Is there a CEO honeymoon period?

by Evan Davies, Chief Executive - QLD, VIC, NZ | |   Personal Success
Is There a CEO Honeymoon Period?

Can a CEO expect to enjoy a free ride in the beginning of their tenure? Or do they need to achieve important wins early in their tenure to secure their success down the track.

At a recent CEO Institute Syndicate meeting, the group was divided on the issue of whether CEOs enjoy an early honeymoon period.

One of our more experienced CEOs was of the belief "There aren't any free lunches in being a new CEO. New CEOs have less time than ever to show results."

Another member had the opinion that the honeymoon period does exist in companies with analyst coverage but not in those without analyst coverage.

It was also noted that share prices tend to drop less in response to earnings decreases announced in the first four quarters of CEO tenure than to those announced by firms with established CEOs. For new CEOs who take over the helm during challenging times - who deserve a grace period the most - the honeymoon effect is more pronounced. If investors anticipate transitory bad earnings news from firms with new CEOs, stock prices can respond less to bad earnings news from these firms.

But the general consensus of the group was 'there is NO honeymoon for new executives'. With corporations getting more aggressive about fast-tracking executives and Boards expecting early results, the honeymoon period for new hires is more myth than reality.

Whilst there is no reprieve period for a new CEO recruit, it is definitely recognised there is a period of make or break for new CEOs. CEOs who can make solid first impression and deliver quickly tend to be destined for a huge success. The concept of the first 100 days in office is widely used in the world of politics. Whether you are a CEO or a politician, the first 100 days on the job seem to be the most critical.

During this anxious transition period, it's easy to make missteps that create political clashes, or to run afoul of the organisational culture you are only just starting to learn to navigate. The new CEO wants to hit the ground running, yet there are still undiscovered diplomatic norms that must be followed.

It is important that a new CEO takes early measures to set the tone and agenda for their tenure, but if they're not careful about context or history, they'll diminish their chances for success before they start.

So it appears a new CEO can't expect to enjoy a free ride in the beginning of their tenure. Rather the path to success is in establishing early momentum by achieving important wins within the first 100 days. 

The CEO Institute was founded in 1992. It is now Australia's leading membership organisation for CEOs and senior executives. It provides a forum for over 1,000 Chief Executive members to connect and share their learning with each other. In 2011, The CEO Institute became the world’s first global certification body for CEOs, and in 2013, partnered with UNESCO in support of the "Malala Fund for Girls' Right to Education". In 2014, they began offering their programs globally.
The CEO Syndicate is an exclusive peer support network for CEOs. The first meeting of The CEO Syndicate program was held in Melbourne in June 1992. Offices were opened in Adelaide in 1996 and Sydney and Brisbane in 1997, with Perth launching in 2007. In 2015, the New Zealand office opened.
The Future CEO program is a certification course designed by the business leaders of today for the business leaders of tomorrow. The first Future CEO meeting was held in Melbourne in May 2012. In 2014, the "Future CEO Scholarship Fund for Women" was established, and continues to be offered today.

Membership of The CEO Institute is by invitation only. To register your interest, click enquire.





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