Why CEO Transitions Fail — And How Boards Can Stop It
Leadership is hard, and transitions to CEO are even harder. Even great CEOs stumble if not supported by the board during their psychologically difficult transition.
Opinions expressed by Entrepreneur contributors are their own.
The CEO's transition is a major psychological event — an identity shift that reorders their sense of self and often even their sense of meaning in life and work. But while most of the spotlight falls on the CEO, there's another character who determines much of the outcome: the board of directors.
What happens in the early months between a new CEO and the board drastically influences the long-term outcome. A board that is simply an evaluator of the CEO will plant seeds of failure early on. In contrast, a board that steps into the role of partner and coach can help transform the CEO's psychological turbulence into clarity and, by extension, leadership effectiveness.
In other words, CEO transitions don't succeed because of a single great leader. They succeed when the group of people at the top is an effective team. And no part of the team is more influential in shaping the CEO's transition than the board.
Related: 5 Steps for a Smooth and Successful (CEO) Exit
Stepping into the unknown
Research shows that over half of newly appointed CEOs fail within 18 months. Many point to culture mismatch, unclear expectations or misaligned visions between the CEO and the board. However, there is a deeper psychological truth: transitions destabilize identities and role relationships — not just for the CEO, but for everyone involved.
Psychologist William Bridges famously described transitions as consisting of three parts: the ending of an old identity, the "neutral zone" of uncertainty and the emergence of a new beginning. The same is true in organizations. When a CEO changes, the company enters an uncertain space filled with problems and trepidations. The previous regime's story has closed, but the new one hasn't yet taken shape.
Now, it's time to shape that story – the hero's journey. And the board is not an observer; it's a co-author of the next chapter. Its role is not just functional - it's psychological.
The CEO's identity crisis
The moment a new CEO steps into the job, they undergo a phenomenon psychologists call "identity disequilibrium." Their previous role is over. But the "CEO self" hasn't fully formed. Impostor syndrome spikes in high performers who are used to mastery.
At the same time, their internal compass begins spinning. It's an overwhelming situation to be at the very top of an organization. They ask themselves: What should I prioritize? How bold should I be? What will this board support or punish? Will I meet expectations and be as good as the last CEO?
Here, the board becomes more than a governance body. It becomes a mirror of the company's history. The board reflects the company's implicit beliefs about what and who a CEO should be. If that reflection is distorted, if expectations are unclear or contradictory, it sends the CEO into deeper disorientation rather than clarity.
Conversely, if the board is aligned and transparent, it becomes a stabilizer during the transition - a foundation of psychological stability. It can help the CEO clarify not just what to do, but who to be.
Related: 3 Ways to Navigate the Journey from Entrepreneur to CEO
Why alignment is emotional, not just strategic
We hear about the need for board–CEO alignment on strategy, performance metrics or goals. This is what people inside businesses talk about. But the real alignment, like in all human relationships, is emotional.
This includes:
Shared understanding of identity: What kind of leader do we want the CEO to be? A change agent like Steve Jobs? A steward of tradition like Kay Whitmore from Kodak? A hard charger or an enabling leader with empathy? Without consensus on role expectations, the CEO receives conflicting feedback, which amplifies an already anxiety-laden situation.
What kind of leader do we want the CEO to be? A change agent like Steve Jobs? A steward of tradition like Kay Whitmore from Kodak? A hard charger or an enabling leader with empathy? Without consensus on role expectations, the CEO receives conflicting feedback, which amplifies an already anxiety-laden situation. Psychological safety: Does the board offer the CEO a space to be vulnerable and have productive conflict, as well as receive real feedback? Can the CEO ask naïve questions, admit doubts or test bold ideas without fear of judgment? Boards that offer this kind of psychological environment give the CEO room to learn and grow instead of forcing them to pretend they have everything under control, when they don't.
Does the board offer the CEO a space to be vulnerable and have productive conflict, as well as receive real feedback? Can the CEO ask naïve questions, admit doubts or test bold ideas without fear of judgment? Boards that offer this kind of psychological environment give the CEO room to learn and grow instead of forcing them to pretend they have everything under control, when they don't. Respect for personal "why": Great boards ask their CEOs what drives them deep down inside. What big problem are they trying to solve? What kind of legacy do they want to leave? When a board links its organizational goals to the CEO's core purpose, the CEO's commitment skyrockets and, with support from the board, they leverage this energy to catalyze the company.
The board as cultural translator
Every company has an invisible operating system: its culture. For a new CEO, entering this system can feel like landing in a foreign country. It's a culture shock. There are unspoken rules, taboos, rituals and metaphors. There is an entire system of beliefs about what is right and wrong. If no one explains these hidden rules to the CEO, and they were hired from the outside, this becomes a dramatic stumbling block in the leader's transition.
Boards have a unique vantage point and an obligation to past on this very important information. In a successful transition, the board acts as the CEO's cultural interpreter. Not to constrain them, but to orient them. "Here's what matters here." "Here's how people think." "Here's what will gain trust and what will lose it."
This guidance allows the CEO to avoid landmines while still charting their own course.
Related: These are the Signs of a Toxic Company Culture
The board's balancing act
Silence is never neutral. When a board fails to engage early in a CEO transition, the vacuum gets filled with mistrust. The CEO wonders: Am I on track? Do they like what I'm doing? Should I move faster? Slower?
This silence is not due to malice but to uncertainty. The board may assume it should "give the CEO space." But in the early days, that's precisely when the CEO needs the most engagement, as long as it's healthy engagement.
Conversely, when boards overstep, such as micromanaging the CEO or contradicting themselves, they erode confidence and degrade psychological safety. The CEO becomes reactive, second-guessing decisions or even looking for approval from the board on simple decisions. Creativity shuts down. Risk-taking and entrepreneurialism vanish. A downward spiral begins because the team isn't effectively working together.
