Latest / Hiring & Firing with Fexingo: Recruitment, Performance, and Workforce Decisions / When a Hired CEO Fails in 90 Days
Transcript
- Lucas: There's an assumption that when you hire a CEO, they're seasoned enough to hit the ground running. But the data on early CEO exits tells a different story. Luna: You're talking about those cases where a new chief executive gets pushed out within a quarter or two. I think of the one at a major retailer a few years ago — lasted just 90 days. Lucas: Exactly. That retailer is a perfect anchor. New CEO comes in with a bold turnaround plan, announces big changes to the supply chain and store formats within the first month. By day 90, the board decides it's not working and he's out. Luna: Ninety days is barely enough to learn where the bathrooms are, let alone transform a company. What went wrong? Lucas: The biggest mistake was that he tried to impose a strategy without understanding the existing culture and operational reality. He came from a very different retail segment — think big-box, high-volume — and the company he joined was a specialty retailer where relationships with suppliers and store managers were everything. Luna: So he skipped the listening phase entirely. That's a classic error. Lucas: Right. The board hired him for his bold vision, but they didn't build in enough guardrails to check that the vision was actually landing. There's real research on this. A 2023 study by leadership advisory firm Heidrick & Struggles found that nearly 40 percent of new CEOs from outside the company regret not spending more time listening in the first 90 days. Luna: Forty percent. That's a huge number. And those are the ones who admit it. Lucas: Right, the ones who lasted. The ones who got fired likely never got the chance to regret. So let's talk about what a good first 90 days looks like, because it's not just about not making mistakes — it's about building credibility fast. Luna: What does the research say is the most important thing a new CEO should do in month one? Lucas: The single highest-leverage activity is what I call the listening tour, but with a specific structure. Most CEOs do a listening tour — they meet with the top team, maybe visit a few stores. But the effective ones do three things differently. First, they conduct skip-level meetings at every level, not just direct reports. Luna: So they talk to people two or three levels down. That's where the real operational knowledge lives. Lucas: Exactly. The second thing is they ask a standard set of questions at every meeting. Questions like: 'What's one thing you'd change if you could?' and 'What's a rule or process here that makes no sense?' They aggregate those answers to find patterns. Luna: And the third thing? Lucas: They share what they're hearing. They close the loop. After a few weeks, they send a note to everyone saying, 'Here are the top five themes I've heard from you. Here's what I'm going to do about them.' That builds trust because people feel heard, and it also signals that the CEO is transparent. Luna: That's smart. It's a form of accountability too — because if they later do something completely different, everyone will notice. Lucas: Exactly. Now, the flip side — the red flags that a new CEO is heading for trouble. Besides not listening, there are a few specific behaviors that correlate with early failure. Luna: What are the biggest ones? Lucas: One is moving too fast on organizational structure changes. Firing or reassigning senior leaders in the first 30 days. There's a reason we call it the 90-day plan, not the 30-day plan. You need time to understand who the high-performers are, who has institutional knowledge, and who might be a blocker. Luna: But some boards hire a CEO specifically to shake things up. Isn't speed sometimes necessary? Lucas: It can be, but there's a difference between speed and haste. A good board will have already done some cultural due diligence before the hire. They should have told the candidate, 'Our culture values consensus-building. If you fire three people in your first month, you'll lose the organization.' If the board didn't have that conversation, it's a board failure. Luna: So a lot of this falls back on the board. They set expectations and they should monitor progress. Lucas: Yes. And the best boards don't just wait for the CEO to report. They schedule a 90-day check-in where the CEO presents their findings and initial plan, and the board gives honest feedback. That check-in should include input from at least one or two skip-level people, not just the CEO's version. Luna: So the board should have independent channels. That's rare. Lucas: It is, but it's critical. There's a great example from a tech company — I'll keep it anonymous — where a new CEO was hired, and the board had a practice of having a board member do a 'listening session' with a random sample of employees at 60 days. That uncovered that the CEO's communication style was alienating the engineering team. The board was able to coach the CEO before it became a crisis. Luna: That's proactive governance. Most boards are reactive — they wait for the quarterly report, and by then it's too late. Lucas: Right. So let's talk about what the CEO should deliver at that 90-day mark. It's not a full strategic plan. It's an assessment of the current state, a list of the top three opportunities and top three risks, and a proposed process for developing the strategy over the next 90 days. Luna: So the first 90 days are really about diagnosis, not prescription. Lucas: Exactly. And we have data on this. A McKinsey study from 2022 looked at CEO transitions and found that companies where the new CEO spent the first 90 days on diagnosis had a 60 percent higher success rate in the first two years than those where the CEO rushed to announce a new strategy. Luna: Sixty percent. That's huge. So why do so many CEOs still rush? Lucas: Pressure. The board expects action. The stock price may be down. The CEO wants to show they're worth the pay package. But the evidence is clear: patience in the first 90 days pays off. The key is managing expectations upfront. Luna: One thing I've seen work is the 'first 100 days' document. Some CEOs write a memo to the board before they even start, outlining exactly what they plan to do in each month. That sets the bar. Lucas: That's a great practice. It's like a contract. I'd add one more element: the CEO should also define what success looks like at 90 days, and it shouldn't be financial targets. It should be things like 'I've met with all top 50 leaders individually' or 'I've visited at least 10 customer sites.' Qualitative milestones. Luna: Because if the board judges the CEO on revenue in 90 days, that's a recipe for short-termism. Lucas: Exactly. And that brings us back to the failed retailer CEO. He was likely judged on early financial results, which forced him to act fast. But the real failure was a combination of a CEO who didn't listen, a board that didn't set proper expectations, and a mismatch between the CEO's background and the company's culture. Luna: It's a cautionary tale. But it also gives us a checklist. I'm thinking: before you hire a CEO, make sure the board and the candidate agree on the first 90 days. And during those 90 days, the CEO should listen more than they talk. Lucas: That's a solid takeaway. And if you're a candidate listening, think about whether the board is willing to have that conversation. If they expect a full strategy on day one, that's a red flag. Luna: I want to circle back to something you mentioned earlier — the idea that these conversations can change how we actually work. I know we don't run ads on this show, and I've had listeners tell me that a single episode helped them renegotiate their onboarding process. That's the kind of impact that keeps us going. Lucas: It really is. And the fact that we can do this without any commercial breaks — just straight, honest conversation — that's something we're committed to. If you find value in that, and you want to support the show staying ad-free, there's a simple way. It's buy me a coffee dot com slash fexingo. No pressure, but every bit helps keep the lights on. Luna: Yeah, it's a small gesture that makes a big difference. And it means we can keep diving into topics like this one, which I think are genuinely useful. Lucas: Absolutely. So back to that checklist — let's make it concrete. If you're a board member or an incoming CEO, here are three things to get right. One: schedule a 90-day check-in with qualitative milestones. Two: the CEO does skip-level listening tours with a standard set of questions. Three: no major organizational changes in the first 30 days. Luna: That's a short list, but it covers the biggest failure modes. I'd add one more: the board should have its own independent feedback channel by day 60. Lucas: Good addition. So that's four things. Follow those, and you dramatically reduce the odds of a 90-day flameout. And if you're sitting in a boardroom right now watching your new CEO ignore these? It might be time for a conversation. Luna: Or a very short tenure. Lucas: Exactly. Thanks for listening.