Issue link: http://www.e-digitaleditions.com/i/269179
65 BizEd March/April 2014 sh i ronosov/Th i n ksTock Monika Hamori Burak Koyuncu WHen coMpanies Hire new leaders, they most often place their bets on CEOs with plenty of previous experi- ence. But according to a new study, a com- pany might see better outcomes if it takes a risk and hires someone with little to no prior experience. Burak Koyuncu of NEOMA Business School in France and Monica Hamori of IE Business School in Spain looked at data on CEOs who had been at the helm of S&P 500 corporations since 2005, tracking their performance for up to three years. They found that the average return on assets for those who had transitioned from one CEO position to another was 48 percent lower than for those who had no prior experience or who worked in different positions between CEO jobs. In many cases, CEOs need more time to "unlearn" the approaches they used in their old positions. They often try to apply old solutions to new problems, says Koyuncu, "because they have developed fixed assumptions about how tasks should be done." The CEO Experience Trap These findings don't mean that companies always should hire inexperienced CEOs. But the authors rec- ommend that when companies hire individuals straight from other CEO positions, they place them in interim positions for a year or more to learn the nuances of their new companies before taking the helm. "The greater the opportunity for acculturation, the greater the chance the company can avoid falling into the CEO experience trap," said Koyuncu. "Experience Matters? The Impact of Prior CEO Experience on Firm Performance" is forthcoming in Human Resource Management. At Seattle University's Albers School of Business and Economics, we develop exceptional business leaders who work with honesty and integrity in their careers and in serving their communities. Nationally ranked by: • BusinessWeek (#1 in Macroeconomics) • U.S. News & World Report • The Princeton Review • Beyond Grey Pinstripes www.seattleu.edu/albers The best way to get ahead? Put Others First