it helpful to a beleaguered management team.
The most successful CEOs are not always the leaders who are most knowledgeable and decisive. Often they are the leaders who create the best teams, inspire peers, and set a coherent vision in keeping with the organization’s mission.
– Roselinde Torres and Peter Tollman, ‘Five Myths of a CEO’s First 100 Days’, HBR Blog, January 2012
Here too, those CEOs who are able to unlearn the behaviours of the day job and practically support and guide the management team, including at times of great stress, will add substantially more value. We would go so far as to argue that executives who have successfully navigated the unusual career move from CEO to member of ExCo have the potential to be particularly effective Non-Executive Directors. This is because they clearly understand the boundaries of power, responsibility and influence and at the same time can offer high quality support and guidance having themselves sat in the hot seat.
We have chosen to keep our discussion of this topic generic and have appreciated the candour of our conversations with senior executives who have travelled along this this particular career path. In preparing this article we have in true Fidelio style looked cross-border, cross-sector and cross-function. And in conclusion we come back to that throw-away remark in the opening paragraph. Successful career development does not need to be linear. The ability to “unlearn” as well as learn is vital to the executive brave enough to take the unconventional career path.
Coming Up…
Overture explores how talent drives valuation. Future editions of Overture will deal with
• Building leadership teams for new markets
• How Boards keep on learning
• Post-acquisition – what to do with the former CEO
• Articulating the value of the IR profession
Please contact us with comments or for more information on Fidelio Partners at info@fideliopartners.com