Shortly after starting a new Chief Financial Officer (CFO) role, preceded by an impeccable 20-year career in finance, Peter was gone. What happened?
Joining a new organization is like careening down a highway while still figuring out how the steering works. While scrambling to locate cruise control, you can suddenly find yourself driving on the opposite side of the road, making a wrong turn, or ending up in a ditch. In this two-part article, Dr. Tracy Cocivera, Eric Beaudan, and Gary Payne explore how to overcome the challenges of executive integration.
According to McKinsey and Company, between 27% and 46% of newly placed executives are seen as a failure or a disappointment within two years of joining an organization.
As you transition into a new executive role, you can learn from Peter’s failure through strategic planning, building relationships, proactive decision-making, and understanding the value in your team.
Peter was the CFO of a $1 billion technology firm with operations across three continents, and managing a team of 50 finance professionals. His professional background was impressive, including 15 years as Vice President (VP) Finance at a high-growth technology business which had grown through an aggressive global mergers and acquisition strategy. When he was recruited by a private equity-backed organization seeking a CFO to scale the business and undertake an Initial Public Offering, Peter leapt at the opportunity. Confident and excited, he moved quickly to re-organize his team and launch a finance transformation agenda.
Six months later, Peter’s agenda ran into a wall, as did his trail-blazing career. He left the firm with a generous exit package, but with a bruised ego and sense of self-doubt.
1. Weak relationships - Despite his genuine attempts, Peter failed to forge a close relationship with the Chief Executive Officer (CEO) and his Chief Strategy Officer, who he underestimated.
2. Trust deficit - He hardly spent time getting to know his team, and instead became quickly frustrated by their shortcomings. He took on the critical reporting tasks he had previously handled as a VP Finance and became mired in minutiae.
3. Lack of communication - He never expressed his doubts and challenges – either with the Chief Human Resources Officer (CHRO) or an external coach – believing that would be seen as a weakness.
Peter’s experience is not unique. Adjusting to a new role, a new team, and demanding stakeholders can be a daunting challenge, even for an accomplished executive. Too often, we have found leaders like Peter are “underprepared for – and unsupported during – the transition to new roles.” (McKinsey & Co., 2018)
McKinsey reported that a successful transition can lead to a 90% likelihood that teams will meet their three-year performance goals. By contrast, unsuccessful transitions can result in a 20% drop in employee engagement and a 15% dip in team performance.
SHIFTING GEARS TO LEAD EFFECTIVELY IN A NEW ROLE
We set out on a quest to interview CEOs and senior executives in the United States, Canada, the UK, and China to better uncover the biggest struggles executives face in a new role. We found that, in many cases, executives have learned to manage culture and organizational politics using instinctive or learned behaviors that may not carry over naturally to a new environment.
The odds of success for newly appointed executives have become even more lopsided during the pandemic, as many workplaces have shifted to remote and hybrid work environments. The CHRO of a large Canadian telecommunications firm noted that remote work has doubled the time it takes for new executives to find their groove.
Combine that with the alarming tendency for both leaders and companies to overestimate their ability to fast-track the success of new executives, their teams can wind up in utter chaos. Worse, it can have a broader impact on organizational performance.
In Part 2 of our article, we will be highlighting the four main strategies we recommend to help mitigate the risks in the early stages of executive integration. In the meantime, if you would like to find out more, you can get directly in touch with us here.