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

© Korn Ferry 2015. ALL RIGHTS RESERVED.

Transitions at the TopCEO Succession and a Framework for SuccessDavid DotlichPresident, Pivot LeadershipA Korn Ferry Company June 2015

© Korn Ferry 2015. ALL RIGHTS RESERVED. 2

Today’s speaker

David Dotlich, Ph.D.

Founder and PresidentPivot 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 ofHoneywell International.

Author, 12 books on leadership,culture, and change.


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.

C O N T E N T S

1. Why CEO Succession Matters

2. PitfallsErrors in Thinking(Three Destructive Myths)

Errors of Execution

3. OpportunitiesFramework for Success

Key Roles

4. Creating SuccessBuild Transition Capability

Develop the Team

Coach the Key Players

5. About Pivot


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.


Glaring examples of transition failure

The media highlights a number of recent cases with CEOswho 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 Xeroxafter 13 months.

David Siegel only lasted two years at US Airways.

Leo Apotheker stepped down from HPafter 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.


Transitions matter

StrategicTransition can create a change in strategy and direction.

OperationalSystems and processes are typically reworked orredirected, impacting the infrastructure of the company.

PoliticalNew alliances and coalitions reorganizeand regroup around a new leader.

CulturalA new leader must learn but also affects“the way we do things around here.”

Change at the top creates and inhibits system adjustments.


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?

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C O N T E N T S



Errors of Execution


Key Roles


Develop the Team


5. About Pivot


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 OneWe Want Says “Yes”

Myth 3:We Know What He Can Do


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 playersdo not pay attention to what they need to know and learn about transition.

Major players do not question what needs to be done.


• 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 thetransition process.

• Miscalculatinginformation needed.

• Failure of major playersto prepare.

• Poorly handling onboarding.

Errors of execution: The major mis-steps

C O N T E N T S



Errors of Execution


Key Roles


Develop the Team


5. About Pivot


Framework for transition success

ROOTSOF 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

INTERNALADVISOR

SENIOR MANAGERS

PREPARE ORGANIZATION

ADAPT


Key roles

BOARD

ACCOUNTABILIY

RIGHT INVOLVEMENT

CEO

DIRECT THE TRANSITION

NEW LEADER’S SUCCESS

CHRO

COORDINATE PROCESS

INTERNAL ADVISOR

SENIOR MANAGERS

PREPARE ORGANIZATION

ADAPT

C O N T E N T S



Errors of Execution


Key Roles


Develop the Team


5. About Pivot


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


Develop the team tosupport 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


Top team and boarddevelopment 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


Coach/advise the keyplayers for success

GUTSDo the right thing basedon clear values.

HEADProvide clear purpose,direction, and strategy.

HEARTUnderstand, work with,and develop others.

WHOLE LEADERSHIP

Leading today requires whole leadership.

BUILD DEVELOP COACH


Coach/advise the key players for successNeed 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


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

C O N T E N T S



Errors of Execution


Key Roles


Develop the Team


5. About Pivot


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.


Our purpose


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.


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Experience

250Each year, Pivot Leadership delivers approximately 250 leadership-development programs around the world.

12,000+Over 12,000 participants have attended Pivot Leadership programs.

47We have delivered programs in 47 countries in nine languages.

175+We have a global facilitator team of 175+.

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Our future

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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

http://www.pivotleadership.com/books/unfinished-leader/

http://pivotleadership.com/category/white-papers/

http://www.pivotleadership.com/

http://pivotleadership.com/books/transitions-at-the-top/

http://www.kornferry.com/SuccessionMatters

© Korn Ferry 2015. ALL RIGHTS RESERVED. 30© Korn Ferry 2015. ALL RIGHTS RESERVED.

Leadership & Management

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