CEOs are perhaps never more vulnerable than when they first enter the role.  New research from Rice University suggests a couple of factors that play a key part in this vulnerability.

The first of these is when the stock market reacts badly to the appointment, while the second is if the previous CEO remains at the company as the chair of the board.  The researchers believe, however, that both of these can be overcome if the new CEO engages in what the researchers refer to as ‘social influence behaviors’.

The team assessed the transcripts of calls the CEOs had with securities analysts, and a clear trend emerged.  When CEOs ingratiated themselves with their predecessors, it significantly reduced the negative impact of that former boss remaining at the company as the board chair.

Similarly, if the CEO engaged in a degree of self-promotion, they were found to mitigate the impact of a poor reaction from the stock market.

No silver bullet

Despite this apparent success however, the strategies were not without risk, and should certainly not be regarded as a sure fire way of delivering results.

“A new CEO’s commitment to strategic continuity—as originated by the predecessor CEO—can amplify the adverse impact of the initial negative stock market reaction,” the authors say. “Moreover, a new CEO’s self-centered expression may turn off the retained predecessor CEO, thus amplifying the adverse impact of the predecessor’s staying on as board chair on the new CEO’s early survival prospect.”

The results emerged from an analysis of 440 successions that had taken place across the S&P 500 between 2001 and 2012, and it revealed the importance of the CEOs language in public matching their language in private.

“Public language is endemic to public corporations,” they explain. “It is very difficult for a leader to communicate privately with one group while making contrasting statements publicly.”

Social influence

The theory of social influence suggests that the way we convey information can have a big impact on our ability to not only manage relationships with others, but also influence their thinking and attitudes.

“Ingratiation and self-promotion are two important social influence tactics,” the researchers explain. “Ingratiation focuses on a target individual with the aim of evoking interpersonal attraction by complimenting that individual or agreeing with that individual. Self-promotion focuses on highlighting one’s own experiences and accomplishments in order to generate a perception of competence. Both ingratiation and self-promotion can improve outcomes such as hiring recommendations, promotion and performance appraisal ratings.”

Both of these strategies raise the chances of the new leaders approval by the shareholders and the board, but they rely on a very different approach.  Self promotion is a strong way to boost the perception of competence about a leader, whereas ingratiation is more about likability and similarity.

“In brief, while new CEOs’ social influence behaviors may alleviate the adverse impact of targeted audiences, such behaviors may amplify the adverse impact of non-targeted audiences on their early survival prospects,” the researchers conclude.