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Successful Leadership Transitions Boost Revenue

Washington — Nov. 26

CEB, a member-based advisory firm, has announced new research findings that indicate organizations with well-executed leadership transition processes can boost revenue by as much as 5 percent.

Companies employing innovative approaches to transition management not only focus on transitioning the incoming leader, but also the existing team and other colleagues. These approaches produce less organizational paralysis and employee attrition during the transition, and increase the employment value proposition and reputation for integrating new leaders.

CEB’s research draws on large-scale quantitative research representing more than 30,000 leaders, including heads of HR and recently transitioned leaders at large organizations.

Findings show that at least 90 percent of teams led by well-supported, high-performing transitioning leaders meet their three-year performance goals. In addition, the risk of attrition for their teams is 13 percent lower than average. Their teams also show discretionary effort levels two percentage points higher.

Conversely, companies that lack an effective leadership transition management process may be disappointed in their new executive’s performance, as 46 percent of leaders underperform during the course of their transition.

Leaders struggling in transition have direct reports who perform 15 percent worse than those who work for a high-performing one and are 20 percent more likely to be disengaged or leave the organization.

Successful leadership transition management can help organizations avoid significant business risks, but most transitions underperform or fail outright. This is because they employ an overly generic approach focused exclusively on the new leader’s actions, and with support confined to early days of the transition.

Companies consistently transitioning new leaders achieve better results through several steps:

Approaching each leadership transition in the appropriate context: Viewing each transition through a situational lens, taking into account the degree of role clarity and the level of urgency to produce results.

Tailoring transition emphasis to ensure success: Understanding the common transition archetypes, identifying the type of transition under way and tailoring plans appropriately.

Viewing leadership transition as a repeatable core process: Orchestrating a structured transition support process that mobilizes resources and applies innovative tools and approaches to assist leaders with high-impact transition activities.

Focusing transition support on the organizational community: Shifting members of leaders’ transition communities from passive observers to active partners by educating community members on what roles to play and how to play them effectively.

Source: CEB