Internal CEO Hires Need More Help, Not Less

An internally developed CEO knows the strategy, understands company culture and is well-known to directors following the succession process. Consequently, boards often give homegrown, first-time CEOs a wide berth, telling them that directors’ doors are always open. But an open door may not be enough. A study published last month by The River Group found that new CEOs ranked their level of preparedness on the first day at 7.2 on a scale of 1 to 10. After six months in the job, however, CEOs rated their preparedness at 3.5. The study is based on interviews with 75 CEOs. Similarly, a 2012 study conducted by RHR International found that half of the 22 CEOs interviewed described their transition into the role as “challenging” and occasionally “chaotic.” Many found themselves misaligned with the board on strategy and performance after several months in the role. In addition, a majority said they expected more support from the board during those first months on the job. The research also found that first-time CEOs often felt isolated and unable to decide on a course of action early in their tenure, a time when companies are energized by a CEO transition and open to change driven by a new leader. The findings suggest that boards, while seeking not to hover over new CEOs, may be taking too much of a hands-off approach when their new leaders are still learning how to be chief executives. “It’s clear to us that there’s an opportunity for boards to make the CEO more successful by removing some of the parts of becoming a CEO that are most destabilizing,” says Peter Thies, president of The River Group.