Got a New CEO? How to Make the Cut

Posted by: Jena McGregor on May 17, 2007

If you can, check out the lead article, “Surviving Your New CEO,” in this month’s Harvard Business Review. While I find many HBR articles long and pretty dry, this one’s worth a read. Co-author Kevin Coyne, a McKinsey vet and current lecturer at the Harvard Business School, stopped by the office today, and he offers a refreshing perspective on the overdone topic of executive turnover. While much of the coverage has been at the macro-level—why high turnover is happening and what the effects will be—Coyne speaks to the individual, telling you how to make the cut after the new guy arrives. (An outline of the tips can be found here.)

The statistics he lays out are frightening. In looking at new CEOs that came in from the outside at the 1,000 top U.S. companies between 2002 and 2004, more than a quarter of proxy-level execs (those among the top five earners at the company) left the company. Even more disturbing: Of the some 400 such executives who left after a new CEO arrived in 2002 or 2003, none found a similarly high-ranking job in any large U.S. firm.

Coyne, who also consults with CEOs, wrote the article with his dad, a retired Kaiser Aluminum executive and a b-school prof himself. Gotta respect that.

Reader Comments

Jake

May 18, 2007 9:53 AM

You can do everything right and have a perfect track record in an organization for many years, if a new CEO comes on board, more than likely he has friends that he wants in that position. Loyalty is thicker than competence. It's not what you know It's who you know.

Alec

May 18, 2007 10:59 AM

True, many CEOs will want to place their cronies in key positions. However, it is quite likely that the proxy-level execs they're replacing were given their jobs by the same criteria. This would explain why they were completely unable to achieve similar career success in other firms.

George

May 18, 2007 4:11 PM

Another possible explanation for the exits could be that once a proxy level person realizes they are not going to get the top job they decide they don't want another number of years doing the same job they have been doing. Most of these folks would be financially secure and might decide to move on to something more interesting or personally satisfying.

Lord

May 18, 2007 4:44 PM

So much for the theory executives are paid what they are worth.

Jamie

May 18, 2007 9:54 PM

Let's not forget that most, if not all, these CEOs and top executives have spent their entire careers as employees. Not owners, not responsible for payroll, not focused on creating value or enhancing equity returns. They have played the system, kissed the appropriate amount of, maybe beat out their competition, who are also employees, and gotten to the top. These are not people who create wealth but rather people looking to gain wealth. The real talent is owning and running middle market businesses and could certainly run fortune 1000 companies. The reality is that they are not employees and were likely not ever going to play the political games to move up in large corporations. The real talent can move the needle on profits and create shareholder value. The issue is that they are not easily recruitable.

reb

May 19, 2007 3:14 PM

This is especially prevelent in developing countries where transparency is not the norm.

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