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Why New Leaders Fail - Bonar Institute for Purposeful Leadership

In my coaching practice, I see organizations struggle because they fail to offer key executive hires the support they require to successfully integrate into their new organization, their new position, and to learn the intricacies of the corporate culture. This support is a process called executive onboarding; it aims to build new executive hires’ effectiveness and impact on the business as quickly as possible. This is especially important if the executive is an external hire from a different industry. In the case of external hires, executive search firms normally do an excellent job in identifying well qualified candidates to fill key executive positions. Typically, their mandate does not include ongoing support to effectively integrate these executives into their new roles. In the case of internal hires, they are often promoted to executive ranks based on a record of past accomplishments and on senior management recognition of their potential to assume greater responsibilities. Regrettably, however, these recently promoted executives often lack some important skills required for their new positions. Corporate orientation programs are not adequate for this purpose; and learning on the job is often insufficient.

The consequences for a company of not providing newly hired executives proper support can be dire:

  • 89% of new US executive hires indicated that they did not have the optimum level of knowledge and skills to do their job (Corporate Executive Board Recruiting Round Table survey);
  • 40% of all executives who change jobs or get promoted fail in the first 18 months – this number has remained steady for the past 15 years;
  • 64% of new leaders without previous industry-specific experience fail within 18 months.

The estimated financial cost of replacing a new executive within 18 months of hire is roughly three times the leader’s first year salary (Career Partners International). The cost is much higher when lost productivity and opportunity costs are factored in. When an executive position turns over in a short period, team productivity is greatly impacted and the credibility of the leadership team may be tarnished. In addition to the new replacement hire’s learning curve, each incoming executive brings new strategic intentions, and reorganizes and redirects the activities of team members accordingly.

Even if new leaders remain with the company, they may never reach their full potential. Many factors contribute to this (e.g., lack of role clarity, failure of the organization to deal effectively with resistance to new leadership etc.). But, the new executive’s inability to manage the perceptions that others have of him or her during his first months on the job is chiefly responsible; this shortcoming can be fatal. If companies were to commit to executive onboarding as an integral part of the executive hiring process, there would be fewer failures.

When executed properly, executive transitions develop capability for people and for organizations. Executives get a new assignment that can build and broaden their experience, often at earlier stages in their careers. Organizations get new leadership to energize the company and advance its strategy. Boards, as well, fulfill their succession and governance responsibility. An accomplished executive coach, with a keen understanding of business issues, can assist newly hired/promoted executives to position themselves for success.

The very best companies have prospered despite the ravages of time over many generations through constant innovation. They understand that executive onboarding is a key component of leadership development. For these companies, leadership development is not a cost, but an essential investment to foster their competitive advantage in an ever changing business environment.

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