Leave role of CEO

CEO Transition: How to Know It’s Time to Leave Your Role

by Mar 2, 2021Delegation, Growth, Leadership

Even as a CEO, in certain situations you should consider if there’s a better job out there for you.

There comes a time in every CEO’s career when they need to exit their position.

Yes, there are plenty of examples of CEOs who keep the post for 30 years or more. But the average tenure for a chief executive is just five years, according to PWC, and there’s a reason for that. At some point, every CEO faces the question of whether it’s finally time to take the off-ramp and leave the company.

But how do you decide when it’s time? There are three key topics you can consider to help determine the answer.

1. You’re out of ideas

All of us can relate to the experience of starting a new job and being filled with energy and new ideas. The possibilities of what you can do can seem endless, and the exciting ideas can flow like water. Your organization might even struggle to keep up with all of them, especially during the first 12 to 18 months you take the job.

But that flow of ideas tends to shift over time. After that initial phase of ideation, you might shift into an implementation phase where you begin to reap the benefits of putting your ideas into place. The final phase, typically five years in, is where the change and growth resulting from your ideas begin to flatten out. That helps explain why the average tenure of a CEO caps at that time frame. The excitement of those early days is gone, and you just don’t have as many new ideas for change as you used to.
If you find that’s the case with you, and that you have already deployed all of your best ideas, then it might be time to leave and let someone else come in with their ideas of how to bring the organization’s growth to another level. While some have endless innovation and ideas, most of us run through our bag of tricks and need a new environment to be maximally effective. You have done what you came there for, and it might be time to let someone else have a go.

2. You’re low on energy

We all have energy when we start a new job. There’s so much to learn and so many people to meet. It’s exciting and energizing, especially if it connects to your passion and it’s a place you want to be. You can’t wait to wake up each and every morning and get back to work.

On the flip side, we have all worked in a job we hate. One where the clock can’t tick fast enough before the day is over, and you can go home and do something you actually enjoy. The catch is that if you feel that way about your job and you’re the CEO, everyone in the organization knows it. It becomes a kind of negativity that infects everyone. That’s why it’s important to check your own energy level and see how you feel about your job.

To be fair, everyone can have a bad day. But if you find your energy level lacking for a week, a month, or longer, then it might be time to ask if the job is a fit for you anymore. After all, life is too short to waste on doing something you hate.

3. You’re not being paid enough for your work

I recognize that very few people, especially CEOs, think about money as their first priority when it comes to doing their job. Very few of us are driven by greed, and most of us have much higher goals and ambitions.

That said, if you are not being fairly rewarded for all the blood, sweat, and tears you are investing in your job, it can be difficult to stay with it. For example, I’m working with a company that is currently trying to grow. The catch is that their original debt holders are pushing an arrangement in which they will not only recoup all of their money, plus interest but also 80 percent of whatever gain in the company’s value has been created by the management team if they sell the business.

You can imagine how demotivating that is to the current leadership team. They have been working hard to grow the value of the business, but the investors are the ones who will reap most of the rewards from that work. That’s why I won’t be surprised if the CEO and other leaders choose to move on to another job where they can be more fairly compensated for their work.

So, if you ever find yourself wondering if it might be time to move on from your current CEO role, or if you’re a board member evaluating the current leadership of a company, consider these three factors: Is the leader still generating new ideas, adding energy to the organization, and fairly compensated? If you find yourself answering no to one or more of these factors, it might be time to make a clean break and start anew. In fact, it might be the best move for everyone involved.