by Mark HuYoung
I’ve sat through quite a few first board meetings, and almost everyone always has lovely manners.
The investment thesis is fresh. The CEO is energized. The sponsor is supportive, and someone brought good coffee. Everyone agrees the business has enormous potential, which is easy to agree on when nobody’s had to deliver it yet.
Fast forward two years, and the tone shifts a bit…
Why is organic growth behind plan? Did we actually integrate those acquisitions, or did we just buy them? Is the sales team improving, or has it simply gotten more eloquent about its challenges? We spent real money on new systems and AI tools, so why are we still waiting a week for a forecast? And why does every meaningful decision still land on the CEO’s desk?
The honeymoon’s over. Not the marriage, necessarily. Just the part where enthusiasm earns partial credit.
Why Two Years Matters
I want to be careful here. CEOs don’t come with a twenty four month warranty, and I’ve never seen a board calendar with “Replace CEO” penciled in on the second anniversary. At least not one anyone admitted to.
Still, the timing isn’t random. In our work at NorthWind, year two is when the phone rings most often. Sometimes it’s a sponsor asking us to “take a quiet look at the market.” Sometimes it’s the CEO, calling to ask what we’re hearing. Both calls usually mean the same thing: something’s shifted, and nobody’s said it out loud yet.
And it’s not just our experience. The research shows the same pattern. CEO turnover in PE backed companies tends to cluster around year two, and unplanned changes have a way of stretching the hold period. So, this isn’t just an awkward people conversation. It’s a returns conversation wearing a people costume.
By year two, there’s been enough time to make real decisions, build a team, and find out whether the strategy survives contact with actual customers. There’s also been enough time for the job itself to change.
The Job You Took Isn’t Always the Job You Have
I once watched a CEO join a founder-led company with a clear mandate: professionalize the place. Put in real finance, real reporting, real HR. Eighteen months later, the company had closed three add ons, and the job had quietly become “integrate three businesses, rebuild the commercial team, and keep the founder from reorganizing everyone on Fridays.” Nobody rewrote the mandate. They just started grading against a different one.
Another executive we placed came in to lead growth and walked straight into customer concentration, a tariff surprise, and a lender who’d developed a sudden interest in covenants. Meanwhile, two competitors had started quoting jobs in hours instead of days because they’d automated the estimating work. Same title. Very different job.
And sometimes the job didn’t change at all. It just wasn’t described accurately in the first place. More on that shortly.
None of that’s an excuse. Noticing the shift and adjusting to it is the job. But it does mean the CEO and the board share some responsibility. The CEO has to adapt, and the board has to stop measuring the executive against last year’s plan while privately expecting next year’s company.
If you hire someone to build a house and quietly start expecting an airport, it might be worth mentioning.
Five Questions I’d Actually Ask
I wouldn’t build the two year review around fifty competencies or a personality report heavy enough to check as baggage. I’d ask five questions and listen carefully to the answers.
1. What changed, and what are you doing about it?
I want to hear the CEO describe the business as it is today, not as it appeared in the deck. What did we get right? What turned out to be wrong? Where did customers surprise us, and where did competitors?
Then comes the important part: what are we doing differently?
One of the best answers I’ve heard went something like this: “We underestimated how much integration would distract the sales team. So, we cut our priorities from nine to four, put a dedicated leader on integration, and started tracking retention monthly instead of quarterly. We also moved the customer service team onto a shared AI assistant, and it’s freed up enough time that two people now work full time on at-risk accounts.”
That took about forty seconds, and it told me more than an hour of “the environment remains challenging.”
I don’t need a CEO to predict the future. Nobody can, and the ones who claim to are usually selling something. But I do need to see that new information changes decisions. Conviction is wonderful right up until it becomes loyalty to an old spreadsheet.
2. Is the team getting stronger, or just busier?
Here’s a call we get more often than you’d think. A board says, “Our CEO is stretched thin. We need a strong COO.”
Maybe. But before we write that job description, I want to know why the CEO’s stretched. Is there truly a capability gap? Are roles muddy? Does the CEO struggle to let go? Or has the team simply learned that every decision eventually goes back to the corner office, so why bother?
Sometimes a new COO fixes everything. Sometimes we recruit a very expensive spectator who spends a year politely watching the CEO do the job.
