19/12/2023

Challenges Every New CEO Faces and How to Overcome Them

Challenges Every New CEO Faces and How to Overcome Them

Taking over the helm of CEO is a monumental task. Fortunately, it’s a task that has been well documented thanks to existing CEOs who have shared their experiences. So, we can learn from those who have gone before us.

 

With so many changes to get used to in your new role, there are a few challenges that are almost universal. And one solution that is guaranteed to help with all of them. Keep reading to discover what that solution is.

 

Internal vs External

 

It’s worth mentioning that the experiences between internally promoted CEOs and externally hired CEOs can vary significantly. However, neither option reduces the number of challenges you will come across.

 

Internally promoted CEOs benefit from an extended handover period with the outgoing CEO, and already have a strong understanding of the business, how it’s run, and the team within it.

 

However, that familiarity can also be their downfall as it may be harder to make a clean transition from their previous role.

 

Internally Promoted vs Externally Hired CEOs: Pros and Cons. Pros for Internally Hired CEOs: Extended handover from outgoing CEO, existing understanding of the business, Existing relationships with the team. Cons of Internal Promoted CEOS: Harder to make a clean transistion. Pros of an Externallly Hired CEO: Structured onboarding process, Fresh outlook on the business, Possible previous experience in a CEO role. Cons of being an externally hired CEO: Learning about the new business, industry, and team.

 

Moreover, externally hired CEOs usually have a strong, detailed onboarding process, yet internal candidates are assumed to have all that they need to know. There’s no reason why internal candidates can’t have the same structured treatment.

 

On the other hand, External hires still have lots to learn about their new industry, sector, and company culture. They bring incredibly valuable insight with them, but they must balance this with patience and curiosity to learn about the new business.

 

As you can see, both come with their own set of positives and negatives, but the following challenges can apply to both internal and external CEOs alike….

 

Fighting Pre-Conceptions

 

Whatever their journey, all CEOs will face preconceived notions on what kind of leader they are going to be. Internal candidates because their team have known and worked with them for many years. Even externally hired CEOs will face assumptions based on their professional CV.

 

For example, people may assume that the CEO who comes from a finance background will prioritise financial matters, without giving equal attention to other departments.

 

First Day as CEO

 

It is therefore vital for any new CEO to nip such preconceptions in the bud. In order to counterbalance any natural leaning to your native department, you might actually want to focus on other departments in your first few months.

 

Regardless, a CEO should make a concerted effort to understand operational areas that they are not already familiar with. You should already have an understanding of your own area of expertise, and, presumably, you will already have allies there too. So, take the time to lay strong foundations in other areas until you have the correct balance.

 

Operating at the right pace

 

Another challenge new CEOs can face is to do with patience. It can be easy to unleash all the plans you’ve been sitting on, waiting for your chance at the top job. Research by Havard Business Review found that many new CEOs were already thinking about their legacies when they took on the role. This fascination with making a mark on the company can lead to rash decisions that are not actually in line with long-term company goals.

 

In some situations, bold action is necessary. However, those situations are rare. Changing too much too quickly can result in burnt-out staff, disenfranchised senior leadership, and a weak overarching goal.

 

Planning Your First Months as CEO

 

Instead, CEOs should spend their first year building a solid working relationship with the board and the wider team. In return, the board should provide early, structured feedback on how the new CEO is doing, so that they can calibrate the pace of change to a speed that everybody can maintain.

 

Operating at the right altitude

 

Pace isn’t the only thing new CEOs need to worry about. They also need to figure out the right amount of distance between themselves and everyday business proceedings. This is a challenge that many new CEOs will not anticipate, and yet it may be the most difficult to overcome.

 

CEOs will soon realise that it’s impossible to manage a company when you’re too close to day-to-day operations. A CEO cannot monitor everything all at once. In order to see the whole battlefield, the captain must sit back and assess the bigger picture.

 

Thankfully, this is where their senior leadership team can help to bridge the gap. As executive demands grow, you may be shocked to see just how much responsibility you must let go of.

 

Becoming CEO

 

It might help to maintain an employee mindset. All CEOs must remember they are but a cog in the machine. A vital cog, of course! But a cog nonetheless – only one part of the whole. You have your responsibilities as CEO, and you should be able to rely on those around you to address their responsibilities.

 

Gaining Buy-in

 

A common mistake that new CEOs make is to assume that they have finally reached the position of ultimate power. In reality though, they are still part of a team, and they still have the board of directors to report to.

 

CEOs need to be careful when making big decisions, especially early on, to ensure that they have the backing of their team. Without it, meaningful change is unlikely to occur. Instead, the CEO risks alienating their team and making life a lot harder for everyone involved.

 

Plunging a stake in the ground might be necessary to demonstrate who is in charge and to send a message around your expectations for the company. However, issuing a direct order, with no buy-in from the senior team, isn’t usually the best way to go.

 

Board of Directors

 

For example, new CEOs could share their vision with the board of directors and senior leadership team at a dedicated workshop. Deliver your ideas and be open to feedback. This lets your team know that you value their input before you stride forward with any big plans. Plus, people are more likely to get on board with ideas they’ve had some involvement in.

 

Transparency is also key. Clear communications must be upheld on both sides; to staff and to the board of directors. This way, everyone knows what to expect and will not be taken aback.

 

Finally, CEOs must recognise that decision-making isn’t actually the biggest part of their job. In a truly successful team, most decisions should already be made lower down the chain because leaders are trusted and empowered to make choices in line with your goals. If decisions are reaching you that you regularly disagree with, there needs to be better communication on your vision for the business.

The Challenges Every New CEO Faces: Fighting Pre-Conceptions, Operating At The Right Speed, Operating At The Right Altitude, and Gaining Buy-In

 

The Ultimate Solution: Building the Right Team

 

Throughout this article, we’ve given solutions for each challenge. But the one solution that can help with all these challenges is to surround yourself with the right people in your team.

 

Our contact, Charles Hartwell, CEO of Eville & Jones, said this is the main thing he wishes he’d known when he became CEO. “Ensure you surround yourself with the best team you can, “ he says, “If there are gaps, then filling those gaps should be your number 1 priority.”

 

Your team is your most valuable asset as a CEO. They are the one’s who’ll keep you up to date on all business activities – from operational difficulties to employee mood. As Mark Cotter, Ex-CEO of Baird Group says, “Make sure you have the right team around you quickly. It is critical they are aligned with your vision and that your trust them.” He also adds the importance of including a mentor in your team planning, “I was told it would be lonely as CEO and it’s very true. Having an external mentor to use as a sound board is very helpful.”

 

Your team will also make up for any knowledge gaps of your own. There’s no shame in admitting you don’t know everything, that would be impossible! So, it’s important to create a diverse board, full of subject matter experts for the areas you are less confident in. Recognising your weaknesses is a must if you want to put the needs of the business before your own.

 

We’ve worked with many new CEOs. If you’d like to find out more about the challenges new CEOs face, or how your organisation can help to counter these challenges, give us a call today.

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