High expectations rest on the shoulders of newly hired executives joining the C-suite of a company.
Execs need to possess brilliance, come up with groundbreaking ideas, maintain a solid commitment to the company, keep up a competitive work ethic, and display a knack for effectively motivating and managing company employees. On top of it all, they need to know how to woo and dazzle shareholders.
That’s quite the tall order.
According to a study released late last year from FTI Consulting, one of the most difficult challenges facing companies with new CEOs is convincing shareholders that she or he is worthy to lead the business. This obstacle can remain regardless of long-standing company excellence and fastidious strategic planning implementation.
Despite a company’s best efforts, many investors are more likely to sell rather than buy during leadership transition periods.
So what can companies and new executives do to impress shareholders and stave off the impulse to sell?
Simply put, you need a hire with a strong track record of success who can also speak intelligently and convincingly about the growth and the future of the company.
Whether this person arrives internally or from an outside company, you must be sure they are the best choice for taking charge and can do it right from day one.
The study shows that the public opinion of the CEO alone can influence nearly one-third of shareholders’ ultimate investment decision. Thus, choosing someone with an excellent reputation and history of success is key to keeping investors appeased.
From there, it’s vital to start off on the right foot and keep heading in the right direction after the exec’s newness has worn off. The study found that the status of the stock is most volatile after the new leadership has been in place about six months.
Businesses looking to find new executives absolutely must be sure to select the right leader. A transition is tough even with a strong candidate; picking the wrong one will only exacerbate these transitional problems.