By year two, a CEO should have a clear view of the team. Who can take on more? Where do we need different talent? Which gaps can be developed, and which need a change? And what can this team decide without the CEO in the room?
I’d also want to know whether the roles themselves still make sense. A lot of work that used to need a person now needs a person and a good set of tools, and the leaders who’ve figured that out tend to run leaner teams that are a lot less tired. The ones who haven’t usually come to us asking for more headcount.
Being indispensable isn’t the flex people think it is. It can mean you’re committed. It can also mean nobody else has been allowed to be useful.
3. Is any of this showing up in the numbers?
Busy companies are easy to find. Better companies take more evidence.
Depending on the thesis, I want to see progress in revenue quality, retention, margin, cash, forecast accuracy, or the ability to absorb an acquisition without the sales team losing its footing.
Technology sits right in the middle of that, AI included, because that’s how most of those improvements get made now. But I’m not interested in how many tools the company bought or how passionately the CEO can talk about them at dinner. I want to know what changed. Maybe the finance team stopped spending three days building a monthly report and started spending that time on customer profitability. Maybe pricing decisions are getting made with better information. Maybe onboarding got faster, and nobody had to loosen the controls to get there.
Saving time is nice. Doing something valuable with the time you saved is the actual point. The CEO doesn’t need to build any of it, but they do need to know what it’s supposed to accomplish, who owns the result, and whether it’s working.
A slick vendor demo isn’t an operating result, no matter how nice the interface looks.
4. Does bad news show up while it’s still useful?
Board confidence doesn’t come from a steady supply of pleasant updates. It comes from knowing that reality will reach the board while there’s still time to do something about it.
I’d much rather hear, “We’re seeing early softness with two key customers, and here’s what we’re testing,” than learn a quarter later that everyone was worried, but nobody wanted to spoil the mood.
The irony is that most companies now have better early warning signals than ever. The data’s there, and the tools can surface a slipping account or a margin problem weeks before it shows up in the quarter. The question is whether anyone feels safe saying it out loud.
That takes discipline on both sides. A CEO who gets defensive turns every hard question into a personal threat, and then nobody can tell the difference between a bad assumption and a bad day. A board that pounces on every early warning teaches management to wait until the evidence is undeniable.
By then, it’s usually expensive. Holding people accountable and making honesty feel dangerous are two very different things, though plenty of boards manage to do both in the same meeting.
5. Can this leader keep going without becoming the bottleneck?
Some CEOs look successful on paper while running a company that depends on a superhuman amount of personal effort. The numbers are fine, but the calendar looks like a hostage situation.
Every customer escalation, senior hire, and internal argument lands on the same desk. The company moves, but only when the CEO pushes.
So I look at whether the CEO has made room to think, developed real successors, and built relationships where people can disagree without drama. I’m also curious how they use their own time. The CEOs who seem calmest in year two have usually handed off the routine work, whether to people or to tools, so they can spend their energy on customers, talent, and the few decisions that really matter.
And I listen for whether the leader can name their limits without dodging responsibility.
“I need a stronger commercial leader” is a mature thing to say.
“I just need everyone to work harder” tells me more about the speaker than the team.
The goal isn’t to make the job comfortable. It’s to make the performance repeatable.
The Board Takes the Test Too
It’d be tidy to make this all about the CEO. Tidy and wrong.
Before a board decides its CEO has fallen short, it should ask itself a few uncomfortable questions. Starting with the most uncomfortable one: did we tell this person the truth when we recruited them?
The Version We Told in the Interview
This one doesn’t get talked about nearly enough, so I’ll say it plainly. Boards and investors don’t always disclose everything during a CEO search.
Usually it isn’t malicious. It’s competitive. The sponsor has found the candidate they want, the market for proven PE CEOs is tight, and nobody wants to spook them with the lender conversation, the customer who’s been threatening to leave, the CFO who’s already halfway out the door, or the founder who still calls the plant manager every morning. So the opportunity gets presented in its Sunday best. The rough edges are “things we’ll cover once you’re on board.”
I understand the temptation. I’ve also seen what it costs.
