The biggest threat in shorter and shorter CEO tenure is the risk to the functioning of the senior team that reports to the CEO. It is increasingly the reality in today’s complex organizations that the members of the senior team have to collaborate closely with each other. They can’t operate independently in their silos if the company is going to be supremely successful. Most organizations have increasingly difficult complex matrices within which they have to function. It takes time to create a high-functioning team. Then at peak performance it takes even more time to make the highest impact and it becomes increasingly important to maintain moment and to demonstrate continuity in the marketplace and with the investment community.
The second threat is the reality of how many placements of CEO’s coming in from outside the company fail. Additionally, boards are finding it difficult to insure that there are sufficient internal candidates who are ready to succeed to the top job when the incumbent leaves the company.
The major board approach to solving the problem requires the board to find more and more ways to see potential internal candidates in action well before the time an incumbent leaves the CEO position. Additionally, strong boards must insure that potential internal candidates for succession to the position get sufficient exposures to the various functional areas and market segments to insure each prospective successor is broadly exposed to all aspects of the business. It is shocking to me how often senior executives have not received a performance review in years before being offered the top job.