Don McKenzie

Appointing a CEO/GM/COO

As a business owner or major shareholder, appointing senior roles such as CEO, GM or COO is a big step. In the Adizes Lifecycle model, it marks the transition into the “Adolescence” phase. Just like in the human lifecycle, this phase is not without its challenges. In a large percentage of organisations we work with, entry to the adolescence phase is often where we start.

Copyright 2024. Ichak Kalderon Adizes, Santa Barbara County, California. All rights reserved.

If you are currently employed in one of these roles reporting to the business owner or the board, you know that it is often not smooth sailing. This article seeks to share some ideas on why this is, and what to do about it.

The appointment generally starts off very well, but over time destructive conflict can manifest. Communication breaks down all too often, and the newly appointed leader gets pushed out. Not every time of course, but in a significant percentage of cases.

It can be hard. I don’t have a survey to quote, but in my own personal experience, and the experience of the institute in over seventy countries for nearly fifty years, it is a global issue. We’d say, in more than 80% of cases, those appointed by a business owner to the CEO, GM or COO role the first time will not last more than two years, often much less.

It normally plays not too dissimilar to this;

  • In the early days, everything is rosy. It’s a new relationship and things are just wonderful. The owner/major shareholder can take more time out, work on new things, and just touch base every now and then.
  • As the honeymoon period fades, a few differences start creeping in. The staff that were with the company before the CEO/GM/COO started won’t like some of the new things being implemented and will start reporting them back to the owner. The owner is trying to be professional but can’t help but try and ‘help’ by getting involved to resolve disagreements.
  • After a short period of time, there are now new business problems/opportunities to tackle. Because the new CEO/GM/COO is a different person, they interpret things differently, make decisions differently and implement them differently. This often results in a new conflict between the appointed leader and the business owner. It can be subtle, but it starts to creep in.
  • As time goes on, the “old guard” continues to report back to the owner, and the owner is now also seeing lots of situations that they would have done differently.
  • A lot of energy gets consumed away from the business needs of the organisation. It is not uncommon for results to fall even without changes in the market.
  • The situation deteriorates to the extent that the appointed person can’t take it anymore. They think the owner is useless. The owner thinks they are useless. The CEO/GM/COO either resigns or is fired.
  • The cycle will soon repeat itself.

The timeline can be totally different depending on the rate of change within the industry, how the underlying business is performing, the managerial style of the owner, and the number of times the owner has been through the cycle.

Why does this happen?

In the meantime, here are two thoughts, out of many, to start you off:

1. The well-tailored suit:

As a business owner, you have built a business that suits you. It suits what you like, whom you like, how you like to operate, and how you like to spend your time. There are very few people in the world like you, and therefore very few people who can run what you have created.

If you appoint someone to a senior role such as CEO, GM or COO without first making the “suit” more standardised and able to be worn well by others, you are essentially setting yourself up for failure.

So, the first step before appointing someone is to make changes to “how” the business runs whilst you are still in that chair.

By this we mean:

  • How problems and opportunities are identified
  • How decisions are made
  • How decisions are implemented
  • How the vision and mission of the organisation is created and communicated
  • How the structure of the organisation is changed to suit the vision and mission

And if you have already appointed the person, consider implementing a change in the approach to the above items now, rather than waiting until the inevitable starts to occur.

2. People should be last:

Most methodologies and frameworks say people should be first. We disagree. People should be last. There is a nuance here, however. People are the most important asset, but people are also a product of their environment.

When a Managing Director/Owner/Board decides to appoint a CEO/GM/COO, often a job description is devised, and recruitment starts.

However, appointing someone into this role, without altering the tailored suit discussed above, guarantees a high risk of failure.

If people are last, what should be first? We believe Collaborative Managerial Process is the first ingredient.

Up until this point, the managerial process has been a function of the owner’s style and experience to date. It suits them very well. But trying to find someone just like the owner is going to be near impossible.

The first step is to change the processes and framework of how the team identifies, aligns, prioritises, makes decisions and implements decisions. The business needs to transition from individualised through the owner to institutionalised through the entire team, irrelevant of who is in the team at any time.

What I mean by this, is that previously the owner was at the centre of most of the major parts of identification through to implementation processes. Whilst it is true that some may have been more collaborative than others in how they went about this, nevertheless, they were in the centre of it.

Before trying to put someone new in the middle, who will have a different style, experience, perception, expectation, interest etc, we see the best outcomes occurring when the framework and processes are institutionalised to make it less personal. We move from personal-based, to process-based.

Doing this as a first step will create an environment where the differences in the new people will be harnessed and remove the potential for destructive conflict.

Destructive conflict is at the centre of the revolving door that occurs when business owners appoint senior roles such as CEO/GM/COO.

If the above rings true, consider joining us at one of our events around the world. If you are a business owner, you can use the ideas to appoint a new senior role without the potential risks. If you already have appointed someone to a senior role and don’t want to risk becoming a statistic, you will derive high value as well.

If you work for a business owner and have been appointed to one of these roles, these tools will also help you manage situations more effectively.

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