The high costs of appointing the wrong CEO

By TCii Admin |

The role of the CEO is absolutely pivotal to the success of any company. Sadly, all too often the appointment process is flawed and the wrong person is appointed.

There are many costs associated with making the wrong appointment. There will be negative fallout across the team and you may lose good talent because of the associated demotivation. Then there’s the reputational risk – not only to the reputation of the company as a whole, but also to the reputations of the individual board members. You are who you hire.

And let’s not forget the financial consequences. Not only can hiring the wrong CEO have a negative effect on the stock price and shareholder value: it can also be very expensive in terms of the severance package for the failed appointee. Perhaps most importantly, you lose time and opportunities. Eighteen months after an unsuccessful appointment, the business has lost momentum.

CEO attrition rate in the UK is currently running at about 15% to 20% a year, and only 50% of boards think they’ve made a good hire after 18 months.

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