The Critical Second Year: When CEO Leadership Faces Its Greatest Test

Reprinted with permission from Harvard Business Review after originally appearing as an online article on October 13, 2025

The first year of a CEO’s tenure is widely seen as the most challenging. New leaders face intense visibility, unfamiliar dynamics, and the pressure to move quickly. Yet our research shows that the second year of a CEO’s tenure, not the first, poses the greatest risk to CEO success.

While year one revolves around a CEO’s potential, year two demands performance. We explore how the landscape shifts between these two time periods, strategies for navigating this transition successfully, and how boards can provide essential support during this pivotal time.

The shifting landscape after year one

Our Global CEO Turnover Index found that in 2024, CEO departures in the second year occurred at almost triple the rate of first-year exits. Among chief executives who departed in 2024, 7 exited during year one, while 20 departed in year two, with an additional 60 leaving during the early months of year three. New leaders typically benefit from significant leeway during their initial twelve months. Boards and investors understand the complexity of the transition, accept that strategic clarity takes time, and allow space for team assessment. This period focuses on establishing foundations, building relationships and setting direction.

These early moves generate optimism and signal fresh thinking. However, promises must eventually yield measurable progress. Several factors converge to make year two especially challenging:

1. Leadership appointments require validation. Our CEO Transitions research shows executives make initial senior team changes within 2.8 months on average. Building the complete leadership team takes 9.2 months, with high performance emerging 11-14 months later. The second year reveals whether these C-suite decisions were the right ones. 
2. Strategy needs results. Initial strategic announcements generate enthusiasm, but year two stakeholders expect demonstrable progress toward stated goals.
3. Cultural transformation needs followership. Announcing new values and ways of working is straightforward; embedding behavioral change throughout the organization is often significantly more challenging.
4. Accountability transfers. Legacy issues can no longer be attributed to predecessors—ownership now rests entirely with the current CEO.
5. Skeptics become more assertive. Those who have doubts about the new CEO’s decisions often wait before voicing concerns. Their opposition often becomes louder during year two.
6. Intensity may diminish. Following an exhausting inaugural period, leaders sometimes unconsciously slow their pace—precisely when stakeholder attention intensifies.

While our data highlights year two as statistically the most precarious, the core challenge transcends specific timeframes. The fundamental shift from planning to execution—regardless of when it happens—marks the true inflection point.

Strategies for second-year success

Fortunately, there are some steps CEOs can take to manage this transition and ensure their second year gets off to a strong start.

1. Realign with your board. The most crucial action as year one concludes involves actively resetting board expectations. Rather than assuming continued alignment, CEOs must proactively review their initial year's focus areas, explain the reasoning behind key choices, and establish clear metrics for evaluating progress. This direct discussion avoids misaligned expectations and promotes collaboration.
2. Establish your narrative. Without clear communication from leadership, stakeholders create their own narratives—often wrong or incomplete. CEOs must consistently communicate progress markers and emerging capabilities. The second-year message should show ongoing progress and maintain confidence in strategic choices.
3. Strengthen C-suite cohesion. Beyond having capable individuals in key roles, year two success requires the senior team to operate as one unified leadership body. This means working cross-functionally to debate enterprise priorities, make collective commitments, and share accountability for outcomes. High-performing executive teams think and act with the entire enterprise ecosystem front-of-mind, not their function.
4. Maintain urgency. The urge to slow down after a demanding first year must be resisted. Year two requires continued, visible commitment and urgency, though perhaps with more sustainable rhythms. The organization needs clear signals that momentum is continuing to build rather than plateauing. 
5. Expand your network. Every CEO evolves significantly during their first year. The start of your second year marks an ideal time to deliberately expand trusted advisor networks—individuals who provide unfiltered feedback, challenge assumptions, and offer an experienced perspective. As responsibilities deepen, so must support structures.

How boards can support CEOs in their second year

A CEO’s second-year challenges affect entire organizations, making board engagement critical. Directors can help improve results through several key actions:

1. Anticipate a reset. Boards should welcome and expect comprehensive year-one reviews from their CEOs. Create space for executives to share lessons learned, explain their strategic decisions, and share success metrics for the coming year.
2. Look for early indicators of progress. While definitive results may still be developing, boards can assess progress through the CEO’s choices in C-suite appointments, early indicators of cultural change, and operational improvements.
3. Ensure your guidance is consistent. CEOs face multiple, often conflicting pressures from various stakeholders. Board feedback must remain coherent and consistent across directors. Mixed messages hurt CEO performance.
4. Combine rigor with empathy. Accountability matters, but so does recognizing the unique isolation CEOs experience. Regular chair-CEO dialogue—balancing accountability with genuine support—can prove invaluable during this challenging period.

From survival to sustained performance

A CEO's second year is a critical turning point. Initial promises meet reality, stakeholder patience wanes, and room for error shrinks. Yet this same period determines whether leaders just hold the position, or genuinely master it. Executives who approach year-end deliberately—recalibrating expectations, strengthening teams, and maintaining momentum—turn risk into lasting advantage.

Author

Ty Wiggins is the global lead of Russell Reynolds Associates’ CEO and Executive Transition practice and the author of The New CEO: Lessons From CEOs on How to Start Well and Perform Quickly (Minus the Common Mistakes). He is based in New York.