When an employer has a well-managed leadership transition program, it can improve revenue by 3 percent to 5 percent and gain an advantage in talent acquisition, according to new research by advisory company CEB.
For employers that use innovative approaches for transition management, they focus on transitioning the incoming leader as well as the original team and other colleagues. Doing so creates less organizational paralysis and employee attrition during the transition while improving employment value proposition and reputation for assimilating new leaders.
The research also demonstrates that at least nine out of 10 respondents led by well-supported, high-performing transitioning leaders hit their three-year performance goals, and the risk of attrition is 13 percent below average. Additionally, these respondents' teams display discretionary effort levels two percentage points higher.
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For respondents that do not have effective leadership transition management processes, however, 46 percent of leaders fail to perform to company standards during the transition. Subordinate employees who report to leaders struggling in transition also perform 15 percent worse than those under high-performing leaders, and they are 20 percent more likely to become disengaged or leave their jobs.
"The reality is that a macro-environment of high expectations means leadership transitions now occur in greater numbers than ever before – and with high stakes for all involved," says Steve Meyer, general manager of CEB. "Ironically, most organizations leave transition management to the individual who knows the least about the organization, the incoming executive. The most progressive companies have begun to establish more rigorous and repeatable processes to address leadership transition management and are seeing important results from their efforts."
CEB maintains that many employers fail at leadership transition management because they rely on generic approaches that solely support the move during the early days. Instead, CEB recommends that employers look at each leadership transition as a unique case, and they should first identify the type of transition and develop a custom plan. Furthermore, employers can improve leadership transition by seeing it as a repeatable core process and focusing transition support on the larger organizational community that extends from leaders' first 100 days.
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