CEOs begin to lose faith in leadership in just 6 months

• A study found that many CEOs don’t have a lot of faith in their management team.
• New CEOs start questioning senior teams after only 6 months.
• Only 29% of CEOS felt their team was effective after 6 years.

In the eyes of most CEOs, next-generation leadership is lacking.

Only one in three CEOs said their organization’s frontline leadership was very good or excellent, and leaders at the top question whether their frontline and midlevel leaders will succeed, according to a new report.

DDI, a leadership consulting firm, released its CEO leadership report for 2021 that highlighted the unease people at the top of many companies feel about their lower-level management. It wasn’t just seasoned CEOs saying this, either — newly minted CEOs said they quickly begin to lose confidence in the effectiveness of other leaders in their companies, a spiraling trend that only gets worse over the years.

“These ratings suggest CEOs struggle to understand their leaders’ capabilities,” Stephanie Neal, director of DDI’s Center for Analytics and Behavioral Research, said. “Whether lower-level leaders really are struggling or not, CEO ratings suggest organizations really need to prioritize development for this critical first step into leadership.”

The honeymoon phase ends quickly

It only takes six months for new CEOs to begin questioning whether senior teams are effective, according to the report.

One of the hardest parts of the CEO’s role is to understand who they can count on. But in the first six months in their role, only 41% of CEOs rated their senior teams as effective, and as time goes on, even those CEOs  begin to lose patience. By the sixth year of their term, only 29% of CEOs said they felt they had an effective team.

Why does this happen? CEOs who were hired externally have to get to know their teams and begin evaluating performances, which could mean they want their own hires underneath them. Meanwhile, CEOs who were internally promoted face different challenges, like navigating previous relationships and figuring out whether former allies can help them in their new role.

“New CEOs start off in learning mode, dependent on the knowledge and expertise of the other C-suite executives,” said Matt Paese, senior vice president of DDI’s executive services. “It takes CEOs a bit of time to fully assess their teams, and we see confidence drop as they gain a deeper understanding of the accountabilities and performance of their top players.”

C-suite leaders need to look at themselves, too

CEOs set the tone for their company. So when leadership lacks confidence, so too does the rest of the company, from midlevel leadership to entry-level employees.

Three key basic leadership skills — empathy, inclusivity, and communication — were all lacking in C-level executives, according to the study. Only 53% of CEOs said they were effective at demonstrating empathy. And while a large chunk (61%) said they were effective communicators, only 48% of C-level executives said they were effective at inclusivity.

Although these skills seem like fundamentals of leadership, the study warned that all three of these leadership skills can greatly benefit an organization — and it starts with training. C-suite execs who received training on core leadership skills were in the top 5% of financial performers compared to those who didn’t receive training.

“C-suite and senior-level executives are facing one of the most challenging environments when it comes to conducting business, as well as attracting and retaining top-level talent,” Neal said. “If organizations and their leaders hope to thrive in a constantly changing world, C-suite and senior executives need to align their priorities and find ways to become more confident in the quality of their talent. In many cases, they may need to take a back-to-basics approach and focus on assessing and developing essential leadership skills that are reinforced by high-quality coaching and mentoring opportunities.”

The research featured responses from more than 350 CEOs and 2,000 human resource professionals across more than 40 countries at 1,700 companies averaging 28,000 employees.