Is it Time for A Leadership Change?

When is it time for the CEO of a small business to step down as its leader? Their skills should be assessed in four different areas.
Getting Small Businesses Unstuck, Shafran Moltz Group
March 20, 2013

When does a small business replace their leader? Until recently, the Catholic Church only picks a new Pope when the current one passes away in office. On the  Marketplace Morning Report, Stephan Richter of The Globalist poses the following question:

Going back to 1892, which of the following institutions has seen the fewest changes in leadership?

a. The Catholic Church
b. IBM
c. The United States
d. General Electric
e. The United Kingdom

(Answer at the end of the article!)

Few founders are able to lead a rapidly growing company past $20M, but beyond that, it's even harder for them to step down at the right time. Bill Gates and Michael Dell are the exception; Andrew Mason, the former CEO of Groupon saw how difficult this truly was. Most founders and CEOs find their strength in managing a business during a certain phase. I loved the startup stage from $0 to $10M in revenue, but once the company exceeded that, I was ready to hand over the reins to another executive. CEOs excel based on their skills. The effectiveness of a particular CEO needs to be examined annually to see if a change in leadership is needed.

Their skills should be assessed in the following areas:

1. Is the CEO building teams to achieve a particular goal? A rapidly growing company only finds leverage in people and the work they do or the intellectual property they create.
2. Does the CEO give real power and responsibility to other executives in the company? A CEO can't direct everything in a growing company as it grows.
3. Does the CEO build bridges to strategic vendors and customers? This is where the real value is created for any organization.
4. Does the CEO still have the passion and drive daily for the company? Alternately, is he or she increasingly out of the office or out of communication? Is his or her life focus elsewhere?

The surprise answer is  (d) General Electric. CEO Jeffrey Immelt is only the company's ninth leader since 1892.


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Photo: iStockphoto

Getting Small Businesses Unstuck, Shafran Moltz Group