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Transitions At The Top: CEO Succession & A Framework For Success

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David Dotlich, President of Pivot Leadership (a Korn Ferry company) shares why CEO succession matters, pitfalls to avoid, and how to create a framework to ensure success and build transition capability.

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Transitions At The Top: CEO Succession & A Framework For Success

  1. 1. © Korn Ferry 2015. ALL RIGHTS RESERVED. Transitions at the Top CEO Succession and a Framework for Success David Dotlich President, Pivot Leadership A Korn Ferry Company June 2015
  2. 2. © Korn Ferry 2015. ALL RIGHTS RESERVED. 1 Today’s speaker David Dotlich, Ph.D. Founder and President Pivot Leadership, A Korn Ferry Company Successful entrepreneur who has started, built, and sold two large companies. Consultant to Boards and CEOs. Former Executive Vice President of Honeywell International. Author, 12 books on leadership, culture, and change.
  3. 3. © Korn Ferry 2015. ALL RIGHTS RESERVED. 2 Transitions at the Top • Researched the practices of key companies and executives. • Combined experience of the authors. • Pivot Leadership programs and advisory of global corporations.
  4. 4. C O N T E N T S 1. Why CEO Succession Matters 2. Pitfalls Errors in Thinking (Three Destructive Myths) Errors of Execution 3. Opportunities Framework for Success Key Roles 4. Creating Success Build Transition Capability Develop the Team Coach the Key Players 5. About Pivot
  5. 5. © Korn Ferry 2015. ALL RIGHTS RESERVED. 4 Transitions matter • A recent Fortune article estimated that 40 percent of executives who are hired into a job from outside or are promoted fail within the first 18 months. • CEOs who depart within their first 18 months on the job cost small- cap companies an estimated $12 million each. • For large-cap companies, the average figure is $52 million. • Some research estimates that these departures add up to a minimum loss in the United States of $14 billion each year. • Other research shows that a failed leader transition can cost 10 to 20 times the executive’s yearly compensation. The cost of transition failure is significant—not just financially, but also in impact on people, careers, and company reputation.
  6. 6. © Korn Ferry 2015. ALL RIGHTS RESERVED. 5 Glaring examples of transition failure The media highlights a number of recent cases with CEOs who didn’t last long in their roles. Bill Perez departed from Nike 12 months after he arrived from SC Johnson. Richard Thoman was out of the top spot at Xerox after 13 months. David Siegel only lasted two years at US Airways. Leo Apotheker stepped down from HP after 11 months. HP has had six CEOs since 1999. Yahoo has had six CEOs since 2007. CEO failures don’t just damage the company bottom line. They also hurt careers and reputations.
  7. 7. © Korn Ferry 2015. ALL RIGHTS RESERVED. 6 Transitions matter Strategic Transition can create a change in strategy and direction. Operational Systems and processes are typically reworked or redirected, impacting the infrastructure of the company. Political New alliances and coalitions reorganize and regroup around a new leader. Cultural A new leader must learn but also affects “the way we do things around here.” Change at the top creates and inhibits system adjustments.
  8. 8. © Korn Ferry 2015. ALL RIGHTS RESERVED. 7 The questions we sought to answer Why is it that otherwise competent leaders and senior managers who do a good job with their strategic, financial, and operational duties fail to win at the transition game? Why do companies that spend so much money on recruiting, compensating, and rewarding senior executives fail to acknowledge the unintended consequences of new leadership on company performance? 1 2
  9. 9. C O N T E N T S 1. Why CEO Succession Matters 2. Pitfalls Errors in Thinking (Three Destructive Myths) Errors of Execution 3. Opportunities Framework for Success Key Roles 4. Creating Success Build Transition Capability Develop the Team Coach the Key Players 5. About Pivot
  10. 10. © Korn Ferry 2015. ALL RIGHTS RESERVED. 9 Errors of thinking: Three destructive myths Myth 1: People Join Companies All the Time … It’s No Big Deal Myth 2: Our Job Is Done When the One We Want Says “Yes” Myth 3: We Know What He Can Do
  11. 11. © Korn Ferry 2015. ALL RIGHTS RESERVED. 10 How these myths bar productive thinking Lack of Questioning Lack of Empathy Lack of Learning Major players do not understand the difficulties the new leader is experiencing. Major players do not pay attention to what they need to know and learn about transition. Major players do not question what needs to be done.
