By Rashmi Dubé

Published 8th Nov 2023, 05:45 BST

The business is effectively their child, but as any parent knows, as that child grows you have to learn to let go of the reins. The question is how long does a founder CEO remain? What is their ideal expiration date before it gets too late and the culture, brand and business suffer?

The first point of consideration has to be the succession – what does it look like?

Often there is a conflict between the greater good of the organisation and relinquishing control and placing their legacy in the hands of others.

There is a difference between those appointed as CEOs and those who are founder CEOs in that it may take them 10 to 15 years to build the business to a certain inertia point, but unless they are thinking about the succession plan, the business will start to feel the impact.

This is usually because everything is coming from a very personal perspective, and confrontation of differing ideas of what is best for the business can sometimes be taken very personally, when in fact the position is always the greater good and not an attack upon the individual.

This could be in part because according to a law enforcement officer, the ideal CEO is a corporate psychopath. His definition in Forbes states: “He is a charismatic leader who inspires people to follow him. A strategic thinker who can master the details. A tireless worker with incredible focus and problem-solving skills. He is well-liked by his employees but is also able to make and execute unpopular decisions. Above all, he is an exceptional communicator who can convey a vision to any audience, from Wall Street to the most junior employee.”

The problem occurs when they don’t see that the CEO ends up hurting the brand, goodwill and people within the business, sometimes by the way they approach matters and by staying too long in the business at the seat.

Some of the reasons for keeping the founder CEO in place according to data during an IPO includes the approach they have with venture capitalists which in the early stages can be of benefit. The problem is on average, post-IPO performance is lower for businesses with founder-CEOs.

But founder CEOs have a lot of value to still add to the business in both scenarios where the business has taken the IPO or decides against it. The research from HBSC shows that CEOs after six years from development of the business ought to start moving into non-CEO positions.

The CEO needs to be challenged on their thinking and their beliefs, simply because you “can’t solve problems using the same kind of thinking we used when we created them.”

So, what is the solution where the CEO has outstayed their welcome?

There are two issues fundamentally. One is where the CEO no matter what has dug their heels in and will still be at the helm for a period of time.

During those times it is critical that a) they plan their succession and b) the executive board rotates on a yearly or bi-yearly basis per member. This has shown far better performance for companies overall - the new group always find it easier to make changes where needed.

In the meantime, the advice to current founder CEOs serving longer than 10 years is this - for the greater good please arrange your exit within the next five years.

It would be in everyone’s best interests, including your own.

Rashmi Dubé is a partner at gunnercooke

Founder CEOs shouldn't overstay their welcome - even when they love their business: Rashmi Dubé