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The first 100 days for a new CEO.

Board/CEO RelationshipCorporate PurposeSuccession PlanningCorporate Culture
By Janet L. Spencer

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ORGANIZATIONAL. LEADERSHIP The first 100 days for a new CEO Don’t squander those first vital days; wrong moves could take years to repair. Here are the right steps and the critical areas to address. BY JANET L. SPENCER AND PETER K. THIES I T MIGHT NOT BE FAIR, but ifs true: Your first few months as CEO — the time when you’re just starting to grasp the challenges of your new job — may well turn out to be the most crucial time in your tenure. Everyone with an interest in your company will scrutinize your for- mal decisions, informal behavior, and symbolic acts. Everything you do and say will send messages, es- tabhsh expectations, and communicate directions for the new leadership group. While these first 100 days represent a unique op- portunity, they also hold incredible risks. How quickly you move wÃœl earn you a label as either rash, purposeful, or indecisive. Who you consult on de- cisions will feed the notion that you’re inclusive or authoritarian. People will rush to categorize you as fair or arbitrary, and — most importantly — as either a visionary leader or a cautious bureaucrat. As Jeffrey Immelt, who succeeded Jack Welch as CEO of General Electric Co., said to a Business Week reporter when asked about the time it would take for him to leave his mark, “From a performance standpoint, I have no time. You’re expected to per- form from day one ” Your initial decisions —- in particular, with regard to set- ting clear objectives, filling top positions, and articulating and communicating a com- pelling overall direction — will shape perceptions of you that may last for years. It sounds obvious, but the key to your success is to ap- proach this crucial time in a systematic way. You will need an arsenal of strategies, prin- ciples, and prescriptions to guide yourself through five critical areas that will demand most of your atten- tion: creating a plan, evaluating personal attribut- es, engaging key constituencies, extending your leadership reach, and heeding red flags. 1. Creating a Plan While many people believe your first step should be action, we suggest you resist that urge. Henry Schacht, who has led massive change at two very dif- ferent companies — Cummins Engine Co. and Lu- cent Technologies Inc. — suggests, “Think first: What is it you’re trying to do…what’s going on, where are you, what do you need to do first, and why?…A lot of things are going to go untouched for long periods of time, so where do you want to spend your time?” Use the first 100 days to build the basic plan that will take you and your company beyond the next few weeks and months. While the contents of a new CEO’s plan will vary from one organization to an- other, one thing remains constant: the need for an integrated design that addresses each of the major elements of the organization, including strategy, structure, work processes, leadership, culture, etc. JanetL Spencer (at left), partner and head of international operations, and Peter Thies (r.), partner, work for Mercer Delta Consulting |www.mercerdelta .com), which consults to chief executive officers, senior executives and boards of directors on the design and leadership of large-scale change. Mark B. Nadler and David B. Wagner, also partners atthe firm, contributed to this article. WINTER 2002 31 ORGANIZATIONAL LEADERSHIP The following three steps will point you in the right direction: Conduct an Organizational Assessment: Start by undertaking an organizational assessment that will result in a roadmap that clearly identifies the major issues. A well-designed agenda must include metrics that can be used to monitor the organiza- tion’s progress and make rapid course corrections. Involve your executive team and other key leaders in the assessment and development of your plan as a way to energize and em- power them, and to signal Many believe the first step your intent to listen to others. should be action; we suggest you resist that urge. Select a Framework: To quickly make sense of how your company is organized and how it really operates, ^^^^-^^^^—^ you need a systematic way to observe and understand the organization. In con- ducting a broad assessment, we find it helpful to think about organizational performance in terms of a framework known as the Congruence Model of Organizational Behavior (see diagram). This model can be a convenient way for you to accurately grasp the lay of the land. It will help you analyze what’s working and not working well in your organization, and prioritize what needs to be done. This model views the organization as a system that translates strategy into performance through the interaction of four basic components: • Work: the basic, inherent tasks to be done by the organization and its parts. • People: the characteristics of the individuals within the organization who perform the work. • Formal organization: the various structures, processes, and systems that are created to help groups and individuals perforni required tasks. • Informal organization: the behavioral norms, patterns of influence and communications, and other aspects of the corporate culture. The purpose of the system is to transform an ar- ticulated strategy into a desired set of outputs. The degree to which each pair of components within the system achieves congruence, or “fit,” will determine the organization’s ability to meet its strategic ob- jectives. Maintaining a high degree of fit within an organization is incredibly hard; that is, in fact, the primary role of any CEO and executive team. Build Your Roadmap: Once you have a clear sense of what needs to be done, it’s time to create a short-term plan that will set the stage for your long-term agenda. To ensure that you move with purpose — and that others move along with you — translate goals and priorities into an action plan. A well-defined roadmap will help the organization stay focused on the vital few initiatives that will have the greatest impact. For maximum effect, your roadmap should: • Link to your assessment, so that people under- stand there was input and where it came from. • Indicate the core set of initiatives you intend to launch. • Position two critical, ongoing processes— mea- surement and communication — as part of the overall plan. • Depict the desired outcomes. 