Linking Theory + Practice: Leadership Transitions

Transition Strategies to Overcome 
the High Cost of New-Leader Failure 

The dawn of the 21st century saw the rise of a critically important business challenge. The world was growing increasingly complex at a rate that strained organizational capability. In 2010, an IBM report identified this disruption as the greatest concern of 1,500 CEOs surveyed, with most reporting that their organizations were not prepared to manage it.

Through the next decade, disruptive technologies, political shifts and a change of the generational guard increased the pace of complexity. Many began to adopt a military acronym—VUCA—to describe these volatile, uncertain, complex and ambiguous conditions. Now, at the 2023 World Economic Forum in Davos, a new term, "polycrisis," translates some of our VUCA world's ambiguity into concrete risks that we will face in
the future, such as a cost of living crisis and a growing frequency and intensity of natural disasters and extreme weather events.

As a way of measuring the business impact of increasing complexity and continual churn, AlixPartners's 2023 Disruption Index indicates that three quarters of CEOs believe their organizations are facing extreme disruption, and a similar percentage say their executive team is not agile enough to address it. 

The High Cost of Poor Transitions

Shorter employment and position tenure reduces long-term, trusting work relationships and adds to the churn in today's business environment. This constant chaos increases the number of leadership transitions that an organization must manage, and each transition is another disruption to the organization's operating environment.

CEO turnover has been rising and hit a five-year high in 2022, according to a Russell Reynolds Associates' analysis of 1,500 companies. Because 69 percent of new CEOs reconfigure their leadership teams within the first two years, transitions then cascade throughout the organization.

Although everyone has high hopes when a new leader is hired or promoted, the reality is that about half of executives fail within 18 months of taking on a new role, according to a Corporate Executive Board estimate. The costs of poor management transitions are unsustainable—and they can be devastating at the top of the organization. Estimates place the cost of each failed transition at 10 (or more) times the executive's compensation. At the top of the house, the stakes are even higher. An analysis of the world's 2,500 largest public companies found that the struggle to replace a departing CEO can cut shareholder value by an average of $1.8 billion.

The investment in managing effective leadership transitions is only a fraction of these costs, and the return can be substantial. For example, McKinsey & Company reported that when leaders successfully transition to new roles, their teams have a 90 percent greater likelihood of attaining three-year performance goals and a 13 percent lower attrition rate than teams whose executives do not transition successfully.

Failed transitions result in 20 percent lower employee engagement scores when compared with successful transition. A study conducted by Boston Consulting Group found that companies that successfully onboard new hires and retain talent had 2.5 times as much revenue growth and 1.9 times higher profit margins than their less capable competitors.

A Practical Framework for Executive Leadership Transition

Despite this compelling data, organizational decision-makers routinely leave transitioning executives to sink or swim, assuming that smart people who have been successful in the past will somehow figure things out in a new role. As the McKinsey report noted, "leaders are typically underprepared for—and undersupported during—the transition to new roles."

An effective executive transitioning program can be a competitive advantage that allows organizations to adapt to—and effectively manage—change, uncertainty, complexity and disruption. Clearly, organizations that can get new leaders up to speed quickly will gain an advantage over competitors that can't. Achieving this objective requires a leadership transition framework that is easy to understand, practical to implement and gets positive results.

A practical framework has been developed to help new executive leaders succeed in an ever-changing and polycrisis world. The framework is research-based and systematic, and has been utilized by newly appointed leaders around the world. It is not a one-size-fits-all solution but is adaptable to the needs of each organization and each transitioning leader.

This transition process utilizes close coordination with HR's talent development professionals and a skilled advisor and sounding board to coach and support an executive during this period of intense change. Typically, this process lasts six to nine months, depending on the needs of the leader.

The transition coach may be internal to the company or an external consultant. At no time, however, is the transition coach the leader's manager. This ensures that the executive receives an external perspective and allows for the candid exchange of disruptive ideas and discomforting information.

Working together, the coach and leader will explore solutions that may lie beyond current personal, organizational and situational constraints. To allow the leader to see the situation clearly and make the right decisions, the coach must offer an impartial perspective. In this partnership, the coach must adapt to minimize the effort of the leader. And, as their discussions may embrace controversial topics, the coach must create a cone of silence to provide complete confidentiality.

Managing the Transition: The HR Team and Transition Coach

The HR team and the coach set the stage by clarifying expectations for the executive and their team, establishing priorities, defining action items and specifying a progress review cadence. To build strong, trusting relationships, they also work to identify—and outline steps to remedy—
any nagging issues that could impede collaboration.

Working within the context created with the HR team, from a foundation of trust, the coach and leader follow a three-step process: a nine-point needs assessment, a clear transition plan and a progress assessment to guide ongoing development.  

