When Should a Founder Relinquish the CEO Role?

Founders and CEOs pour their heart, soul and countless hours into building their companies from the ground up. The journey is usually filled with triumphs, challenges and sleepless nights. But there comes a point in every entrepreneur's journey when the question arises: Is it time to relinquish the CEO title? 

The decision to step away from the CEO role is not easy and requires honest self-reflection, preparation, and the willingness to give up a level of control. Here are some leading indicators that signal you might be getting ready for the next phase of your leadership journey.

Are You Getting Restless? 

Founder/CEOs often have a unique vision and passion that fuels their company's growth. However, as the company matures, you might find your interests are evolving or your passion has been diverted to other areas. Reflect on whether you are genuinely excited about the company's future path or if you are holding on because you can’t find a way to exit with grace.

Are You Good at Running the Company? 

Successfully steering a startup through its early stages is vastly different from managing a larger, more complex organization. If company performance is dropping and you find the day-to-day operational challenges are taking a toll on your effectiveness, it might be a sign that different skills are required to navigate the current phase of growth.

Related Article: The Skills to See You Through Times of Uncertainty

Do You Like Having Direct Reports?

A strong indicator of readiness to pass the torch is whether leading people and teams irritates you. Leading a company at scale means leading through others. The best CEOs are energized by people and teams. If you can’t find the energy and excitement to lead and empower others, most likely you are creating an environment where people are trying to appease you, which means performance is already starting to decline.

Are You Convinced You Are a Different Type of Leader? 

How interested are you in evolving your leadership skills to instill more rigor and discipline to bring your ideas to life? If your immediate reaction to this question is to emphasize how different your company is and how you are committed to a “different” type of leadership, you are probably underestimating the task ahead of you.

Are You Conflating Title With Self-Importance?

To step away from the CEO role, you must be willing to disconnect title/status from self-worth. Founding and nurturing a company is deeply personal, and it's natural to feel emotionally attached. Separating your self-worth from title is critical to helping orchestrate a successful transition. “Hanging on” to the CEO title can prevent your company from achieving the next level of growth.

Have Employees Stopped Telling You the Truth?

If employees spend more time managing your personality than running the business, it is likely the company has become an ode to you as opposed to a well-run business. There is an inverse relationship between ego and scaling your company. Starting a company takes hubris. Growing and scaling a company takes the humility to admit what you do not know.

If any of these questions ring true, it is worth considering whether it is time to start orchestrating your succession. Planning for a smooth CEO transition is a key responsibility of any CEO. The worst thing that can happen to any founder willing to give up the CEO title is to then have the next CEO fail. There are tried-and-true steps to mitigate this risk, starting with strategic dialogue between the CEO and trusted members of their board. Remember, it also takes time to find the right person. 

Raising the topic of succession does not mean you are immediately committed to act. It is simply a strategic choice that requires the diligence you would give any other big decision. Stepping away also does not mean you have failed as a CEO. Conversely, it usually indicates you have achieved a level of success that affords you the luxury of thinking about “what’s next.” Relinquishing the CEO title is an opportunity to redefine the founder role in relation to company success. A chapter might be ending, but your legacy is still being created.

Learn how you can join our contributor community.