For CEOs, retirement is the ultimate performance review—and 60% are failing it
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Good morning. Phil Wahba writing from New York. Earlier this month, I wrote about how more companies, among them Verizon, Boeing and Cracker Barrel, have been hiring CEOs out of retirement, often in times of crisis. But why do these CEOs, who are presumably wealthy enough to never work again, accept a grueling new assignment in their sixth or seventh decades? A new study suggests an answer: They simply weren’t prepared for retirement.
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New data published by Boston Consulting Group (BCG) in early August found that only 40% felt satisfied with their transition from hard-charging CEO to retiree in the first year after making the move. It seems that many CEOs, like millions of other Americans, underestimate the emotional upheaval that comes from suddenly having a lighter schedule, no longer having a role central to their identity, or no longer having the structure that a job gives them.
“Is the decision to get a new CEO job really motivated by value creation where you know a unique skill that you bring that only you can do, or is it … really more fear or vanity?” asks Christine Barton, leader of BCG’s North America CEO Advisory practice.
It can be especially difficult for CEOs who are still relatively young, in their 50s and 60s, who want to stay in the mix. Mary Dillon, former CEO of Ulta Beauty, told me three years ago that when she came out of retirement after a highly successful stint at Ulta to lead Foot Locker in her early 60s, that “I didn’t realize how much I would miss having one big thing to focus on and how much I would miss leading a retail company.”
Here is something companies can help with: Helping CEOs prepare to leave. Having an executive coach is pretty standard now, but Barton says there is a growing niche within the CEO coaching world specifically tailored to helping executives prepare for active retirement and build their legacy.
The survey of former CEOs of companies with at least $1 billion in revenue found that 3 to 4 meaningful activities, such as serving on a board, being an advisor, or teaching, were the sweet spot where one can both still feel needed and useful but not overprogrammed.
Again, self-awareness is key. “The portfolio career can be incredibly exciting, but it has to be intentional, and you have to do real self-reflection on whether or not you’re at that stage,” says Barton.
The BCG report found that after one year, 90% of CEOs were happy with how things went down with their retirement. But Barton says there’s one sure fix for having to lure a CEO back from retirement: Focus on building a robust internal pipeline now, long before your leader is ready to leave.
Contact CEO Daily via Diane Brady at [email protected]
This story was originally featured on Fortune.com