The numbers back up what we see in our own work. Large studies of senior placements have consistently found that roughly 40 percent of executives fail, get pushed out, or leave within about 18 months. When one major search firm asked executives why new leaders leave early, the top answer by a wide margin was that the role wasn’t what they’d anticipated during the hiring process. Another chunk said the company itself wasn’t as presented. Senior leaders interviewed by another major firm put it more gently, describing companies that are “selective in what they share” while selling the opportunity. One leadership advisor who works with PE firms went further, writing that sponsors sometimes all but whitewash the context in their rush to fill the seat.
Here’s why it matters at year two. A CEO who discovers in month four that the business was sanitized during the search doesn’t just recalibrate the plan. They start wondering what else got the same treatment. And once that question is in the room, it tends to stay there. Every board update gets read a little more carefully. Every new ask gets a little more pushback. The relationship that’s supposed to carry the company through a hard stretch starts out with a crack in it.
There’s a practical problem, too. You can’t learn how a candidate will handle a tough financing environment, a weak leadership team, or a founder who won’t let go if you’ve tidied all of that up before the conversation starts. You end up evaluating the candidate against one version of the job while asking them to accept another. Then, two years later, the board wonders why the CEO seems to be solving the wrong problems. Well, they were solving the problems in the brochure.
When we take on a CEO search, one of the first things we ask our clients is, “What would make a great candidate turn this down?” That answer belongs in the search, not in the onboarding binder. Confidentiality matters, and candidates aren’t entitled to every privileged detail before they sign. But there’s a big difference between protecting sensitive information and presenting a company that the people inside it wouldn’t recognize. In my experience, the candidate who hears the hard truths and still says yes is worth far more than the one who said yes to the brochure. The first one signed up for the real job. The second one is going to find out about it eventually, and usually at an inconvenient time.
A mature board can be honest about the mess and still make the opportunity compelling. In fact, the strongest candidates often get more interested when they hear what’s actually broken, because that’s where they get to make a difference. Good operators like a hard problem. What they don’t like is a surprise.
The Rest of the Board’s Homework
Then come the other questions. Did we define success clearly? Did we agree on the tradeoffs between growth, margin, cash, and integration? Did we give the CEO the authority and resources the plan required, including the budget for the systems we keep asking about? Did different directors send different instructions? And when the facts changed, did we actually say so?
I’ve watched an operating partner push for investment, a deal partner push for cash, and a chair push for growth, all in the same week and all with good reasons. The CEO still needs to know which one wins.
Here’s what I’ve learned from sitting on both sides of that table. Accountability needs an agreed mandate, not a collection of private expectations. Most of the CEO transitions I’ve seen go badly didn’t start as bad hires. They started as unclear mandates that nobody wanted to revisit. And a reset in year two almost always costs less than a search in year four, both in dollars and in the months the business spends waiting for someone new to find the restrooms.
None of that lowers the bar for the CEO. It just makes the bar visible.
What Comes After the Conversation
A good review should end somewhere more useful than “that was a productive discussion.” In my experience, it lands in one of three places.
Recommit. The CEO’s the right leader, the strategy holds up, and the progress earns continued confidence. Confirm the next phase, sharpen the priorities, and then get out of the way.
Reset. The leader’s capable, but the mandate, the team, the resources, or the approach needs to change. Say so plainly. Agree on a few outcomes, the support needed, and a sensible time to check back in. “Be more strategic” isn’t a development plan. It’s a comment hoping someone else will turn it into one.
Transition. The gap between what the business needs and what the leader can deliver is real, and there’s no credible way to close it in the time available. So act, clearly and with dignity. A transition doesn’t have to be a trial. People can contribute a great deal and still not be right for the next chapter. I’ve placed more than one executive who was the wrong fit for one company’s year three and exactly the right fit for someone else’s year one.
Respect matters. It just shouldn’t become the reason everyone postpones a decision they already understand.
Beyond the Honeymoon
The two year test isn’t about catching anyone out. It’s about having an honest conversation while the business still has options.
Has the CEO learned? Is the team stronger? Are decisions getting better, and is the company using what’s available to make them faster? Is it creating value? And do the board and management trust each other enough to talk about what isn’t working? That trust is a lot easier to build if it didn’t start with an edited version of the truth.
Most of all, can this leader carry the next chapter, or are they just defending the last one?
The honeymoon runs on possibility. Everything after it runs on evidence, judgment, and a relationship sturdy enough to handle the truth.
Ideally, that conversation happens before anyone asks for a “quick private call” after the board meeting.