Should They Stay or Go? How New CEOs Decide the Fate of Their Senior Leaders

How do newly appointed CEOs make the judgment about which leaders they want to keep and potentially develop, and the ones they need to replace? How do they assess their team? What measures do they use?

CEOs often have no shortage of data for decisions or problems they face. Ideally, this will also be the case with their SLT (senior leadership team) in terms of assessment and performance data. Commonly, CEOs will make effective use of this data alongside trusting their instincts.

Senior executives have years of experience in making judgments about people. An array of good, bad and ugly experiences over their careers will have refined their internal (gut) assessment. The thing that comes up for many CEOs is the question of trust: “Person X is really good, capable and well liked, but I just do not trust them.” CEOs cannot have people on their team who they do not trust.

The SLT is so important that there can’t be “maybes” on the team. And if there are, they can’t be there for very long. CEOs can’t have people in the boat who are not rowing, or worse, are dragging their oar. As one CEO described it, “Three of my SLT were sitting in the boat drilling holes in the bottom.”

Formal Assessment Helps Remove Bias

CEOs also need to challenge themselves when they assess members of their team. They need to push themselves, asking “Is good really good enough?” and “What am I sacrificing for the organization’s success of having a key role filled by a role player instead of a star?”

The ideal situation is for CEOs to utilize a psychometric assessment tool to ensure they are countering their biases—and the biases of the organization—to have a base assessment that allows them to compare apples with apples.

Hans Vestberg, CEO of Verizon and former CEO of Ericsson, adopts this approach to assess his teams when he starts as CEO. He works with a third party to stop any biases that he—or the existing leadership or HR function—may bring to the table.

“Talent decisions are so crucial that I put everyone through a formal assessment process. It was and still is essential that I was able to understand if we have the right people in the right roles,” Vestberg told me for my book The New CEO (Wiley, 2024). “The intent is to make sure that their capability and skills are being assessed today and for the business that I want to build.”

He added, “When I did this at both Verizon and Ericsson, it did lead to people leaving the organization. But we also found that, in many cases, we had the right person in the wrong role.”

From my research, I’ve found that new CEOs assess their senior leaders by looking at team dynamics, such as how team members work together, how decisions are made and the level of trust as it relates to debate and the outputs. When assessing individual traits, CEOs most commonly look at:

• Motivation/energy/purpose
• Capability/capacity
• Openness/transparency
• Collaboration
• Curiosity/intellect
• Scalability

Of course, to develop that gut feel for leaders’ performance, CEOs need to create plenty of opportunities. One tactic is via off-site meetings. Another is to increase the cadence of the SLT meetings, which gives CEOs more opportunities early to see the team behave, interact, perform and communicate. Essentially, more time on the ground here helps CEOs ensure they have seen what they need—good or otherwise.

The approach I see many CEOs adopt when relying on their gut feeling is to apply the simple concept of “skill versus will” or “attitude versus aptitude.” The idea is that if a leader has the right will or attitude, but lacks certain skills, then it’s a positive—as long as the skill gap can be closed quickly. If it cannot, you might have the right person in the wrong job. It’s a common issue, and fixable.

If a leader has the skills, but not the will, then it’s usually a very short conversation that goes something like: “Is this the right role and organization for you?”

As a check on the process, CEOs can ask questions such as:

• Do leaders know what is expected of them?
• Do they have the tools and resources, plus the opportunity to build the skills and use them effectively?
• Are they surrounded by aligned people?

It is challenging to decide that people who have worked at an organization for a period of time should no longer work there—just because you think it to be the case. It is tough, but necessary. It is normal to be reluctant about these changes.

CEOs Agree: Move Fast on Your Team

When CEOs are new, there are many benefits of slowing down and taking time to learn the context before making major decisions. However, the area where speed is encouraged is in decisions about the SLT.

The reflection I hear most from the CEOs I work with is that you cannot move quickly enough on your team. In my recent research on new CEOs, 65 percent of them said their top transition regret was that they did not move faster on building their top team.

In terms of timing, 48 percent of CEOs said they made the first change to their team within the first three months. Another 26 percent said they made the initial change within the second three months.

Often, CEOs get a good read on their team early. But instead of acting, they wait to give the people and the organization more time. In hindsight, this causes more issues, and it delays the CEO from being able to deliver and perform.

The CEOs who were most happy with how quickly they moved adopted the following plan:

• In their first month, they assessed the team.
• In the second month, they decided how the team should be structured and who should be on it.
• In the third, they made the changes. (Although many admitted they could have moved even faster.)

6 Reasons CEOs Wait Too Long to Act

Why do CEOs wait to make changes to their executive teams? Here are the top six reasons that I see in my work:

1. Grace. As the new CEO, they accept that there is much they don’t know, especially about people. So they give them grace, often against their better judgment.

2. Guilt. They recognize this is an existing team of people, each with families and responsibilities. They feel bad that their appointment as CEO means some may lose their jobs.

3. Best behavior. The arrival of a new CEO gives poor performers a chance for a reprieve. As a result, they are on their best behavior. The CEO sees a motivated, engaged executive, but the organization generally knows better.

4. Savior complex. CEOs think, “I’m a good leader, good enough to make this poor performer better. I can save them.” This is often more about their ego than reality. The CEO’s responsibility is to the organization. They can inspire and motivate people, but they are not responsible for saving them.

5. Gun-shy. We’ve all experienced or heard about the new “hatchet” CEO who comes in and lobs heads immediately. It is not an enviable perception, so some CEOs who really should wield the hatchet, don’t. In delaying, they slow the success of the entire organization, and importantly, their success as CEO.

6. “OK” performance. The leader might not be a poor performer, but they are not the right fit for the team that the CEO wants to build. Many CEOs hope this “good person” becomes the “right person.” In my experience, they rarely do. And what should have been a positive exit with an obvious trigger (a new CEO) ends up becoming a painful performance issue.

Focus on the Roles, Not the People

One mistake some new CEOs make is to get trapped fitting roles around the existing people. It is generally best practice to look at the roles and structure without the people who currently occupy the roles.

When assessing leadership in a company, there are generally three parts to consider:

1.  What leadership capabilities do we need?
2.  What leadership capabilities do we have?
3.  How do we plug the gaps?

This is best practice. Where some CEOs fall short is starting at No. 2 (instead of at No. 1) due to the pressure around the existing people. Then they realize months later that they do not have the right structure for the organization.

Of course, there are always considerations around the continuity of corporate knowledge (knowing where the bodies are buried). You don’t want to grind the organization to a halt. However, CEOs also need to stay focused on developing a structure that will serve the organization in the longer term.

CEOs should ask themselves, “What kind of senior team is needed?” and “What knowledge, experiences, skills, attributes and attitudes are important?” Sometimes they don’t need to replace people, but merely realign their roles and responsibilities. A good way to make that call is to draw the ideal organizational structure with no names in the boxes and test the functions and roles independent of the people who sit in them.

Ty Wiggins is the lead of Russell Reynolds Associates’ CEO & Transitions Practice globally, where he helps CEOs transition into their roles. This article was adapted with permission from his book The New CEO: Lessons from CEOs on How to Start Well and Perform Quickly (Minus the Common Mistakes) (Wiley, 2024).