The best approach is structured transparency. Boards and CEOs should co-create an agreement in the first month: Here's what success looks like. Here's how we'll talk. Here's how we'll disagree. This is how much we'll be involved and where we'll step in to make decisions versus give the CEO space.
The alignment session is a ritual worth having
One of the most effective tools in CEO transitions is a Board–CEO alignment session. As a coach, I do this with all CEO transition clients. This is not just a check-in or a nice-to-have meeting. It's a facilitated, confidential deep dive where the CEO and board examine the company's strategy, culture, priorities, governance style and operating cadence.
Such sessions allow for three critical things:
Surfacing hidden assumptions. Directors may realize they don't actually agree on the CEO's mandate or on what the company needs next. Better to discover that early. Normalizing emotion. These sessions often allow for honesty: "Here's what excites me, here's what worries me." This humanizes the relationship. Creating a shared narrative. When the board and CEO craft a story of where the company is headed and what kind of leader it needs, they co-create meaning. And that meaning fuels alignment.
Transitions are psychological
People tend to think of CEO transitions as a business event. But underneath they are deeply psychological (like everything else). A new CEO is taking on the job of their lifetime, and it's a big job that comes with an unreal amount of stress.
The science of identity, meaning and psychological safety offers powerful tools for making these transitions successful. Boards that embrace their role as coach and partner, not just overseers of performance, help CEOs tackle a tough time and emerge more whole, more self-aware and more effective.
The most important question a board can ask during a transition isn't "Are we meeting our financial targets?" It's "Are we helping this leader become who they need to be?"
When that happens, alignment is no longer a surface-level outcome to get things done at work or achieve financial goals. It's a strong emotional bond wrapped in shared meaning that energizes passion and focuses it toward the company's vision. And that meaningful pursuit cascades out to everyone else.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Skift
21 minutes ago
- Skift
Travel's Best Paid CEOs: Where They Rank
The pay for a dozen travel company CEOs in the S&P 500 attracted compensation greater than half of their peers in the S&P 500. How does the compensation of travel CEOs compare with peers in the S&P 500? The three highest-compensated CEOs of travel and travel-related companies in 2024 were Glenn Fogel of Booking Holdings ($44.8 million), Bob Iger of Disney ($41.1 million), and Uber's Dara Khosrowshahi ($39.4 million), according to the Wall Street Journal's annual survey of S&P 500 CEO pay. Fogel ranked 16th among all S&P 500 CEOs, Iger was 19th, and Khosrowshahi was 21st — placing all three in the top 25. We included Iger and Khosrowshahi in our list. Although Disney is a media and e
Associated Press
22 minutes ago
- Associated Press
Journalism opens as the Belmont favorite. Kentucky Derby winner Sovereignty is the 2nd choice
SARATOGA SPRINGS, N.Y. (AP) — Kentucky Derby runner-up and Preakness winner Journalism opened as the 8-5 favorite in the Belmont Stakes when post positions were drawn Monday for the final leg of the Triple Crown. Derby winner Sovereignty was set as the second choice on the morning line at odds of 2-1 and drew the No. 2 post. Journalism, near the outside with the No. 7 post, is the only horse running in all three Triple Crown races. 'He's been kind of the same horse since July of last summer,' trainer Michael McCarthy said. 'He does everything you'd ask a good horse to do: He eats well, trains well, acts well. I thought through the last six, seven weeks here, his energy's been the same throughout.' Sovereignty is back after owners and trainer Bill Mott opted to skip the Preakness and run the Belmont on five weeks of rest, and things have gone swimmingly since he arrived at historic Saratoga Race Couse. 'We've been very lucky with everything that's gone on sine he's been here,' Mott said. 'He's been moving well over the track.' Sovereignty and Journalism in the field set up this Belmont, the second at Saratoga while renovations are made to its usual home on Long Island, to be a rematch between the first two Triple Crown winners who were also first and second the Derby. 'He's improved, as I think as many of these horses have,' Mott said of Sovereignty. 'I think this entire group, if you look at their form and the way they've developed over the course of this year, I think they've made steady progress and it should be an interesting race.' No. 6 Baeza, who finished third in Kentucky on the first Saturday in May, opened at 4-1. Hall of Fame trainer Bob Baffert's Rodriguez, who was scratched from the Derby because of a minor foot bruise and held out of the Preakness, was next at 6-1 and will leave the starting gate from the No. 3 post. The field of eight horses also includes No. 8 Heart of Honor, tied for the longest shot on the board at 30-1 after finishing fifth in the Preakness. New to the Triple Crown trail are No. 1 Hill Road (10-1), No. 5 Crudo (15-1) and No. 4 Uncaged (30-1). Journalism, who was favorited in the Derby and the Preakness and at the moment is the top 3-year-old in the country, looks like the horse to beat. 'Saratoga is very good for horses,' McCarthy said. 'He seems a little bit re-energized up here. We're looking for a wonderful renewal of the Belmont here on Saturday.' ___ AP horse racing:
Wall Street Journal
23 minutes ago
- Wall Street Journal
A Better Way to Make New York Affordable
Look alert, New Yorkers: Congress has a chance to cut the cost of living, and it's not the SALT deduction. Rep. Nick Langworthy (R., N.Y.) has introduced a bill in the House that would reduce the cost of federally funded construction projects in the state. New York's Labor Law 240, known as the Scaffold Law, imposes absolute liability on property owners and contractors for construction workers' gravity-related injuries from falling or being hit by a falling object. Enacted in 1885, the absolute liability standard applies even when the worker is at fault.
