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The failure rate of new executives is surprisingly high, and this trend shows no signs of slowing down.
Research from the Corporate Executive Board (CEB) estimates that 50% to 70% of executives fail within 18 months of taking on a role, regardless of whether they were an external hire or promoted from within. At the highest level, the “turnover rates of CEOs of major North American corporations” jumped about 50% from the “last half of the 1990s” to 2000-2007, and the average CEO tenure dropped 17% between 2013 and 2017.
But why?
A survey of 2,600 Fortune 1,000 executives conducted by Navalent found that 76% said that formal development processes were inadequate, and 55% rated coaching subpar, if it existed at all. Research by McKinsey senior partners Scott Keller and Mary Meaney also reveals that three-quarters of executives consider themselves unprepared for a position because of inadequate onboarding processes.
I’ve seen a lot of executives come and go during my business career, including some who’ve failed spectacularly. Much of this blame lies with companies that fail to properly onboard new executives, clearly communicate their culture, and provide leadership training and development for them and other leaders.
Here are my top five reasons for the failure of new executives:
1. They were never properly trained to lead.
The Peter Principle — individuals are promoted until they hit a level of incompetence — often happens at the executive level. There is little formal leadership training in most companies, and many executives are expected to acquire skills on their own. Predictably, most new executives repeatedly make easily avoidable mistakes, some of which cause irreparable damage to their credibility.
2. They have an inability to effectively think and operate at scale.
New executives often struggle to adapt to the strategic nature of a role, and they often fail to detach, assess, delegate and supervise. The scope and responsibilities of their jobs increase enormously, and they often lose sight of what really matters: stepping back and achieving strategy through effective tactical execution.
3. They have difficulty adapting to politics, pressure and expectations.
Executive roles come with higher expectations and levels of responsibility — and many new executives have trouble coping with the pressure of being constantly observed and evaluated. This stress intensifies when an individual reaches the C-suite, where every statement and decision is scrutinized. Throw in incredibly long hours and the resulting strain on their personal lives, and many people simply can’t cope.
4. They don’t prioritize listening and learning — and fail at managing change.
New executives face intense pressure to produce positive results quickly, and they often make unilateral decisions without truly understanding the potential impact on policies, procedures, their teammates or themselves.
Well-trained executives in new roles understand the value of listening and learning before making sweeping changes. They wisely step back and look at the big picture, and they avoid falling victim to the self-inflicted wounds that cause many new and untrained leaders to fail.
5. They lack cultural awareness.
This usually applies to external hires, but it can also happen when internal candidates reach the executive ranks of a company and find that there are some unique politics, subcultures and vastly different methods of getting things done.
Newly hired executives often don’t understand the company’s culture and the experiences and capabilities of their teammates. They don't know who can get what done — officially or unofficially — and thus become ineffective at gaining support for key initiatives. And they often insist on implementing tactics and techniques from their previous jobs that simply don't mesh with the new organization.
Four Ways Companies Can Prevent Executive Failure
There is a silver lining to all of this bad news: The path to executive failure starts early, but often, failure doesn’t happen immediately. Negative performance accrues after a series of missteps, some of which can be mitigated or avoided with smart company policies. These include:
1. Implement a more effective selection process for new executives. Ensure that a candidate’s experience aligns with the new role. Closely assess cultural fit, and ask questions designed to show how the candidate will react to specific challenges. Candidates should also be exposed to multiple stakeholders during the interview process, ideally in settings that give the team a chance to evaluate the individual’s personality and leadership philosophy.
2. Provide in-depth cultural orientation. This is a far cry from simply doing a tour of corporate headquarters and a meet-and-greet. A new executive must be briefed on the existing culture and the key individuals and decision-making processes, as well as the organization's history, culture and traditions — most of which aren't found in the employee handbook.
3. Establish a leadership development program. Leadership training is perhaps the most important step that companies can take to drive executive success — and it’s the longest-lasting approach. New executives tend to fail because they've never learned to lead.
Implementing a comprehensive leadership development program grooms leaders at all levels to take on roles of greater scope and responsibility.
4. Use and encourage mentors. Mentorship is woefully underutilized at most companies, and a sink-or-swim approach prevails. Ideally, an organization has a formal internal mentorship program in place, and it should also encourage new executives to seek out external mentors.
Many new executives have spent their entire career aiming to reach the top level of an organization, only to fall short at the finish line. Companies can help them avoid classic mistakes with better selection criteria, in-depth orientation, mentorship and dedicated leadership training.
Individual leaders can also learn to navigate these choppy waters — regardless of company support — by seeking out and acquiring leadership training from mentors, executive coaches, conferences, and the many leadership books, blogs and podcasts.
Acquiring leadership knowledge and acumen is a lifelong pursuit. It never stops, and it should ideally begin well before an individual reaches the executive level.
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