Tuesday, November 12, 2013

Why do some organizations seem to have a new CEO every year or two?

There are as many different reasons for turnover in executive positions as there are companies. CEO turnover rates fluctuate with time. Often periods of low CEO turnover produce an aging cohort who retire at similar times. Mergers and acquisitions can lead to CEO turnover, meaning that CEO turnover increases when the business climate offers opportunities for mergers and acquisitions. More recently, the MeToo movement has led to replacement or resignation of CEOs who were egregious perpetrators of sexual harassment. Rapidly changing business conditions can often lead to hiring of CEOs who might be more adept at new technologies, tax environments, or global business environments.
When a given corporation has a more rapid pace of CEO turnover than its industry as a whole, usually this is a sign that something is wrong. Often shareholders and boards will press to replace a CEO if a company is showing bad returns compared to its industry as a whole.
If a company is successful, achieving high rates of growth and profitability, few people would wish to replace a CEO. In general, CEO churn suggests an underlying problem with a company. In some cases, such as Uber, it may be a cultural problem, while in others it may be a financial decline or lack of clear direction. At times, churn in the C-suite can indicate a toxic management culture or a declining industry and at times it may mean lack of skill at succession planning or power being divided among warring factions.
https://www.strategy-business.com/article/20306?gko=bfb5b

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