  12. 12. © Korn Ferry 2015. ALL RIGHTS RESERVED. 11 • Not preparing for or attempting to manage the transition. • Missing or ignoring problems in the relationship between the incumbent and successor. • Preparing for only one transition. • Mismanaging the transition process. • Miscalculating information needed. • Failure of major players to prepare. • Poorly handling onboarding. Errors of execution: The major mis-steps
  13. 13. C O N T E N T S 1. Why CEO Succession Matters 2. Pitfalls Errors in Thinking (Three Destructive Myths) Errors of Execution 3. Opportunities Framework for Success Key Roles 4. Creating Success Build Transition Capability Develop the Team Coach the Key Players 5. About Pivot
  14. 14. © Korn Ferry 2015. ALL RIGHTS RESERVED. 13 Framework for transition success ROOTS OF FAILURE KEY ROLES FOR SUCCESS KEY FACTORS Thinking Errors • It’s nothing to get all excited about. • Our job is done. • We know what he can do. Execution Errors • Omission. • CEO-new leader relationship. • Only one transition. • Mismanage process. • Right kind of teamwork. • Student of transition. • Critical crossroads. BOARD ACCOUNTABILIY RIGHT INVOLVEMENT CEO DIRECT THE TRANSITION NEW LEADER’S SUCCESS CHRO COORDINATE PROCESS INTERNAL ADVISOR SENIOR MANAGERS PREPARE ORGANIZATION ADAPT
  15. 15. © Korn Ferry 2015. ALL RIGHTS RESERVED. 14 Key roles BOARD ACCOUNTABILIY RIGHT INVOLVEMENT CEO DIRECT THE TRANSITION NEW LEADER’S SUCCESS CHRO COORDINATE PROCESS INTERNAL ADVISOR SENIOR MANAGERS PREPARE ORGANIZATION ADAPT
  16. 16. C O N T E N T S 1. Why CEO Succession Matters 2. Pitfalls Errors in Thinking (Three Destructive Myths) Errors of Execution 3. Opportunities Framework for Success Key Roles 4. Creating Success Build Transition Capability Develop the Team Coach the Key Players 5. About Pivot
  17. 17. © Korn Ferry 2015. ALL RIGHTS RESERVED. 16 Build transition capability 1. Learn about transitions. 2. Importance of teamwork. 3. Grow/develop the key players. 4. Recognize when transition is at a critical crossroads and be prepared to react in the best possible way. 5. Adjust, learn, and adapt. Developing from the top down. BUILD DEVELOP COACH
  18. 18. © Korn Ferry 2015. ALL RIGHTS RESERVED. 17 Develop the team to support the transition Members of any senior executive team tend to be talented and highly effective individuals who run their units or functions well. However, they often don’t work together productively or operate as an aligned, healthy, high-performance team. They often view transition in win-lose terms. BUILD DEVELOP COACH
  19. 19. © Korn Ferry 2015. ALL RIGHTS RESERVED. 18 Top team and board development framework How: How do we operate and leverage our leadership? How can we be smarter together than separate? Who: Who are we as individual leaders, and who can we become together? What are the opportunities and issues requiring enterprise interdependence and alignment, with a bias toward enabling your company’s purpose and strategy in the future? Build a process and rhythm in order to be focused and decisive in each interaction, surfacing tough issues and clarifying the approach forward. Expand the team’s impact through wisely using your best leadership talent. Transparency on what we care about, individually and collectively. Trust built through disclosure, helping one another, but also surfacing the tough issues. Having shared experiences to build interdependence. What: What is needed to help the new leader succeed? How: How can we better leverage our leadership to ensure a successful transition? Who: Who are we as individual leaders, and who can we become together? Strategy and framework. BUILD DEVELOP COACH
  20. 20. © Korn Ferry 2015. ALL RIGHTS RESERVED. 19 Coach/advise the key players for success GUTS Do the right thing based on clear values. HEAD Provide clear purpose, direction, and strategy. HEART Understand, work with, and develop others. WHOLE LEADERSHIP Leading today requires whole leadership. BUILD DEVELOP COACH
