CEO Tenure: How Long Is Too Long?

pass the batonRecently I was chatting with a CEO about her narrative 360 feedback results, and she suddenly asked reflectively, “I wonder if it’s time for me to go?”. While the feedback she received was quite positive, the question led to further conversation about where she was in her career trajectory, job satisfaction, personal growth and key life goals.

As captains of their enterprise, regardless of business or sector, CEOs have an overriding prerogative to get the best performance from their organization. As with their employees, they, too, need to adapt to meet the constantly evolving demands of clients and markets in which they operate. If they’re not able to do this, it’s time to move on – either voluntarily or with a push from the board or key investors.

ceo retirementMost of us can provide examples of top-level performers in sports, politics and performance arts who have stayed on past their prime, much to the detriment of their reputation – and their team. The same applies to organizational leaders: There is an opportune time to take leave. Far too often, senior leaders are forced out after having a good ‘run’ or succumbing to market forces to which they’ve been ‘flat footed’ in response. Indeed, many CEOs find it very hard to admit that the time has come to ‘pass the baton.’

There are, however, some key considerations around this timing. Leaving too soon may appear and feel like you’ve ‘abandoned ship,’ merely for a slightly more lucrative opportunity, to avoid an impending or intractable crisis, or just wanting a fresh challenge that offers something new and different.

Staying too long, however, risks your own personal success along with that of your company. Succession efforts become bogged down and top-rate candidates, rather than wait around, leave to pursue more lucrative opportunities. Your tried-and-true approach to leadership becomes self-limiting when faced with new challenges, especially those not previously seen in the marketplace.

So how do you determine if it’s time to move on? Research is generally mixed in terms of optimal timeframes for CEO tenure. However, here are five key questions to help with the decision process:

1.) Do You Feel The Passion?

  • Your own engagement and commitment is vital to continued success. Not only for yourself, but for everyone in your organization. If time and effort have dulled that passion, you’ve either got to recapture it or admit that something quite different is required. People know when you’re just going through the motions and can tell when your heart and spirit are no longer in the enterprise.

2.) Is Your Vision Challenging And Inspiring?

  • Effective leaders possess, and effectively articulate, a compelling vision that inspires others to get on board and be fully engaged. Renewing this vision is essential as major milestones and successes are realized. Most difficult is when your people start to believe the company has either lost its way or, alternatively, is coming close to realizing its original vision. Your challenge is then to shift gears, sometimes dramatically, and create something new, different and durable that will re-energize your organization.

3.) Is Your Agenda Ambitious?

  • A long-tenured CEO may be inclined to merely make adjustments, not fundamental or radical changes, to strategic direction and operations. And this becomes even more challenging when sales are strong, profits are improving and growth is underway. Even boards become somewhat starstruck when things are going well. But that’s exactly the time to consider how best to ensure continued momentum for yourself and your organization for the long term.

balanced game of chess4.) Do You Have A Balanced Focus?

  • Most CEOs appear to go through a natural lifecycle in their roles. Early on, during the initial honeymoon phase, executives seek information from diverse sources, both internal and external to their company, to come up to speed. Relationships with customers, key stakeholders and employees are meaningfully deepened during this period.
     

    Later on, as CEOs gain knowledge, experience and success, they start to rely more on internal networks for information – less on clients and market conditions. This more inward-facing approach leads to greater risk aversion, less responsiveness to changing customer needs and myopic decision making. Where and how you source your information is a key measure of continued effectiveness.

5.) Are You Becoming Complacent?

  • Initially, a new CEO takes office and gains the requisite knowledge and experience to launch initiatives that encourage growth and bolster success. Over time, however, that same individual may become more risk-averse, more content with the status quo, slow to adapt to change and late to capitalize on emerging opportunities. Your degree of complacency is a sure measure of effectiveness in the CEO role. Ensure you still have a solid appetite to take on bigger risks and challenge the status quo.

Clearly, there’s no simple and easy answer to optimal tenure as CEO. Five to seven years’ duration for a talented leader is often a commonly accepted timeframe. This horizon is long enough to make significant progress on key opportunities and rectify major challenges while avoiding the delusion that skills and competence will always be optimal for a rapidly changing landscape. Keep in mind, however, that organizations can do well with top executives in roles for various lengths of time. If you’re going the distance, keep in mind that a driving passion, inspiring vision, ambitious agenda, balanced focus and appetite for change will be key factors to continued success.

To learn more about obtaining actionable, high quality executive feedback, contact me at scott@cygnusconsultants.com or 250-882-8830.

About The Author

Scott Borland, Founder & President of CYGNUS Management Consultants Inc, , is a recognized expert in helping executives host strategic conversations and obtain high impact feedback. He brings insightful perspective and proven strategies to strengthen the alignment between strategy and leadership behaviour. Scott has presented frequently at regional/national conferences and is a regular contributor to online journals/blogs. Follow Scott on Twitter or add him as a connection on LinkedIn.


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