Interim CEOs should be the last option for a company and usually indicate poor succession planning, Jeffrey Sonnenfeld, PhD, professor at New Haven, Conn.-based Yale School of Management, wrote in a Yale Insights article.
Interim CEO appointments are associated with poor management as well as continued poor performance, Dr. Sonnenfeld wrote, citing research from the Strategic Management Journal. Some of the performance issues can be ascribed to the limited authority of interim CEOs, who, cautious to make too many changes in a temporary position, assume a non-risk-taking leadership style, resulting in strategic paralysis. This keeps the organization at a standstill. Customers and stakeholders may also lose trust in the organization, as they know that the interim CEO may not be able to deliver on commitments.
This kind of leadership then encourages employees to revert to cautious performance too, unsure of how the temporary leader will react to bold, risky decisions. The interim appointment can also quickly turn political, as disruptions in internal leadership create tension.
Dr. Sonnenfeld argued that systematic leadership failures cause organizations to get to the position of appointing an interim.
"Boards can't perpetually kick the can down the road. Companies need courageous leaders, not custodians," he concluded.