Preparing for CEO-ship: Companies using Chief Executive Institute hire external CEOs half as often

Proof Point

Preparing for CEO-ship

Companies using Chief Executive Institute hire external CEOs half as often as the Fortune 500 average.

by Kevin Cashman

The concept: The Chief Executive Institute® is an individualized, in-residence program for CEOs and their successors. CEI is a key program within Korn/Ferry’s CEO Succession and Senior Team Effectiveness offerings.

Used to: Prepare individuals for the unparalleled pressures of the CEO job, with four expert coaches assigned to each executive.

Important because: Identifying future CEOs is only the start of complete succession planning. CEI coaches each candidate to be ready for the rigors of the top job. Companies using CEI hire outside CEOs 11 percent of the time, compared to 30 percent for the Fortune 500.

CEOs sit at the intersection of two giant pyramids.

Pressing downward is the whole weight of external stakeholders: customers, the board, bargaining units, and the media. Pointing upward is the pyramid comprising the internal organization: the executive team, the business divisions, the people who make up the enterprise. New CEOs quickly experience the full force of this high-pressure spot.

By the time executives become CEO candidates, they have proven their financial skills, their strategic skills, their operational skills.

And yet, wedged between these pyramids, simple things become staggeringly complex. That’s why Korn/Ferry International has honed a proprietary process to meet those unique development needs: the Chief Executive Institute®.

Korn/Ferry research on CEO turnover found that 30 percent of Fortune 500 companies hired externally when they got a new CEO from 2003 to 2009. For companies that use CEI, that rate is less than half—only 11 percent.

Honed over the last ten years, CEI is an intensive, in-residence program that engages one senior executive at a time with a team of four Korn/Ferry consultants, each

a specialist in an area crucial to successful CEO development: Personal leadership. The character, values, and strengths of a CEO profoundly influence the sustained performance of the entire enterprise—and so each CEO needs a comprehensive self-awareness of his or her strengths, development challenges, and personality characteristics.

Team/interpersonal leadership. CEO leadership is a human endeavor managed through teams and interpersonal excellence. Learning to balance the drive for results with deep interpersonal connection is crucial. With less time and less proximity to people, each interpersonal and team interaction must be optimized.

Enterprise leadership. Being CEO requires a system-wide mindset.

Only by learning to transcend the divisional and functional points-ofview can a CEO move the whole enterprise with purpose, vision, and inspiration.

CEO leadership. The CEO is scrutinized from all sides—so anyone stepping into the role must be prepared to apply influence in every direction and master the strategic and communication skills required, internally and externally.

CEI coaches are Korn/Ferry’s most experienced, most senior consultants with a minimum of fifteen years of coaching and leadership development experience.

Those who specialize in the CEO leadership component of CEI are former CEOs who have demonstrated exceptional general management expertise and have built a track record of people development. Additional resources, based on needs, are also provided in media relations, public speaking, investor relations, analyst presentations, and other areas customized to the needs of each CEI candidate.

For CEI candidates, the effect is transformative. Surveyed afterward, 92 percent of them said it was the “most impactful leadership development experience of their career.”

A CEI participant, Laura Karet, recently named CEO of the $10 billion grocery chain Giant Eagle, commented: “Chief Executive Institute completely exceeded my

expectations. Going beyond a content-focused university program and a personally-focused coaching process, it integrated my strategic, business, team, culture, personal and leadership needs into a comprehensive process. The team approach is great. It is like having my own advisory board in CEO development.”

Indeed, the integrated team approach differentiates CEI from other coaching and leadership development methods, and inherently offers more than any one-coach process or academic program. Also, by tailoring the program to the CEO’s personal or strategic needs, and working intensely with them on-site for three days, the program has a quick impact. At the end of the three-day residential program in New York, San Francisco, or Minneapolis (soon in London or Hong Kong as well), participants emerge with a detailed 18-month development and coaching plan.

CEI also utilizes what we call 720° Leadership Development. That means focusing first on clarifying a CEO’s values, strengths, purpose—aspects that come from inside—and then adding external feedback from interviews and proprietary assessments to form a complete picture. The combination of our research-based assessment tools and a decade of delivery around the globe make CEI a proven and consistently successful process.

A board chairman of a Fortune 500 services firm put it this way, “As

board members, our greatest responsibility is to find and prepare the next CEO. While ‘finding the next CEO’ for us was not a problem, developing the next CEO over a two- to five-year period was. Chief Executive Institute gives you a proven way to prepare each of your CEO succession candidates in a tailored way. It amazed me how engaged each CEI participant has been. It definitely moves key successors from the ambitiously seeking the CEO job to getting prepared for the rigors of ‘CEO-ship’.”

About the Author

Kevin Cashman is a Senior Partner in Korn/Ferry International’s CEO and Board Services group. He is the author of Leadership From the Inside Out, one of the top selling business books of the decade.

Over the last 25 years, he has focused on optimizing CEO and senior team effectiveness.

He has worked with senior executives in more than 60 countries and was named a Top 10 Thought Leader by Leadership Excellence magazine.

About Korn Ferry International

Visit www.kornferry.com for more information on the Korn/Ferry International family of companies, and www.kornferryinstitute.com for thought leadership, intellectual property and research.