Chief Learning Officer - September 2007 - (Page 24)

learning solutions Learning’s Place During CEO Transitions Yaarit Silverstone, Neil Lawson and Craig Mindrum A recent report based on surveys of current and former CEOs discusses ways that executives can make the most of the “golden time” between winning their company’s senior position and actually starting work. But how golden is it, really? As they look at the statistics about the ever-shrinking tenure of the average CEO and the often insurmountable challenges faced at the top level, newly appointed CEOs might be forgiven for looking at that transition time in slightly more ominous ways — perhaps as a soldier reporting for duty or a mountain climber about to begin the last stage of a difficult ascent. The average tenure for an outgoing CEO now stands at a very brief 5.9 years, down from about 12 years just a decade or so ago. About one-third of the time, the tenure is fewer than three years. In the United States last year, the number of CEO departures broke all records, and that has doubled in just two years. By the middle of last year, CEO changes were averaging six per day. The health care industry leads in the number of executive transitions, followed by computers and high-tech, then the financial services industry. Because CEO transitions now occur more frequently, it is especially important for companies to execute those transitions effectively. As with so many types of major organizational change, the first few months of a CEO transition are critical — mistakes made during this period may be difficult to overcome. For example, one CEO notes that in his eight-year tenure, he never quite recovered from his “wrong response” to a question from his board about performance reviews. He said he was in favor of performance reviews, and a few board members subsequently suspected him of harboring secret plans to push them out. More generally, the departure of one CEO and the arrival of another places many stresses on a company. Productivity and morale might suffer, especially if the CEO change comes as a result of business decline or controversy, such as the stock options backdating scandal last year that led to the departure of a number of high-ranking executives. Boardroom conflict is the cause of a CEO departure more than 10 percent of the time, so an executive change might indicate deeper troubles to employees. Decision making might slow, previously critical initiatives might be tabled and careers might be threatened. Employees might have concerns over the direction a company is taking, therefore, the retention of top talent could be at risk. All these issues add up to the classic valley of despair — the dip in performance that occurs during the initial periods of major business change. Yet, there are things that can be done — specifically, things learning executives can do — to make the transition less painful and even more productive for the company. It will be up to the new CEO and the board to improve the company’s performance over time, establish growth platforms, increase revenues and improve shareholder value. But learning executives and their teams can do a lot to get the company and its people through the valley of despair as quickly as possible, putting the new CEO and the entire company in a position of strength and stability. September 2007 I www.clomedia.com I Chief Learning Officer 24 To read more about CEO transitions, see the article “Beyond Track Records: Helping Successor CEOs Navigate Transitions,” at www.CLOmedia.com/CEOtransitions. http://www.clomedia.com http://www.CLOmedia.com/CEOtransitions

Table of Contents Feed for the Digital Edition of Chief Learning Officer - September 2007

Editor's Letter Contents Letters to the Editor Strategies Selling up, Selling Down Take Five Imperatives Guest Editorial Learning Solutions Embarking on a Learning Journey Clo Profile Environment CIGNA Service Operations: Making Strategic Change Happen, and Making It Stick Tactics Black & Decker: On-Demand Learning Creation and Consumption Productivity The Army You Have Human Capital Holiday Inn Express: Delivering Critical Training Globally Case Study: Tegan Jones Business Intelligence Case Study: Lisa Rummler Advertisers' Index Editorial Resources In Conclusion

Chief Learning Officer - September 2007

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