The Importance of a Leader’s First 100 Days
Planning assiduously for one’s first 100 days in a new job is more critical than ever. Today’s business climate feels more like a trial by fire than a honeymoon.
The hazards are real. Forty percent of those who take on corporate leadership
this year will fail in their first 18 months, according to oft-quoted findings by the Center for Creative Leadership
and supported by our research at the Fordham University Graduate School of Business Leadership
What’s more, top CEO job changes in 2007 are on pace to outstrip last year's record breaking 1,322 departures, according to Chicago consulting firm Challenger, Gray & Christmas. In 2006, big-name companies including Home Depot, Bristol-Myers Squibb, Nike, Ford, and Viacom all suffered top man shifts.
The cost for each failure is steep. Search fees, interviewing, sign-on bonuses, annual salary, first-year guaranteed incentives, and relocation can easily exceed $1 million per top hire. Add to that planned but unrealized revenue, typically $3 million to $4 million, that the failed hire was expected to generate. And don’t overlook the nonbalance sheet costs—damage to the firm’s brand, missed market opportunities, loss of client confidence, and the fear factor planted in the minds of disheartened staff and future candidates. All tolled, the total loss can surpass $5 million.
In the wake of this harsh reality, search firms, leadership
coaches, and consultants have come up with a new service labeled with the hot buzzwords “executive onboarding” to help new business leaders increase their odds of becoming successful.
In my view, a leader’s first 100 days are the most critical. But the onboarding experience actually begins the very moment a new CEO, COO, or Sr. VP of Marketing entertains an offer to join an organization. That’s not a moment too soon for an executive to initiate due diligence on the company he or she is about to lead.
It’s important to get a head-start, especially on what’s been going wrong. Business may have been flat; shareholders may have been disappointed; top performers may be circulating résumés “just in case.” There’s no time for delay, no time for “wait and see,” to begin probing for answers.
Richard Notebaert, who led Qwest at a time when the company was plagued with dismal financials, a sinking stock price, and an SEC inquiry, sees it this way: “You have to triage: first fix the balance sheet and get the revenue going. Then, sort out legal and regulatory issues.”
A strategic agenda will help prioritize your short-term initiatives, support your long-term objectives, and give your people the resources they need to reduce the uncertainty that comes with change.
Strive for Early Wins
Early wins build credibility and confidence. They confirm that you are, indeed, right for the job, that you’ve earned support from your key direct responders. Early wins imbue key internal stakeholders into a “we can do it” spirit. (And, at public companies, early wins get influential securities analysts on board.)
These wins also let your people know that they’re part of a bright future. As Lew Platt, former CEO at Hewlett-Packard, explains: “If you can find a few things that were serious flaws in the organization and fix them quickly, you can establish your credibility as a leader very fast.”
You can get an early win from a turnaround for a failing product; from a creative new acquisition; or from a team effort that raises spirits as well as profits and shares values.
Major customers are another superb source for an early win. Meet with them and probe for their insights so that you can really get to know their businesses. In the pharma space, this means sitting down with HMO leaders, pharmacy benefit managers, hospital pharmacists, physician specialists, and high prescribers of your product class. Their money is on the line; they operate without delusion. How do they position your company? What’s their take on improving a relationship? What will it take to enhance their loyalty to your product line?
It’s no less important to “know thyself,” to define the vision that will make your new leadership a winner. “Branding” is a popular term these days to identify an entity, whether a business or a product line. Make it a 100-day priority to brand your operation to identify clearly where it’s headed, where it should be going, and what must be done to alter the course if necessary. Ask yourself: Are we a research entity? Should we add business segments, subtract them, or simply improve on what we have? How are we identified in the marketplace? Is that how we want to be known?
Surround Yourself with the Best People
The key to solving problems and defining your direction will depend heavily on how you put together your team of key direct responders. "The biggest challenge is the leading-people piece," says Michael Feiner, management professor at Columbia University Graduate School of Business. "It takes a while for even really smart CEOs to understand that it’s people first, strategy second. That comes from experience and mistakes, and I don't think there's a shortcut."
About those key direct responders: it is imperative to track their performance critically from the outset; you must get to know who they are. Determine which ones fully understand your new vision for the company and ascertain whether or not they are ready and able to take on a heavier workload to make it real. If a staffer responds with an early negative attitude, saying, “I’m over my head now with work. Frankly, I can’t see taking on greater responsibilities,” that person (and others so inclined) should be allowed to take those sentiments to another organization—promptly.
You should thoughtfully figure out which key direct responders you can count on: determine which are top-flight “A’s” and “promising “B's,” The “C's” should be heading to the door because they just won’t complement your new vision and direction. Keep the pressure on “A’s” to maintain their lofty status, and on “B’s” to work hard to replace those above them who don’t maintain the needed pace.
W. James McNerney left GE after 19 years to head 3M, where his early win included a stock rise of 34%. He departed 3M for Boeing in mid-2005, where the stock rose 30%. McNerney sees himself as a “value-added facilitator more than as someone who's crashing through the waves on the bridge of a frigate.”
When asked what he observed about those who grow and those who don’t under his leadership, and if he can tell in advance who they’ll be, he responded, “No, you can't always tell in advance. It generally gets down to a very personal level—openness to change, courage to change, hard work, teamwork. What I do is figure out how to unlock that in people, because most people have that inside them. But they [often] get trapped in a bureaucratic environment where they've been beaten about the head and shoulders. That makes their job narrower and narrower, so they're no longer connected to the company's mission—they're a cog in some manager's machine.”
Put—and keep—your A+ passionate team in place and you’ll be on board for quick and sustaining wins.