During a crisis situation, it is not enough to have just one backup plan. In the current economic scenario, it is necessary to plan for the worse.

When a company – regardless of its industry – is going through a rough patch and the CEO is an experienced veteran, then according to Chen and Hambrick, the CEO would not be able to think the way out. “He is too trapped by the baggage of the accumulated wisdom of that industry, so the longer the tenure of the industry incumbent, the more a company will benefit from getting rid of him,” says Hambrick.

The same would not be applied when the CEO is an industry-outsider; in that case figuring out a new pathway is easy and seems feasible.

The in-house talent cannot be ruled out in this case but the ‘any-fresh-face-will-do’ attitude will eventually prove worthless unless you are lucky enough. Looking for an in-house alternative can also help avoid the internal unrest that could result from disgruntled employees over missing the opportunity.

One of the key factors in deciding the turnaround is the board’s involvement. The matters related to the CEO shuffling are amongst the most prioritised jobs for any board. Read more...

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