New CEOs Can Raise Their Social Game to Keep Their Jobs
October 10, 2019 | Rice UniversityEstimated reading time: 2 minutes
A new study shows that two key factors can make freshly appointed CEOs more vulnerable and raise the odds they’ll get fired.
The job security of a new CEO tends to suffer when the stock market reacts badly or when the previous CEO stays on as board chair, according to the study by Rice University and Peking University management experts. But the study found that the new CEO can overcome these challenges with what researchers call “social influence behaviors.”
The study’s authors used computer programs to analyze transcripts of new CEOs’ conference calls with securities analysts. They found that CEOs who ingratiated themselves with their predecessors reduced the adverse impact of the old boss remaining as board chair. At the same time, the study concluded CEOs who engaged in self-promotion mitigated the negative impact of poor stock market reactions.
But the authors also found evidence that new CEOs’ social influence behaviors can backfire. “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 said. “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 study will be published in the Academy of Management Journal.
Yan “Anthea” Zhang, professor and the Fayez Sarofim Vanguard Chair of Strategic Management at Rice’s Jones Graduate School of Business, along with co-authors Xiwei Yi of Peking University’s Guanghua School of Management and Duane Windsor, the Lynette S. Autrey Professor of Management at Rice Business, focused their study on a sample of 440 successions that consisted of newly appointed CEOs in S&P 500 companies who took office between 2001 and 2012.
The language used by new CEOs in conference calls is public language, the authors said. “Public language is endemic to public corporations,” the authors wrote. “It is very difficult for a leader to communicate privately with one group while making contrasting statements publicly.”
“Taking charge is challenging for new CEOs,” they wrote. “Predecessor CEOs remaining as board chairs undermines the authority and discretion of the new CEOs. Negative stock market reactions reflect shareholders’ doubt about the new CEOs’ job fit.”
Social influence theory suggests that people can convey information in such a way as to manage relationships and influence the attitudes of others, the authors said.
“Ingratiation and self-promotion are two important social influence tactics,” the authors wrote. “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 types of behaviors aim to improve a new CEO’s approval by the board of directors and shareholders, but they rely on different mechanisms, the authors said. Ingratiation increases perceptions of similarity and likability, while self-promotion elicits the attribution of competence.
“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 authors wrote.
Suggested Items
Flex Announces Upcoming Changes to Its Board of Directors
05/07/2024 | FlexFlex announced that consistent with its succession plan, Michael D. Capellas, non-executive Chair of the Board of Directors of Flex, has informed the Board of his decision not to stand for re-election to the Board at the company's 2024 Annual General Meeting of shareholders to be held on August 8, 2024. Mr. Capellas has served on the company's board for 10 years, including as Chair since 2017, during which time he played a key role in building Flex's reputation as a trusted global technology, supply chain and manufacturing solutions partner and driving the company's success.
Happy’s Tech Talk #28: The Power Mesh Architecture for PCBs
05/07/2024 | Happy Holden -- Column: Happy’s Tech TalkA significant decrease in HDI substrate production cost can be achieved by reducing the number of substrate layers from conventional through-hole multilayers and microvia multilayers of eight, 10, 12 (and more), down to four. Besides reducing direct processing steps, yield will increase as defect producing operations are eliminated.
Real Time with…. IPC APEX EXPO 2024: Innovation and Collaboration at EPTAC
05/06/2024 | Real Time with...IPC APEX EXPOGuest Editor Kelly Dack and EPTAC Vice President Leo Lambert discuss the partnership between EPTAC and Blackfox, their program alignment, and future expansion plans. Leo introduces Burak Gokmen as the new "leader of the pack." The focus then shifts to Nano Dimensions' 3D printed circuit boards, emphasizing the need for proper documentation and training.
New Yorker, Major League Electronics Sign New Franchised Distribution Agreement
05/06/2024 | New Yorker Electronics Co.New Yorker Electronics, global distributor of electronic components, recently announced a new franchised distribution agreement with Major League Electronics, renowned manufacturer of interconnect products.
OSI Systems President and CEO Deepak Chopra to Retire by Calendar Year-End, Will Remain as Executive Chairman
05/06/2024 | OSI SystemsOSI Systems, Inc. announced today that Chairman and Chief Executive Officer Deepak Chopra has informed the Company’s Board of Directors of his plans to retire from his roles as President and Chief Executive Officer by the end of the current calendar year, after the appointment of a successor.