Listen rather than speaking: learning about the organization
Given that the CEO role is action oriented and that the organization often eagerly awaits their direction, one of the biggest risks of the transition period is that they will move too rapidly from listening and learning towards speaking and providing uninformed answers. This is particularly pertinent in the case of an outside CEO.
On the other hand, CEOs appointed from the inside may underestimate the need to learn new skills and may fall into the trap of maintaining behaviors and favoring relationships that characterized their previous roles. A business unit executive promoted to CEO, for example, may favor relationships in their original business group or even be prone to allocating more funds to that business unit, generally because he or she understands that business better. It is not surprising that many first-time CEOs told us that the move from a division head to the CEO role was their biggest learning challenge. First-time CEOs are well advised to view the initial months as a learning period, and boards should consider providing mentoring by a chair or board member with personal CEO experience — even better if they have experience in a CEO role with the same appointment characteristics.
During the transition, incoming CEOs should focus on asking questions and listening. While the CEO may have formed an initial picture prior to day one, based on conversations with the board and the initial preparatory work, the first two to three months should be spent engaging in conversations with employees across the organization, in order to gain a deeper understanding of how the organization functions and where the problems are.
The goal of focusing on learning about the organization during the first months is threefold.
- • All CEOs, especially those who come from outside, need to build a thorough understanding of the different businesses of the company and how the organization functions.
- • CEOs who come from outside need to develop a more complete understanding of the situation the company is in. The picture painted by the board during the recruitment process frequently does not fully reflect the reality, and before being able to take action, full understanding of the strategic context is needed.
- • An initial listening period is also a useful way for an internally appointed CEO to develop a deeper understanding of the business areas they have not been involved with in their prior position, so they can develop a more balanced plan for the development of the company.
To gain a deep understanding of the organization, it is important to engage with all stakeholders including customers, partners and suppliers, employees, board members, shareholders, and bankers. Among employees, it is especially important to engage in conversations with those further down the hierarchy, rather than relying on the information from the top team that is being filtered through the hierarchy.
In conversations with stakeholders, a combination of open questions and checklists of topics derived from the initial preparation is useful. Jonathan Lewis, CEO of UK-based Capita and former CEO of Amec Foster Wheeler, explained how open questions can be used to put people at ease and get them to open up:
You ask broad questions and then just listen: “How do you feel the business is performing? What do you like or not like about working at the company? What can we be better at? If you had my role what would you change?” Just get people to talk. You very quickly get a sense of how the business is really operating and what is not working.
Similarly, Jan Jenisch, CEO of LafargeHolcim explained how structured questions may be used:
During the first three months I’m visiting the country organizations. When I go to the countries I always have 20 topics where I want their opinion. I let them suggest a formal agenda but I always have my 20 topics in the back of my head and I ask about them.
While interviewing or having informal conversations with a wider group of stakeholders, an incoming CEO can triangulate the data, build a valuable picture of the organization, and ultimately draw up a powerful plan that takes into consideration the views of various stakeholders. It is also very important to address separately those stakeholders whose ideas and wishes have not been considered and to explain why so that the conversations do not backfire.
Irrespective of the type of questions used, these conversations should be centered around the facts and processes rather than around opinions and political agendas. This is often easier in direct conversations with customers and suppliers or when conversations take place with employees further down the hierarchy.