On November 29th, Guberna's held their ‘Directors Day’ event with top speakers, a panel discussion about leadership selection, and the role of boards and future CEOs. Guberna is the Belgian Association for Board Members and approximately 200 CEO’s, Board Members and investors participated in the event. Mercuri Urval joined with Wout Van Impe , Partner & Director, and Nicolas Alaerts, Partner & Director. Wout was one of the key notes and spoke about why leadership selection often fails, and what you can do to mitigate those risks. Nicolas joined the panel discussion with the CEOs.
One of the board’s main roles is leadership. Although succession planning is a key pillar of sustainable company performance, evidence shows that boardrooms still need to improve their pathway to successful leadership development. In their book ‘The next CEO’, Thomas Keil and Marianna Zangrillo illustrate with real-life examples why CEO changes often fail and how boards could increase the odds of success in selecting the right leader. A recent study published by MU came to the same conclusion: many of the CEO succession planning mistakes can be avoided.
Without a clear mandate, CEO selection can only fail. Defining a mandate is complex because businesses need urgently to be remodelled. Boards need to review the purpose of the company and put it into practice (cfr Colin Mayer). The focus should not only be on sustainability but on regenerative business. Paul Polman and Andrew Winston brilliantly illustrated in their book ‘Net positive, how courageous companies thrive by giving more than they take’, why and how every business leader should transform their business as a force for good.
Last week I gave a keynote about the performance problem in appointing senior leaders and CEO’s at Guberna’s Directors Day. Each week we can see articles in the press about failed leader appointments and about 50% of appointed leaders fails within 18 months. The reasons for this are strong (and wrong) beliefs about what leadership is or should be, assumptions, shortcuts, stereotyping, bias, and use of generic leadership models combined with a lack of an in-depth analysis of what the organisation needs. Only short-term and long-term results define you as a leader.
The senior the level of board members, the stronger the beliefs about leadership based on their own track record and convictions. If we can question our own beliefs and look more at the context and results as a starting point, we can tackle the current performance problem.
Thank you Guberna for the great cooperation!
For Boards, one of their most important tasks is clear: making sure they have a CEO who makes their organisation outperform. However, that turns out to be a difficult task, and the hit rate is that of a coin flip. The board members with whom I sat on the panel recognised both the importance and the difficulty of the task. We discussed the need to plan ahead when it comes to CEO succession, establish a clear profile of the CEO, follow a systematic search and selection process, and ensure a rigorous and thorough onboarding and integration process. It was great to feel their commitment to further strengthen their own practice in CEO succession, selection and onboarding.
Whether the candidate is internal or external, whether an Executive Search firm is involved or not, and whether ‘add on’ assessment tools are used or not, the research is clear – the probability of a successful Executive appointment these days is about the same as flipping a coin. This failure has a staggering cost – to people, to leaders and to organisations’ results.
In recent research into conventional executive appointments, success rates are poor. A few years ago, a well-known and leading global Executive Search firm, studied 20,000 senior Executive placements. The researchers discovered a 40% failure rate within 18 months of a leader’s appointment, despite utilising extensive ‘talent data’ and the ‘latest leader assessment’ tools. In a meta-analysis of recent studies, this poor level of performance was found to be the norm. Shockingly, only 50% to 60% of leader selection decisions are successful when mainstream approaches are used.
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Lack of alignment on critical goals, lack of alignment with company culture, lack of attention to the stakeholder network to be developed can lead to poor onboarding and early departure of the leader from the organisation.
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