Boards and the new leader dilemma.

• Author: Harrison, Raymond

Here are 15 suggestions for how boards can work closely with the company's new leader to help avoid career-derailing pitfalls.

Edward Johnston, the new chief executive in simulated succession case study (see accompanying sidebar), will soon be experiencing what is often called the Newly Appointed Leader Dilemma: The expectations for results is as high or higher than it has ever been, but the patience of key decisionmakers to achieve those results is the lowest that it has ever been. It is the executive's blessing and curse of the mid-1990s. Great opportunities, and large potential rewards, with little if any time allotted to learn the job. Get in, make the necessary changes, and quickly demonstrate results. It is a type of organizational Darwinism: the fastest and strongest survive.

But, based on our research, including interviews and polling of over 1,000 executives, approximately 40% of newly appointed leaders prove to be disappointing, are terminated, or leave the job voluntarily within 12-18 months of their appointment.

There are a number of reasons why the new leader dilemma is a greater problem today than it has ever been.

Change Efforts That Fall Short. A recent review of literature indicates that 50-75% of change efforts fail to meet all their intended objectives - usually because of human factors. Most newly appointed leaders initiate some form of major change process. In fact, as in the case of Ed Johnston, the very reason they were brought in was to shake up the perceived status quo.

Many New Executives Are Being Discharged with Stunning Speed. As reported in The Wall Street Journal, "Not long ago employers gave the newly hired at least a year to prove themselves. But in a recent American Management Association survey, nearly 22% of the employers questioned said that in the past two years, they had fired a professional or manager after less than three months." Lifetime employment is out. Corporations continue to lower staffing levels and any thought about permanent employment at any level is a memory. It is a buyers market with many displaced and highly mobile executives anxious to fill key executive roles, even for short periods of time. Ed Johnston has some specific objectives for the first year. But it is unlikely he will have even that period of time if the board doesn't see decisive actions aimed at set objectives within the first few months.

Accountability Is a Prime Organizational Value and Pressure Point in Today's Organizations. Shareholders are much more demanding. Major shareholding institutions can exert significant pressure, including voting pressure, on boards. In turn, boards have become more demanding of their CEOs, with higher results expected over shorter periods of time. The cycle continues when the CEO pushes down on his/her executives. Scorecards of results are more and more apparent. Visible accountability commonly exists down to the individual contributor and team level.

More Pay Is "At Risk" Than Ever Before. New compensation systems have been devised that put executives under the gun for quick and measurable results. The days of high levels of guaranteed compensation that are not tied to measurable results are rapidly disappearing.

Today's Society Is Highly Litigious. On the advice of counsel and experienced human resource executives, companies increasingly will cut their losses quickly if they determine an executive is not working out. The argument presented is that legally it can be easier and cleaner if an executive is released before a long employment history develops.

Derailment Forces

Our research, as well as studies by other groups such as the Center for Creative Leadership, suggest the following are the most frequently cited factors that derail newly appointed executives:

* Being unclear or confused over the "appointment charter," which should include key performance expectations, degree of autonomy, levels of authority, expectations of communication with the board, transition plans and time frames, and personnel and financial decisionmaking.

* Failing to identify stakeholders and build key partnerships within and outside the organization.

* Learning the job too slowly in an era when honeymoon periods have all but disappeared.

* Overusing or overreliance on existing professional or executive strengths. Strengths used to excess become weaknesses or liabilities. Overused strengths are often executive blindspots and most frequently appear under stress and pressure such as occurs in transition periods.

* Failure to mesh with the existing culture or, conversely, to build the type of culture that is needed.

* Key interpersonal differences with others.

* Previous untested skills and existing problems or flaws begin to matter much more than they did in prior roles.

* Failure to achieve the...