Why Today’s CEOs Aren’t Prepared for the Job

 Why Today’s CEOs Aren’t Prepared for the Job

The CEO role is the most unique but least prepared-for job in business.

Does it matter that so many companies are being led by inexperienced CEOs who are learning on the job? What are the ramifications for businesses? What, if anything, can we do about it? Here are some answers.

A Nation of Inexperienced Time CEOs

How many first-time CEOs do we have running our nation’s businesses? I think it’s the majority. I checked LinkedIn for the career histories of a random sample of 1,200 U.S. tech company CEOs with 51 to 500 employees and found that more than 73 percent are first-time CEOs. I would propose that this is indicative of the general population of CEOs across the U.S.

Why are most CEOs new to the role? Several factors come into play here. The CEO position is often the last stop in someone’s career. As a result, even in large companies, most CEOs are first-timers (see Tim Cook, et al.). Unless they have been specifically groomed for the position, new CEOs are tackling a role unlike anything they’ve ever done in their careers.

Additionally, the advent of cloud computing and other technologies is making it easier and cheaper than ever to start a business, creating a proliferation of startups–and new, inexperienced CEOs to go along with them.

Even those CEOs who have been in the role for years but have no previous chief executive experience should be considered first-timers. A CEO who was a good fit at first may not have the skills and experience to lead the organization to the next level.

First-Time CEOs Face Difficult, Unique Challenges

The River Group recently published a study based on interviews with 75 first-time CEOs and found that they share many common issues. For instance, the CEOs in general said they felt fairly prepared on day one. Looking back six months later, the CEOs said they were much less prepared than they initially thought. Here’s how the researchers summarized their overall findings:

Many surprises lie ahead for the new CEO. The Board will take much more time and attention than expected. The voice of the CEO will take on disproportionate volume and impact. Even the closest of colleagues and friends will behave differently towards them, becoming more guarded and distant….  And they will learn quickly that the assumed control that comes with the most powerful role in the company is a myth.

The CEOs in this study had an average of 8,000 employees and $8 billion in revenue, but the challenges are universal. First-time startup CEOs face similar issues. I experienced many of these issues firsthand as a first-time CEO years ago, and I hear the same things from the many CEOs I interact with, train, and mentor.

I would argue that CEOs’ inability to effectively manage these challenges contributes to the substantial rate of business failures in this country. Consider that since 2000, 52 percent of companies on the Fortune 500 no longer exist. And Harvard Business School’s Shikhar Ghosh found that about 75 percent of startups fail.

How much better would businesses perform if CEOs went into the job more prepared?

Prepare to Succeed

I think the answer is: much better. Many think CEO training–and leadership training in general–is of limited value. There’s nothing like real experience, but there are many ways first-time CEOs can prepare so that they can hit the ground running on day one.

One way is to understand the responsibilities of a CEO. Too many first-timers jump into the position without knowing what to do, which means they waste time handling tactical fire drills rather than focusing on strategy.

Another way is to improve on the “soft stuff,” which is what derails so many CEOs according to former Campbell Soup CEO Douglas Conant. Not only should CEOs study fields such as history, game theory, and organizational development, they should also hone their emotional intelligence and communication skills.

Once in the job, CEOs should engage mentors, trusted advisers, and CEO peers to gain valuable advice and prevent the isolation that is endemic to the job. In addition, seeking objective feedback in the form of anonymous employee surveys and other methods can help. The River Group provides much more advice in their CEO study report.

At any given time, first-time CEOs are leading the majority of our organizations. Business failure and mediocre performance impacts employment, the economy, and the U.S.’s ability to compete in the world. While on-the-job learning may be the reality for first timers, there is no excuse for not being as prepared as possible.

First appeared on Inc.com

Joel Trammell

Joel Trammell is the cofounder and architect of CEO-S, an operating system for the chief executive. Joel is a previous CEO of private and public companies and the owner of Texas CEO Magazine. He is the author of The CEO Tightrope and, most recently, The Chief Executive Operating System (with Sherif Sakr).

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