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Question: Transition from being a division head to being CEO
What advice do you have for someone who is moving from being the head of a large autonomous division, to being CEO of a smaller company, in the same industry.
I have been in this industry for over 2 decades. All jobs are different. But by virtue of leading an autonomous division of a much larger business, I feel I have handled all individual aspects of the CEO job, except relations with the board of directors.
How will working with the board of directors in the new role, be different from working with my current stakeholders in the parent company?
Most of the difference will be due to the difference in the people.
Without knowing you better, chances are that one of two things will be your greatest challenge. Either you won't be decisive enough for your board, or they will believe you don't listen to them enough. You need to take a good hard look at yourself and decide which is more likely.
If you are also Chairman of the Board, your relationship with them will probably be very different than it was with your superiors previously. Those superiors gave you a lot of latitude, but they were still your boss. If you are Chairman and CEO, you are the ultimate boss (your responsibilities to shareholders aren't nearly the same thing). This might be true even if you are not Chairman - it depends on how active your board is. Ideally the board is there to advise you and set broad policy. Listen to their advice, allow the possibility of it influencing or changing your course of action - but remember, the the decision responsibility is yours.
Take advice - that is what the board is there for. Follow Colon Powell's rule - When you have enough information that you will probably (not certainly) make a good (not perfect) decision - decide. Remember what Patton said - A good plan executed now is better than a perfect plan too late. Use your team to get good plans and execute them.
Best of luck on what sounds to be a wonderful new chapter in your professional career!
Congratulations on your new position and Bravo for looking for some help. My initial reaction is to take the first 6 months to a year and treat it like a honeymoon. You want the new organization to know who you are and what your style is, but you do not want to make a lot of changes, you want to get a lay of the land and find out who can do what and what exactly does your board expect.
I would consider trying to simplify as much as possible and use a simple goal structure and delegate as much as possible. As you lead by example the rest of your team and the board will begin to adjust to your style and then you can begin to make the changes you deem necessary.
A division of a larger organization, although autonomous, is nevertheless part of a bigger strategy that the Board oversees. In your new role, achievement of the overall strategy falls solely on your shoulders.
The best way to build a relationship with the Board is to meet with them individually and get to understand them as individuals, their business philosophies, and their perspectives on the potential and direction of your company.
And finally, at the risk of sounding self-promotional, you should retain an executive coach to offer unbiased, outside perspective.
You are absolutely correct in saying all jobs are different. So, too, are all organizations different. Although your position and industry experience will be invaluable, your relationships with your leadership team and other key members of your new company will also be vitally important. I suspect they will think very highly of you if you begin by understanding the uniqueness of the company from their various perspectives.
By taking time to get to know your team you may find it necessary to make some replacements. Of course this should never be undertaken lightly. With any changes you will be sending a message to the company, and it will hopefully be constructive and productive.
People will be expecting some changes to go along with a new CEO, but given the disruption of major change initiatives, it will be important to develop a business case for change that is developed collaboratively. Because your new company does something differently from what you've experienced shouldn't be the sole reason for making changes.
It might be helpful to consider your board as another team of resources. Certainly, the legal and regulatory requirements of governance must be met, and you are accountable to the board for the company's performance, but it would be likely welcomed by all if your meetings were largely devoted to engaging dialogue about strategic issues for the company. The wealth of knowledge and experience in the room should be a tremendous resource, and you have the advantage of a formal leadership position to help maximize the benefit.
I was a division president of a Fortune 500 company, and then went off and formed my own company. I think I was head and shoulders above others running small companies because of the rigid training I got in the big company. We lived and died by the numbers. We knew how to hire and evaluate talent. And we knew how important it was having the right policies and procedures in place.
All of these provided me with the experience I needed to run a smaller company.
Dealing with the Board is certainly an important difference in the transition to CEO. (Assuming it is a Board elected by the owners & not an “advisory” Board for a non-profit.)
We have seen several CEOs struggle with this challenge. Board members often do not understand the business as well as the CEO, are not as focused on the business as the CEO, don’t have as much accountability or responsibility as the CEO, and may not be as smart or as rational as the CEO. The important thing to remember is that they are the “boss” & represent the owners of the business. They need to be catered to collectively & individually and forgiven for any and all sins they may bring to the table. It’s important to build individual relationships with each of them & to communicate regularly & informally and not just at Board meetings.
Other challenges we have seen new CEOs struggle with include:
-The challenge of balancing internal & external constituencies;
-The need to spend even more time on vision, strategy, and culture;
-Lack of awareness that the spotlight is always on them & the importance of their every word, facial expression, and body language;
-The dangers of thinking out loud to avoid random ideas becoming “orders;”
-The difficulty of getting input on their individual effectiveness & remaining humble amid all the trappings of office & rampant kissing up;
-Learning how to say no to all the requests for a CEO’s time;
(There are more. I don’t want to be too depressing.)
