Power, Influence, and CEO Succession

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Personal Development, Leading & Managing Section | 1

Power, Influence, and CEO Succession

By Dan Ciampa and Adam Bryant | Harvard Business Review Magazine | July–August 2024 Issue

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Of all the decisions that a company’s board of directors makes, choosing the next CEO is arguably the most crucial. A failed CEO succession can disrupt employees’ work, cause senior talent to jump ship, damage the company’s reputation, erase enormous value, and ruin the careers and legacies of the outgoing CEO, the board, and the designated successor.

According to research by Claudio Fernández-Aráoz and colleagues, the cost of failed CEO and C-suite successions is close to a trillion dollars annually among the S&P 1500 alone. On average, companies that have to fire their CEOs sacrifice $1.8 billion each in shareholder value, a 2015 study by PwC found.

In theory the key parties in the process would be fully aligned on getting a succession right. In reality, there are multiple agendas at play.  When powerful players have diverging agendas, tensions can easily escalate into conflict. The result can be a high-stakes and deeply fraught process that is all about power—who has it, who wants it, and how each party uses it.

That can be disorienting to the successor, especially if she’s a first-time CEO. She probably has been promoted for performing well in straightforward operational or functional roles and consistently exceeding expectations. Success in the top job, in contrast, requires acute awareness of political forces, the wise use of power, and skill at influencing others. Mastering these requirements is crucial for incoming CEOs.   To be sure, any new CEO, whether she takes over during a strategic succession, a forced succession, or a planned succession, will need to figure out how to influence others in order to implement her agenda.  How new leaders can handle the period of overlap with their predecessors?

The incoming CEO needs to match Influence Styles to the Moment.  This could be attained by assertive persuasion, incentives and disincentives, share the common vision, and/or going for openness and involvement. 

During the transition phase, the incoming CEO’s main objective should be to make others confident that she is well prepared to take charge. That requires doing four things:  learn about the audiences you must influence and about how best to convince and persuade them, consider culture and context; secure the right allies and minimize the impact of opponents, and enhance your power by acting in a humble manner.

When the existing CEO steps down and the successor formally takes office, two additional objectives become paramount:  deepen support from the board and clarify and communicate your leadership vision.

3 key takeaways from the article

1. Of all the decisions that a company’s board of directors makes, choosing the next CEO is arguably the most crucial. A failed CEO succession can disrupt employees’ work, cause senior talent to jump ship, damage the company’s reputation, erase enormous value, and ruin the careers and legacies of the outgoing CEO, the board, and the designated successor.  Success in the top job requires acute awareness of political forces, the wise use of power, and skill at influencing others.
2. To be sure, any new CEO needs to figure out how to influence others in order to implement her agenda. This could be possible by matching influence styles to the moment.  This could be attained by assertive persuasion, incentives and disincentives, share the common vision, and/or going for openness and involvement. 
3. During the transition phase, the incoming CEO’s main objective should be to make others confident that she is well-prepared to take charge. That requires doing four things:  learn about the audiences you must influence and about how best to convince and persuade them, consider culture and context, secure the right allies and minimize the impact of opponents, and enhance your power by acting in a humble manner.

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Topics:  CEO succession, Board of Directors, Organizational Performance