How long should CEOs stay in their jobs? To answer this question, a blog post from Harvard Business Review explores the three distinct phases of the CEO job.
The most common answer to the longevity question is seven years, plus or minus two, according to blog post author Manfred F. R. Kets de Vries, distinguished professor of leadership development and organizational change at INSEAD in France, Singapore and Abu Dhabi. He says seven is a reasonable number, "probably the period of maximum effectiveness for most people in what can be a very stressful job."
But he also notes that the nature and challenges of the CEO position fluctuate. He breaks the CEO tenure down into three phases.
1. Entry. This is also known as the honeymoon period in some regards. In this phase, CEOs are most willing to learn, experiment and innovate. They are unlikely to perform at full potential in this time, however, since they have to gain control over the new environment, get to know various constituencies, select key lieutenants and deal with "wounded" executives who had hoped to secure the CEO spot.
2. Consolidation. After CEOs establish their leadership philosophies in terms of direction, strategy and style, the consolidation phase begins. If all goes well, this is when CEOs will see the fruits of their labor from the entry phase. CEOs have alliances with key stakeholders, support from their top executives and a good working relationship with the board. "The traps here, of course, are complacency and rigidity; as they approach the end of this phase, some CEOs start to resist even minor changes," wrote Mr. Kets de Vries.
3. Decline. CEOs reach this stage when the company has few or no new "products" planned for the near future and there are no initiatives to find new markets, according to the blog post. "Everyone sings to the CEO's same old tune," wrote Mr. Kets de Vries, and there is no new blood coming into the top ranks of the organization. The CEO may stop listening to other people's ideas and approach the job with a sense of routine. Problems from a CEO in decline become apparent quickly in a fast-paced industry, but declining CEOs in relatively stable environments can get away with it longer.
Mr. Kets de Vries says the best scenario is if the CEO realizes when he or she has hit the beginning of the decline phase, acknowledges it and looks for new opportunities. He also advises boards to be on the lookout for these trends and anticipate the decline instead of waiting for a catastrophe to take action.
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