CEO turnover has flattened out at 14% (still up from 11% in 2001) each year but fewer are getting dismissed – only 23% in 2009 compared with 35% in 2008.
And average tenure has shrunk from 8.1 to 6.3 years over the past 10 years. Interestingly that means that although they start the job a little older than in the past they still leave it at the same age: 53.2 years in 2009.
Companies and shareholders are now more impatient for results and CEOs are also more likely to see the job as a project rather than a lifetime career. It helps if you have worked for the company previously as internal promotions seem to last almost 2 years longer than average whereas outsiders are more likely to be forccd out.
The same weekend Ruth Sunderland wrote a well-referenced piece in The Observer: “Superheroes and supervillains – why the cult of the CEO blinds us to reality“. http://www.guardian.co.uk/business/2010/jun/13/tony-hayward-terry-leahy-corporate-governance
She started by comparing the contrasting fortunes of the CEOs from BP and Tesco and suggests that businessmen are idolised out of all proportion and then become victims of a witch hunt when things go wrong (a bit like football managers then so watch out Capello if England don’t do well!).
Some people argue that the “cult of the chief executive” requires bosses to be charismatic leaders rather than competent managers. Most modern CEOs don’t talk about making money but about “vision and values” and have a “mission statement” rather than a job description.
She quotes research that shows that fame and charisma, with a few exceptions, has little relationship to high company performance. In the past entrepreneurs like Rockefeller (founder of Standard Oil) or Victorian soap baron Lord Lever were larger than life but they were bringing something new to market.
With the exception of people like James Dyson, Bill Gates or Steve Jobs, most CEOs are not entrepreneurs (and haven’t invested in the companies which begs the question of why they get paid so much when they are not risking their own money – but that’s a different post).
Perhaps in difficult times we look for inspiration, influenced by the celebrity TV programmes like The Apprentice in both the US and the UK. Some CEOs undoubtedly succumb to narcissistic behaviour, a topic I have touched on more than once.See: “Leadership – the dark side”.
One contributor suggested that many CEOs are driven to succeed by trauma in their childhood which may help them to super-achieve but not have the personality to cope with failure. (This is not true for everyone. See: “What doesn’t kill you, makes you“). Egotistical CEOs may feel the need to take more risks to maintain or enhance their profiles which can then lead to spectacular failures with nowhere to hide.
There are also cultural differences with companies from Anglo-American meritocratic societies tending to go for star performers compared with the emerging Asian businesses preferring a more team-based approach.
As Professor Froud from MBS said; ” … in a large organisation success or failure doesn’t hang on any one individual” but an anonymous FTSE100 CEO said; “Leadership is emotional. It is about winning hearts and minds to a common purpose. It’s not just about one person, but it starts with one person”.
All this reminds me of Harry Truman’s comment about the heat and the kitchen.