In this new publication: "When an Executive Chair Helps or Hinders Company Performance," Spencer Stuart suggests four core principles to successfully transition a CEO to an executive chair role, and thus increase the likelihood that this type of leadership structure will correlate with improved company performance:
- The handover should be clear, visible and rapid. Shorter executive chair tenures (less than a year) reportedly are associated with superior corporate performance.
- Building trust between the executive chair and new CEO is key to success. Importantly, Spencer Stuart notes that research shows little correlation between company performance and whether a CEO successor was an internal promotion or external hire. As such, whether to pursue the executive chair approach may comfortably be considered without regard to that factor.
- The executive chair and CEO need to be clear about the division of labor.*
- The board should be built around the needs of the new CEO - not the executive chair.
The main takeaway is that an executive chair approach can be either a significant asset or liability depending on the company's circumstances and how the succession is effected; as such, the decision about whether to pursue it should be well-considered.
*In addition to sound guidance based on actual succession experiences, the publication includes a list on page 5 of the most common executive chair responsibilities based on successful transitions.
Access numerous additional resources on our CEO Succession and Board Leadership pages. This post first appeared in the weekly Society Alert!