Fri, April 19, 2024

Passing the baton to a professional CEO

A few weeks ago, I suggested a few succession planning options that senior business owners could consider as they are approaching their retirement age. One of those options was having a professional manager or CEO run your business. Giving your throne and position to a professional CEO could be challenging, especially for business owners who have founded their firm since its inception and have a deep emotional attachment with their business.

Dinesh Hasija, Ph.D.

My own research suggests that businesses run by founder CEOs tend to perform better than professional CEOs. These findings can increase anxiety for business owners exploring the option of handing their business to a professional CEO. However, the performance difference is minuscule, and the same study also found that professional CEOs, on the other hand, tend to perform better than founder CEOs when the businesses are operating in environments that require stringent oversight.

It is important for business owners to understand the mindset of professional managers, so they can understand how their companies will run under a different leadership style.


Most business owners tend to have a unique entrepreneurial mindset and like to pursue innovative and risk-taking activities. On the other hand, most professional CEOs tend to have managerial mindsets shaped by their extensive educational and professional trainings. Most business owners like to make their own decisions. However, professional CEOs tend to use sequential, analytical, and consultative decision-making styles. Such a mindset can allow them to streamline the complex responsibilities and demands of your growing businesses.

So, yes, passing the baton to a professional CEO will be a hard decision to make, but it can also be a fruitful decision. You could consider the following steps for your succession planning:

Step 1: Begin by making a checklist of qualities that would require a potential professional CEO to be successful in your business.

Step 2: Use that list to search for a professional CEO inside or outside of your organization that possesses most of those qualities.

Step 3: Make relation-specific investments and begin the grooming process with your potential new CEO. And when the time comes, promote him or her to the CEO position.

Step 4: Ensure your company has several governing mechanisms that could keep a check on the new CEO’s performance and provide advice and counsel to them when needed.

By planning your succession early, you can enjoy fishing later instead of worrying whether your customers and employees are in the right hands.

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