2. Evaluating Personal Attributes Once you have your roadmap in place, conscious- ly think about what role you will play and what roles you will delegate. This requires a deliberate and can- did self-assessment of your personal traits so you can be clear in your own mind about how to be most effective. Assess Your Personal Traits: The following char- acteristics are particularly valuable for new CEOs. As you assess yourself against them, determine where you are strong and which muscles are “un- derdeveloped.” • “Towering strength” balanced by other strong ca- pabilities: Typically, CEOs are particularly strong at some aspect of the job, but you must also be able to do other things well. • Emotional strength and perspective: As you deal with numerous constituencies, you must be grounded and avoid losing touch with your own sense of perspective and common sense. • The ability to act and respond as a genuine per- son: Unless you open up to people, you will give the impression you are faking it when you try to come across genuinely. • Sense of humor: This plays a key role in help- ing everyone maintain perspective during pressure- filled periods. 32 DIRECTORS ft BOARDS ORGANIZATIONAL LEADERSHIP • Empathy for a broad range of people: Convey that you not only understand others’ problems but also somehow share their experience and emotions. • Emotional and intellectual connectedness: The ca- pacity to leave people feeling that even a brief ex- change was meaningful, not perfunctory, is invalu- able. Insider or Outsider — Evaluating the Oppor- tunities and Challenges: Whether you are coming to your CEO role as an insider or an outsider, con- sider the advantages and pitfalls. As an insider, you have a presumed passion for your company, are likely to have the trust of stake- holders, and know the organization’s culture inside out. Disadvantages include the heavy personal toll tough decisions can take, and difficulty in taking radical measures if it means behaving in ways that run counter to what your colleagues expect. When an outsider is appointed CEO, it signals that the company should brace itself for change. Because this is a given, people will be better pre- pared for implementation of your roadmap and may even aUow you time to get up to speed. But as an unknown quantity within the organiza- tion, you must establish cred- ibility and bear the onus of helping your employees get to know you. Environment Resources History • Provide valid information: Everyone involved in making key decisions about change must have the full range of information that will enable them to make appropriate moves. This means collecting enough useful information and disseminating it thoroughly. • Use informed choice: Whatever the change, top management should insist upon and engage actively in free, open, and informed debate on a wide range of alternatives when making important decisions. 3. Engaging Key Constituencies To achieve your goals, actively involve people in planning new directions and implementing your roadmap at their levels. Once you identify your key messages, constantly reinforce them by effectively communicating them to a wide range of stake- holders. Recognize Your Role with Stakeholders: Effec- tive CEOs must exercise power in a focused and ag- gressive way, but because of the complexity of large The congruence model of organizational behavior Input Informal organization Formal organization Follow Change Leadership Guidelines: The installation of a new CEO automatically triggers the organizational dy- namics you’ll find in any change situation. People will assume the worst and become anxious, corporate politics will reach a fever pitch, and employees will slip into neutral to see which way the corporations and the multiple constituencies they Source: Mercer Delta Consulting wind is blowing. Some degree of change will be inevitable as you follow through on your roadmap, and the follow- ing guidelines can help you implement it and achieve your goals. serve, it’s often hard for them to know where to focus their energy and attention. In addition to the board, shareholders, and the enterprise itself, you must manage a set of value chain constituencies, which include the financial community and cus- tomers, and a set of social constituencies in the form • Ensure appropriate involvement: Key leadership of government, regulators, communities, and so- must be engaged to make change happen and en- ciety at large. dorse it to make it succeed. As you involve more and During your first 100 days, each constituency will more people in the change process, remember that experience seriously heightened uncertainty about the new “converts” will need the same time you and the future and will compensate by making in- others did to “get it ” creased demands upon you. You should focus per- WINTER 2002 33 ORGANIZATIONAL LEADERSHIP Update the board frequently, and determine how and when to seek their input and advice. sonal energy and attention on the demands of a limited group, those that no one else in the orga- nization can address adequately: the board of di- rectors, the executive team, the employees, and the enterprise at large. Your roadmap should include a strategy for en- gaging these key constituencies. They need to be up- dated frequently, and you need to determine how and when to seek their input and advice. Clarify mutual expectations with each constituency about the frequency of communications and the terms of your relationship with them. Capitalize on the Potential of Communication: Effective communication — the kind that signifi- cantly improves your chances of success — doesn’t just happen. It starts with a clear understanding of its po- tential as an agent of change, and includes the right mix of vision and strategy, multilevel message development, and a well-conceived, well-executed planning process. In order to rely on your constituencies to help implement your road- map, you need to engage them through effective communication. Once your executive team is built, its members can become your partners in doing this. 4, Extending Your Leadership Reach An effective executive team is potentially your great- est source of leverage for implementing your agen- da and merits a significant amount of your time. It is also important to go beyond your direct reports to engage senior managers. Build and Leverage the Executive Team: To be successful, the executive team must become an ex- tension of your personal leadership, a