Is the Great Testament over? Why CEOs leave at the highest levels
The Great Recession may be over for most workers – but for some top honchos, it’s only just begun.
The number of senior executives who resigned this year was at a record high, according to a recent report by Challenger, Gray and Christmas Inc.
More than 1,400 CEOs have resigned from their positions between January and September, marking an increase of almost 50% from the 969 departures over the same period last year. The careers consultancy firm noted that the figure is the highest since it began compiling data in 2002.
“This increase in CEO turnover is not particularly surprising,” said Alexander Kirss, senior principal at the human resources arm of consulting firm Gartner, explaining that leaders tend to stay at the helm to lead companies at times. uncertain.
“Often, we see CEOs staying in their seats during times of turmoil. And we just had that during the Covid pandemic, the Russian invasion of Ukraine and other recent events,” he told CNBC by phone, adding that companies’ boards of directors would prefer more often. work with someone they already know during a crisis. Therefore, they are more likely to keep the CEO in place.
But as the world slowly moved towards a new normal of living with Covid and away from emergency mode, the turnover of CEOs also rose.
Senior executives are also taking advantage of new opportunities.
“CEOs look around and think: “I prefer a position in another company,” or “I prefer retirement. I don’t want to be CEO anymore,” Kirss said.
From the beginning of the year to September, 68 CEOs left their positions for new opportunities, the Challenger report found. No reasons were offered for almost a third of CEO departures, and 22% of departures were due to retirement.
“In other cases, CEOs are being forced out,” the consultant said, attributing these situations largely to businesses being saddled with challenges such as persistent inflation, interconnected supply chains and recruitment problems – all of which have made it difficult for CEOs to achieve their goals. of their board of directors.
There are a number of business challenges such as persistent inflation, tight supply chains and recruitment problems that have made it difficult for CEOs to achieve the Board’s goals.
“Boards are looking at the performance of their CEOs, they are looking at their peers, they are looking at the market, and then they think the group could be better off with a new CEO,” Kirss said. “I think it’s safe to assume that a lot of these changes we’re seeing are based on performance, rather than self-selection.”
Challenger also expressed similar sentiments.
“Companies are increasingly bracing for economic changes in the coming months. With rising labor costs and interest rates, companies are looking to new leaders,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas.
The Challenger report indicated that the highest CEO turnover occurs in the government and technology sector. Hospitals also reported a high number of CEO changes.
Leaders burn out too
Like everyone else, CEOs are not immune to burnout.
“Retiring CEOs seem less about retirement and more about burnout and the challenges of navigating an unprecedented workforce landscape ,” said founder and human resources consultant at The HR Plug, LaShawn Davis.
Burnout is a common work result, and is defined by an increased mental distance from one’s work, along with feelings of lack of energy and negativity.
Davis pointed out that CEO responsibilities go beyond the typical 9-to-5 and around-the-clock attention. This leads to a “blurring of lines between professional responsibilities and personal life,” and the “non-stop pace” not only puts them at risk of burnout, but also comes at a heavy toll on their families .
The consultant said that workers may not necessarily understand the double pressures on CEOs, caught behind real intentions in addressing the needs of workers, but also bound by constraints before -strategy and shareholders.
And amid an increasing emphasis on employee well-being, there is a distinct gap when it comes to CEOs, Davis said.
“Being in the top position in an organization often comes with unique mental health challenges. While businesses rally to ensure the mental well-being of their employees, CEOs can feel isolated in their struggle.”
The great role of Leaders
Kirss expects the pace of turnover of CEOs to remain at high levels, or to move higher, and she announced that many economic, political and social challenges facing company leaders will stick around for a little longer.
Another sign of this may be the shrinking tenure for CEOs over the past few years, Kirss noted. “That means the people are turning over more often,” he said.
CEO tenure rates have seen a significant decline over the past 10 years. The median tenure among S&P 500 companies fell 20% from six years in 2013 to 4.8 years in 2022, according to a study by Equilar published in July.
“This could indicate that we are entering a new period of volatility in the C series, especially when it comes to CEOs,” said Kirss.