The Psychology of CEO Succession

Choosing the company’s next leader is one of the most crucial decisions a board makes. Yet directors, incumbents, and incoming leaders routinely underestimate how tricky the transition at the top can be. This month’s Spotlight package is a guide to making it go smoothly.

In “Power, Influence, and CEO Succession,” Dan Ciampa and Adam Bryant warn incoming CEOs about the complex power dynamics that inevitably arise because the board and the outgoing leader have agendas that differ from theirs. Designated successors must understand those dynamics and their nuances. Four approaches--assertive persuasion, incentives and disincentives, common vision, and openness and involvement--will help successors influence key stakeholders, but they need to know which situations each works best in.

In “How CEOs Build Confidence in Their Leadership,” Claudius A. Hildebrand, Jason Baumgarten, and Mahesh Madhavan note that many new CEOs get into trouble by launching bold initiatives before they’ve won the support and trust they need to effect change. According to a study of nearly 1,400 CEOs, earning people’s confidence actually takes two years. If leaders focus methodically on gaining it, however, they can generate remarkable increases in company value.

In “The Vital Role of the Outgoing CEO,” Rebecca Slan Jerusalim and Navio Kwok argue that when departing CEOs have strong relationships with the board, are actively engaged in choosing their replacements, and have positive views of the process, handoffs are much more successful. But if they experience ambivalence or regret or feel excluded, transitions can become tumultuous. Drawing on extended interviews with outgoing executives, this article discusses the five psychological crossroads that leaders face when they step down and offers advice on what boards and CEOs can do to navigate each one more deftly.