force that pro- jects your vision, values, objectives, and require- ments out into the organization. Part of your responsibility is to build a team whose members possess the skills, experience, and personal charac- teristics to satisfy two needs. Eirst, they must col- lectively share the technical and managerial exper- tise required to enable the organization to meet its strategic objectives. Additionally, they should bal- ance and complement your professional skills and personal characteristics. Here are some suggestions for making your team a high-performing outfit: • Team makeup: As CEO of an existing business. you will be inheriting all or part of your executive team. Although the composition will change dur- ing implementation ofthe roadmap, you should begin formal assessments ofthe capabilities of your current team matched up against the kind of team you will need going forward. • Visible empowerment: You should quickly find ways to let others see your top team making im- portant decisions in your absence. • Individual development: Give each executive team member specific opportunities to develop his or her leadership skills. • Collective learning: Use your executive team as a tool for organizational learning, actively involving team members in activities that constantly sharpen their external focus. • Focus on team consequences: Turn your top team into a cohesive unit by structuring certain aspects ofthe reward system on the basis of collective rather than individual performance. • Conduct one-on-ones to set expectations: Sched- ule time with each executive team member to dis- cuss their hopes, aspirations, and goals and how these connect to your roadmap. Also share explicit expectations of each other going forward. • Design a “kick-off” event: The first meeting you have with your team after you assume the CEO post will set 80% ofthe tone for the rest of your meet- ings. Make it a well-planned, highly interactive event that models the kind of team process you want going forward. Broaden Senior Management: Just as your ex- ecutive team is an extension of your leadership, they in turn should extend their shared vision and objectives throughout the organization. The chal- lenge for you and your team is to bring leaders into the fold by extending both the mindset and the tasks of senior management out to the next circle — and possibly two circles — beyond your direct reports. Here are some tactics for accom- plishing this: • Create clearly defined senior management groups beyond the existing executive team. Carefully think through your overall governance structure and process so that you create the right configuration of teams and groups to effectively manage the change and the company. 34 DIRECTORS a BOARDS ORGANIZATIONAL LEADERSHIP • Design symbolic and real reward mechanisms that acknowledge and reinforce enterprise leadership be- havior. • Get the members of these management groups ac- tively involved in planning organizational change. • Communicate with the management groups reg- ularly and intensively. Make sure they have more in- formation than the organization at large and hold them accountable for disseminating the informa- tion throughout their own organizations. • Involve the groups in important processes such as developing strategy, planning for staffing and tal- ent needs, working though cross-organizational is- sues, and budgeting. • Appoint executive champions {beyond the ex- ecutive team) for critical change initiatives tied to your key themes and make their roles visible. 5. Heeding Red Flags Now that you have plotted your course for a suc- cessful tenure as CEO, keep in mind things that have the potential to trip you up somewhere along the line if you don’t pay attention to them. Avoid the Savior Syndrome: CEOs often as- sume a role that transcends their routine chores as head of the organization. They become the psy- chological focal point for many of their employ- ees; in an almost mystical way, they become the personal embodiment of the institution, its values, its beliefs, and its future. While this is a tremen- dous strength, it can be a double-edged sword if taken to the extreme. Refrain from taking on all the issues and resist the tendency to be the organiza- tion’s savior. Recognize Problems with Mythic Leadership: Most CEOs aspire to be “mythic leaders” — strong, visionary leaders who have the ability to energize and mobilize large groups of people in a common direction. If thi§ is your goal, be aware that even mythic leaders are faced with several unintended consequences, including the following: unrealistic expectations, misdirected psychological response, stifled dissent, growing expectations, feelings of be- trayal, disenfranchisement of management, and ex- aggerated responses. Plan for Succession: Although succession plan- ning may be the last thing on ^^^^^^^^^__, your mind, it’s widely be- lieved that this is one of the most important jobs for a CEO. That does not mean you should pick one candidate today and groom him or her, but here are two good reasons to give the process some at- ^-^—^^^—^^^— tention now. First, thinking through this will help you staff your executive team in the short term. If your executive team doesn’t include several people who have the potential to succeed you, you’ve prob- ably got the wrong team. Second, be careful about the messages that the appointments or changes to your executive team — and the titles that go with them — might send. Don’t take premature actions that could limit your options, and don’t inadver- tently send signals that someone is the heir appar- ent, or people will become fixated on him or her in- stead of focusing on more important issues. Vital to Your Tenure The bar is high for new CEOs — especially during their first 100 days in office. At a time when you would most appreciate being cut a little slack, quite the opposite will be true. All stakeholder eyes will be on you as you settle into your new role and set the stage for your tenure. Your first months as CEO will be a testing period where people will push to see what you will and won’t do. You’ll also be testing your own limits and resolve. If planned and exe- cuted well, this period can provide a powerful launch to your tenure. If those first vital days are squan- dered, the damage could take years to repair. • Design a ^kick-off ^ event for that crucial first meeting with your team WINTER 2002 35
 

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