  21. 21. © Korn Ferry 2015. ALL RIGHTS RESERVED. 20 Coach/advise the key players for success Need to be able to create change at the company level and the individual level. “Transition is the psychological process people go through to come to terms with a new situation.” – William Bridges, Managing Transitions Personal Transition Head: How do I create value? Heart: Do I really care? Guts: What do I stand for? Organizational Change Head: What change is needed? Heart: How do we enroll others? Guts: How far/fast should we go? BUILD DEVELOP COACH
  22. 22. © Korn Ferry 2015. ALL RIGHTS RESERVED. 21 Intensive coaching for transitions: Executive to Leader Institute® Korn Ferry’s Executive to Leader Institute® (ELI) uniquely equips executives for C-Suite- level roles and the challenges of leadership at the enterprise level. BUILD DEVELOP COACH
  23. 23. C O N T E N T S 1. Why CEO Succession Matters 2. Pitfalls Errors in Thinking (Three Destructive Myths) Errors of Execution 3. Opportunities Framework for Success Key Roles 4. Creating Success Build Transition Capability Develop the Team Coach the Key Players 5. About Pivot
  24. 24. © Korn Ferry 2015. ALL RIGHTS RESERVED. 23 About Pivot Leadership Pivot Leadership, a unit within Korn Ferry, partners with Fortune 500 executives to help them lead, innovate, and adapt to volatile markets and changing industries. We work at the senior levels of major companies around the world to design and implement corporate transformation and strategy execution through unique talent- development programs that are creative, customized, and scalable. Our mission is to develop the best business leaders for the world’s most influential companies, because we believe that leadership is the source of strategic advantage in today’s world. We help companies … • Prepare for and adapt to disruption by building agile cultures. • Operationalize strategy via custom leadership solutions. • Identify and develop key talent. • Build and implement custom, multi-level curricula.
  25. 25. © Korn Ferry 2015. ALL RIGHTS RESERVED. 24 Our purpose
  26. 26. © Korn Ferry 2015. ALL RIGHTS RESERVED. 25 Problems we solve 1. Improving senior team performance. 2. Gaining strategic alignment of your enterprise leaders. 3. Building a culture for competitive advantage, especially organic growth. 4. Shaping and accelerating transformation and innovation. 5. Designing and implementing multi-level curricula.
  27. 27. © Korn Ferry 2015. ALL RIGHTS RESERVED. 26 + Experience 250 Each year, Pivot Leadership delivers approximately 250 leadership-development programs around the world. 12,000+ Over 12,000 participants have attended Pivot Leadership programs. 47 We have delivered programs in 47 countries in nine languages. 175+ We have a global facilitator team of 175+. ARGENTINA AUSTRALIA BANGLADESH BELGIUM BRAZIL CANADA CHINA COLOMBIA CZECH REPUBLIC DENMARK DOMINICAN REP. ENGLAND ESTONIA FRANCE GERMANY GREECE INDIA INDONESIA IRELAND ISRAEL ITALY JAPAN KENYA MALAYSIA MEXICO MOROCCO NETHERLANDS PANAMA PHILIPPINES POLAND PORTUGAL PUERTO RICO ROMANIA SINGAPORE SOUTH AFRICA SOUTH KOREA SPAIN SRI LANKA SWEDEN SWITZERLAND TURKEY UAE UKRAINE UNITED KINGDOM UNITED STATES VENEZUELA VIETNAM
  28. 28. © Korn Ferry 2015. ALL RIGHTS RESERVED. 27 Our future + =
  29. 29. © Korn Ferry 2015. ALL RIGHTS RESERVED. 28 Learn more Other recent publications: Unfinished Leader (book) www.pivotleadership.com/books/unfinished-leader/ The Third Wave (White paper): www.pivotleadership.com/category/white-papers/ Pivot Leadership: www.pivotleadership.com To learn more about the book or buy online: www.pivotleadership.com/books/transitions-at-the-top/ Korn Ferry’s Succession Matters: www.kornferry.com/SuccessionMatters
  30. 30. © Korn Ferry 2015. ALL RIGHTS RESERVED. 29© Korn Ferry 2015. ALL RIGHTS RESERVED.

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