Having been hired as an agent of change, a CEO must take a good look around the boardroom and try to decipher where changes need to be made; where fresh blood is needed and where some degree of continuity may be needed.
Reaching this decision is never easy, but asking yourself four crucial questions can help: whether changes need to be made, who to let go, how quickly people should be replaced and who to hire.
Should you make changes?
Some changes are needed when an outsider joins as a CEO, but brutal changes hold substantial risks of isolating the CEO and the new team from the rest of the organization. CEOs need to keep in mind that the existing team has important know-how, and that letting too many executives go could drive them (and their customers) into the arms of the competition. Sometimes incoming CEOs are best advised to make a clear break with the past to signal change and create a clean start, but in other situations a break is neither needed nor advised.
Who to let go?
One of the most difficult tasks for an incoming CEO is to identify the individuals they can trust, but also to retain individuals who are difficult to work with but are willing to voice dissent and challenge the CEO. CEOs should consider, in addition to performance and competence, the personality of team members, their relational assets, their disruptiveness, and the degree of association with the past strategy.
How quickly to replace people?
Toxic people should be removed as quickly as possible. However, a new CEO coming into the organization from outside may not be able to tell upfront who is the loyal dog that barks and who is the silent snake that bites. To make this process easier, the CEO needs to consider several issues. They must firstly take the time to identify the yes-men and retain the more difficult personalities who can engage in constructive criticism but not delay change, while confronting the board in case of resistance to make desired changes and finally desist from removing top team members too fast so as to create unnecessary uncertainty and a possible vacuum of leadership.
Who to hire instead?
An incoming CEO may be tempted to bring a complete team of trusted employees to support the transformation. However, this may not automatically translate into a high-performance team and may risk creating an echo chamber and signal that the CEO does not value the organization and its current capabilities.
Instead, CEOs should carefully consider and limit the number of external hires, given that appointing top management team members from inside is an important signal for the organization’s talent pool and may be a prerequisite for rapid change. Selected recruitment from outside should be focused on specific expertise or to give more power to support functions.
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