Step 1: An Initial 9-Point Needs Assessment

The leader and coach start by exploring nine areas identified by research as key to successful transitions. As not every issue is equally relevant in every situation, leaders can use this list as a menu, choosing where best to focus their time and energy:

1. Self-awareness. Weigh the leader's personality-based strengths and potential derailers against the requirements of the role.
2. Situation. Is it a startup or a turnaround? Consider the relative priority of growth versus profitability.
3. Organizational change. Set expectations for change and processes to achieve it.
4. Key stakeholders. Identify who makes the decisions, where power resides and how to build productive relationships.
5. Highest-priority issues. Pinpoint the most pressing problems and opportunities for quick wins.
6. State of the leadership team. Are the right people in the right seats doing the right things?
7. Cultural engagement. Identify organizational values and norms, striking the appropriate balance between fitting in and transforming.
8. Communication. Specify what needs to be said, to whom and when.
9. Relationship network. Identify the people inside and outside the organization who are critical to the new leader's success.

In the box, you'll find a series of suggested questions for each of these categories to assess a transition. While not all questions will be applicable to every situation, the first (self-awareness) is important for all leaders in transition.

Either by refreshing an executive's personality assessment or by referencing existing data, the transition coach can facilitate a debrief and related activities to help executives understand their personality-based strengths and how to leverage them for a successful transition to their new role. Given the stressful nature of leadership transitions, it is important to pay particular attention to derailing tendencies—behaviors likely to occur when the executive is under pressure—and to identify triggers for these behaviors as well as strategies for managing these derailers.

Finally, an executive's manager (or board chair), HR partners and other key stakeholders are important sources of information about succeeding in a new role. Part of assessing needs for a transitioning leader is identifying key stakeholders and determining a plan to tap into their insights and expectations, as well as aligning on a cadence for checking in as the transition proceeds.

Step 2: Set a Plan and Goals for the Transition

The needs assessment provides the foundation for a robust transition plan. The executive and coach collaborate on setting specific goals to guide the leader's transition, build out a detailed plan for achieving them and identify ways to measure progress.

Of particular importance is determining when and how to include the appropriate HR and talent professionals in the process and clearly codifying this in the transition plan, so they can effectively partner with the coach to best support the executive.

For example, it's possible that the executive's HR business partner (HRBP) would be better suited than the coach to facilitate a new leader assimilation process with the leader's team. Similarly, there may be other HR-sponsored programs (such as a team development workshop) that would benefit the executive.

Once a draft of the executive's transition plan has been created, the next step is to review it with key stakeholders, especially the executive's manager or board chair, as well as HR and talent partners. 

These conversations guide refinements to the transition plan, including alignment on how these stakeholders can best support the executive during the transition period and agreement on a meeting cadence to discuss progress.At this point, the coach provides both challenge and support to the executive as they execute the steps in the transition plan, with an understanding that the document will be revised as the executive grows in their role.

Step 3: Progress Assessment to Guide the Leader's Ongoing Development

About six months into the transition, key stakeholders should hold a 360-degree progress assessment to calibrate current performance and effectiveness, identify necessary course corrections and set a plan for continuing individual and team development. Positive feedback here can be crucial to the new leader's success. At a time when the busy (often overwhelmed) executive may be painfully aware that some things are not working—and may even feel inadequate to their new challenges—hearing how others have seen them shine can provide the encouragement that generates forward momentum.

Informed by the 360-degree feedback data, the leader and coach modify the transition plan, set longer-term development goals, specify the next action steps and identify additional colleagues to include in the process. They also follow up with feedback providers, thanking them for their input, outlining a summary of the key lessons learned, sharing the modified development plan and asking for ideas to refine it further.

By combining assessment and communication, we create a systematic transition that is guided by data rather than gut feeling.

Research conducted by Marshall Goldsmith confirms that "Leaders who discussed their own improvement priorities with their co-workers and then regularly followed up with those co-workers showed striking improvement. Leaders who did not … showed improvement that barely exceeded random chance." Plus, by making development a team effort, executives help create a culture that builds better leaders by demonstrating the organization's commitment to learning and growth.

A Blueprint for Success

A world-class leadership transition process doesn't just focus on a leader's first 100 days in a new role. Rather, a holistic approach to onboarding an executive includes a plan for the leader's ongoing development based on a comprehensive progress assessment.

This provides a data-based way for the new leader to calibrate wins in the new role and identify necessary course corrections in the context of successfully leading over the long term. Guided by a practical framework and systematic transition practices, organizations can increase the odds that their transitioning leaders integrate seamlessly, are mutually assimilated with their new colleagues (superiors, peers and direct reports) and add value quickly in their new jobs.

	Darren Overfield is the executive vice president of coaching and consulting at Kaiser Leadership Solutions. He is an executive consultant who advises organizations on the people side of the business. Contact: darren@kaiserleadership.com.
	​Patrick Casseday is the director of talent development at Schneider Electric and has been responsible for global executive and leadership development and HR for strategic sales. Contact: patrick.casseday@se.com.
	Brad Winn is a Leadership & Strategy Practice Professor and Executive MBA Director at Utah State University. Brad also serves as a senior editor for People + Strategy and is the principal of Winn Consulting Solutions. Contact: brad.winn@usu.edu.