I was the president one of the largest divisions of Philips in the USA. After retiring from Philips I was the president of a start-up. We had our own board, a chairman who was not the employee of the start-up but was the employee of the company that started this start-up. There were many similarities in those jobs as well as differences.
What was similar was that in order to get funding for our work we had to go to the company that started us as well as other founders that would be interested in our product. As a president of a Philips division to get funding for our projects I had to present management above me the need, the budget, outcomes etc. as I had to do when I looked for funding from the company that started this start-up and/or other founders.
What was quite different was that running a start-up I had the pleasure of hiring all the people that would work for us, presenting to potential founders what the benefit in investing in our company would be. I was able to do this without paying attention to internal politics as this did not exist in the environment we looked for funds.
My recommendation to you is to hire a coach that would help you come up with the right decisions. This is what we coaches do. We do not advise as our clients know what they need to do but many times they are not aware of it. We help them take the knowledge from their subconscious self to their conscious self.
First, congrats on your new position. Being a CEO is one of the most rewarding and "fun" things I've done in my career.
You are right in saying that your experience will help, but you will face new challenges, one of which may be the board. Some recommendations if I may.
First, your first 100 days (forget that – 30- days is all you really get) are critical. Get to know and understand your new company's culture and its people, and do your best to hit the ground running. Don’t make too many changes off the bat, but start to subtly influence and build relationships. You are now a cross-functional manager, responsible for getting everyone to "play nice" and get results.
Second, you now get to work with (for) multiple bosses (the board). They have a specific role, e.g., setting direction / approving strategy and goals, governance, broad policies, etc. Build relationships with them and understand where they stand / what makes them tick. You are responsible to them for results, and must balance those with appropriate (and ethical) people practices. Just because it is legal doesn't make it right. Set reasonable expectations for yourself and your charges, and make sure that you attain them.
Lastly, always remember that you are accountable for the mistakes, but others get the credit for the victories. When you support the people who work for you, the board will see this and see the leader they have hired.
I agree with Iva - get a coach, someone who can be a sounding board if / when you need one. This costs some $$$, but just having someone to bounce ideas off of or get confirmation that you are doing the right thing is important. I had one when I was a CEO, and it was priceless – he and I are still good friends.
(And this is not a shameless plug for myself, as I generally don't do this. However, I do have great respect for those who are effective as coaches.)
You've had numerous responses and most all have made good and valuable points. In reading your situation and your question/concern with reporting to a board one thought was front and center for me. Most likely, this is the same board who approved hiring you as the CEO. And it's safe to presume that this board did the vetting and related due diligence that would lead them to the person who they believed had the skills and talent to lead this organization. So ... that being YOU, I think you're starting off with definite credits in your credit bank. This board wants and expect that YOU will be successful based on what they know about you.
I agree that there are two areas that deserve your focus. First is the board. They want to hear of your plan for moving into the organization and then, moving it forward. it's during this session that you would want to leave with a clear understanding of what they do expect for the company and from you. What is the type and frequency of communication that they'd like to have in order to be kept in the loop of progress? What to they envision the organization will be in 1 and 3 years from now in terms of revenue, product, etc? At the end of such a meeting/session, they will be somewhat relaxed because they have had a chance to tell you of their expectations at the same time you have shared your planned approach to infiltrating the organization initially and then beyond.
The second area of focus is those other leaders who will be reporting to you. The suggestion above to 'listen' and learn is a great starting point as you will quickly uncover the various concerns and issues that are present. You will also begin to get a sense of each person in terms of their strengths, weaknesses and general attitude. You can also lay out your personal approach to your position ... what you count on them for and what they can count on you for
As suggested above, consider employing a coach to facilitate this path. Good luck.
1. Have a trusted and unbiased outsider conduct a closed meeting with your top directs to discuss (without you present) your style and strategy. Listen and learn from what your advisor reports on their issues, fears, concerns & hopes. Afterwards, speak directly to them and their issues. Commit to, or dismiss their recommendations with reasons. Do what you say you will.
2. Identify an insider to be your Devil's Advocate - someone who will tell you the truth about what's really going on in the company culture. Articulate their role and responsibilities, not as "snitch". but as organizational advocate who has their finger on the pulse of the organization and isn't afraid to tell you what others won't.
3. Set up a process to speak directly to groups of employees - face to face if possible. Be open and honest with them. At regular intervals show them your competence, courage and commitment, live and in person. Nothing has yet replaced that.
Remember, your leadership success will be based as much on your emotional resonance with the people of the organization as it is on your expertise.