Successful Leadership Transitions Boost Corporate Revenues by As Much As Five Percent
New CEB Research Reveals Leadership Transition Management to be Significant Driver of Financial Performance and Competitive Edge in Talent Wars
WASHINGTON, Nov. 26, 2012 /PRNewswire/ -- CEB, the leading member-based advisory company, today announce findings that indicate organizations with well-engineered and executed leadership transition processes can boost revenue by three-to-five percent and have a competitive advantage in the executive talent wars. Companies employing innovative approaches to transition management not only focus on transitioning the incoming leader, but also the existing team and other colleagues. These approaches produce less organizational paralysis and employee attrition during the transition and increase the employment value proposition and reputation for integrating new leaders.
CEB's research draws on numerous large-scale quantitative research efforts representing more than 30,000 leaders including heads of HR and recently transitioned leaders at large organizations. Findings show that at least nine-out-of-10 teams led by well-supported, high-performing transitioning leaders meet their three-year performance goals. In addition, the risk of attrition for their teams is 13 percent lower than average and their teams show discretionary effort levels two percentage points higher. Conversely, companies that lack an effective leadership transition management process may be disappointed in their new executive's performance as 46 percent of leaders underperform during the course of their transition. Leaders struggling in transition have direct reports who perform 15 percent worse than those who work for a high-performing one and are 20 percent more likely to be disengaged or leave the organization.
"The reality is that a macro-environment of high expectations means leadership transitions now occur in greater numbers than ever before – and with high stakes for all involved," said Steve Meyer, general manager, CEB. "Ironically, most organizations leave transition management to the individual who knows the least about the organization, the incoming executive. The most progressive companies have begun to establish more rigorous and repeatable processes to address leadership transition management and are seeing important results from their efforts."
Successful leadership transition management can help organizations avoid significant business risks, but most transitions underperform or fail outright. This is because they employ an overly generic approach focused exclusively on the new leader's actions, and with support confined to early days of the transition. Companies consistently transitioning new leaders achieve better results through several steps:
- Approaching each leadership transition in appropriate context—viewing each transition through a situational lens, taking into account the degree of role clarity and the level of urgency to produce results.
- Tailoring transition emphasis to ensure success—understanding the common transition archetypes, identifying the type of transition underway, and tailoring plans appropriately. Depending on the type of transition taking place, some activities will merit greater focus than others.
- Viewing leadership transition as repeatable core process—orchestrating a structured transition support process that mobilizes resources and applies innovative tools and approaches to assist leaders with high-impact transition activities.
- Focusing transition support on the fuller organizational community—shifting members of leaders' transition communities from passive observers to active partners by educating community members on what roles to play and how to play them effectively. This community-based support should extend well beyond leaders' first 100 days.
To learn more about how to identify common transition archetypes, accelerate transitioning leaders' productivity and reduce the risk of new executive failure, download our free white paper.
CEB is the leading member-based advisory company. By combining the best practices of thousands of member companies with our advanced research methodologies and human capital analytics, we equip senior leaders and their teams with insight and actionable solutions to transform operations. This distinctive approach, pioneered by CEB, enables executives to harness peer perspectives and tap into breakthrough innovation without costly consulting or reinvention. The CEB member network includes more than 16,000 executives and the majority of top companies globally. For more information visit www.executiveboard.com.
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