It stands to reason that when companies hire a new CEO, they hope for a new direction for the company. Alas, new research from Cambridge University’s Judge Business School suggests that things might not be quite so straightforward.
The study suggests that new leaders can often bring their culture and habits from their old job with them, and this can hinder any attempts to change their new workplace for the better, as they simple transplant their old ways of working into their new workplace.
“Leaders’ past cultural experiences colour what they ‘see’ as effective solutions for their groups,” the authors say. “Their past cultural solutions often blindside leaders when solving new problems in a new environment in which different performance standards and contingencies make the old solutions obsolete.”
Old habits
The research revolved around the view that while we often strive to adapt our culture to the changing circumstances we find ourselves in, it can be nonetheless tempting to fall back on our past experiences rather than focus on the current conditions we face.
“Leaders may create group cultures based on a limited search for cultural solutions that they have acquired in the past,” the authors explain. “Therefore, the cultures enacted by new leaders resemble the cultures in the groups in which they obtained their past cultural experience – essentially, transferring the cultural traits from the former groups to the current groups.”
The findings suggest that while new CEOs do nearly always bring fresh insights and perspectives with them, they may not be quite as beneficial as the hiring company would like them to be. Indeed, given that the previous company almost certainly had very different problems, issues and resources than the new company, such habits may be wholly detrimental to the success of the new CEO.
“What worked for a CEO at his or her previous company might be a liability in the circumstances of the new company, so cultural transfer can be a big problem unless monitored and if necessary, resisted by the new firm’s board of directors,” the researchers explain.
Leaders were especially likely to bring cultural baggage with them when they worked in a ‘culturally tight’ environment. This refers to the intensity of shared perceptions, which lead to strictly enforced norms and rules. Such environments tend to enforce control and conformity.
It’s well known that many external hires are done in the hope that they will indeed bring fresh insights to the role. Such appointments are typically made because the hiring firm are going through difficult times and hope a novel approach will yield dividends. The research provides a timely reminder that this expectation may not be that realistic.
