Insights
Russell Reynolds Associates: How Boards and New CEOs Can Establish a Strong Relationship
Of all the responsibilities boards have, none is more crucial than the selection and appointment of a new CEO, and over the past decade, the stakes have been raised to make the right decision.
Russell Reynolds’s Global CEO Turnover Index analyzed the CEO turnover data of listed companies globally, including those in the S&P 500, FTSE 100, Nikkei 225, and S&P/ASX 200. It showed that since 2018 an average of 10.9 percent of new CEOs at the world’s largest listed companies failed to make it to the two-year mark; this has increased to 15.1 percent through the first quarter of 2024.
In light of this, boards should remember that they play a critical role in ensuring the successful transition of CEOs and, in turn, help lay the foundation for their long-term success. There is a mutual responsibility to ensure the board-CEO relationship gets off to a good start.
Below are some of the common mistakes new CEOs make with their boards, how to spot them, and what directors can do to mitigate them.
- Failing to Prioritize Building the Right Relationships With the Board
- Assuming Silence Is Approval
- Not Understanding the Board’s Role Versus Theirs