Boomerang or Bust: Can Returning CEOs Save a Company in Crisis?

By James E. Lukaszewski

Many companies have brought back retired CEOs to jumpstart the next wave of success. But success the second time around is rare.

Bringing former successful CEOs out of retirement is the latest succession success trend for corporate boards. This decision includes a handful of significant business relationship challenges, and most fail. There are increasing number of elegant studies to explain these failures, all of which seem to miss the two most important ingredients that can predict success. The leadership changes, the management team changes, but the way employees get their information stays the same. Achieving success requires a reentry plan that focuses on managing the fears employees and stakeholders have about change through extensive and purposeful communication.

At one of his retirement news conferences, a reporter asked Jack Welch a simple question. “After 40 years running the largest and richest corporation in America, what was the worst part of the job?” Welch smiled and answered without hesitation: “being the last to know.”

That line has stayed with me through decades of advising chief executives and their trusted advisors, because it names the exact condition every “Boomerang CEO”–a previous CEO who returns to the role–walks straight back into. Boards love comeback stories. The boardroom logic is always the same, if this person built a company or fixed it once before, surely they can do it again.

Most of the time, they fail. The reasons why are ones I have watched play out at close range across four decades of advising chief executives through exactly this kind of moment.

European boards have generally been wary of the boomerang instinct unlike their American counterparts, more inclined to promote from within than to summon a familiar face back through the door. That caution is well founded. But when a board does decide the comeback is worth the risk, they need to realize, authorize, and insist on extensive communication so the returning CEO can lead the restoration of trust and confidence in themselves.

We start by understanding the hierarchy of boomerang CEO experiences, in order of success:

• The most successful is the non-boomerang, new CEO from inside or outside the organization who almost always outperforms any boomerang CEO;
• Next, the boomerang who left the organization for some time, but was actively engaged in managing other companies or management work in the interim;
• Then there’s the native or outside boomerang who simply retired after their last gig and returned; and
• Finally, there’s the founder boomerang, who is generally the worst performer of all.

What returning CEOs must do to be successful remains the same. Despite meticulous operational failure studies and analysis, even competent speculation, two powerful reasons for failure are always at play: non-communication, the boomerang CEO never really sharing the information needed to succeed; and change management, failing to use communication to overcome the fear and trust loss that afflicts and distracts everyone when there are changes at the top.

This is the environment the returning or new CEO is entering, maybe frustrated by, and failing because of it. The returning CEO who comes in at altitude and digs right in as though they never left, fails to adequately anticipate, announce, explain, or explore the changes they will cause and the fear that permeates the entire organization.

Unlike the fresh, recently selected new CEO, the Boomerang CEO only has a limited time to communicate.

The successful returning executive only spends 5% of their time most days making decisions. The rest of their days are usually––and necessarily spent––explaining, coaching, and monitoring the progress of their decisions. Senior leadership, as well as line managers and supervisors, should spend a significant amount of their time doing the same. Existing management in many cultures say less and depend on others to carry explanations and new messages. At first, and for many months going forward, the reality is that only the returning CEO knows what they want to accomplish and how it’s going to be done. They must lead communications at every level in the organization until everybody gets it.

Here’s how employees value the information they get to help or direct their work: 5% from the CEO, 6% from upper management, 7% from middle management, 8% from district management, 30% from their first-line supervisor, 24% from the person next to them, and 20% they make up.

The communication success lessons are:

1. Focus on the future. Sensible but aggressive, patient, and continuous communication restores trust and reduces the fear caused by the change that accompanies all top-level shifts.
2. Management and leadership that is about teaching, reminding, re-emphasizing, inspiring, repeating, and re-explaining to get it right will likely succeed. Starting big new shiny decisions or initiatives without the above will likely fail. Avoid deciding to do the shiny new stuff right away. Get out of headquarters and spend time in branch operations and collaborating organizations, and with others who need to know what’s happening and what will happen.
3. Look, think, and talk about what’s ahead. Mindless change, new ideas, looking backward, or picking apart old problems are disruptive, distracting, interruptive, time wasting, and costly with little, if any, return.
4. The resolution of problems usually has solution elements from existing successful efforts.
5. Silver bullets are very rare. And they’re still bullets. 

What the CEO’s Team Can Do to Assist in Executing the Success Strategy

This is the piece boards and returning CEOs consistently underestimate: the leader’s fate is decided as much by the quality of counsel around them as by their own instincts. Throughout my career I have made the case that a leader’s real advantage is having their own trusted strategic advisors in the room when the hard decisions get made, people with the standing and the nerve to bring uncomfortable facts to a boss along with options for action.

The company needs to rebuild the room around the returning CEO. The advisors, communications leaders, and senior staff who surround a returning chief executive carry an outsized responsibility: to say, early and plainly, what the board and the market are already quietly thinking, before it becomes a headline or a resignation letter.

Jack Welch had forty years to learn that being the last to know was the worst part of the job. A boomerang CEO only gets a matter of months. A CEO needs to build a team of trusted strategic advisors who will provide early information and warning, so the CEO never has to find out the hard way.

About the Author

James E. Lukaszewski is known as America’s Crisis Guru^®, CEO of The Lukaszewski Group and a best-selling author. His latest book, Influencing Leaders: The Seven Disciplines of the Trusted Strategic Advisor with Helio Fred Garcia, is available now.