CEO searches are on the rise. That’s what we’re witnessing in our Board & CEO practice at The Good Search, a trend that Bloomberg Businessweek is reporting in a recent article, The Recession Is Gone, and the CEO Could Be Next.
“After three years of declining turnover among CEOs, churn at the top is back. As the economy improves, the rate of corner-office shakeups has picked up as more boards replace veteran CEOs with younger leaders with very different résumés.”
Underperforming CEOs are having their heads handed to them, as the economy rebounds and boards are positioning their companies for growth. Hot on the list of must-have skills are international, sales, and marketing acumen as well as candidates who have worked in more than one industry, offering breadth of domain expertise. Out is single-company experience. Working for one employer one’s whole life often leads to culture shock and failure at the next company — too many times the transplant doesn’t take.
Interestingly, CEO churn pulled back with the financial crisis. Notes the magazine:
“CEO turnover declined from 12.7 percent in 2007 to 9.4 percent last year, according to a study of Standard & Poor’s 500-stock index and Fortune 500 companies by executive search firm Crist/Kolder Associates in Chicago. One likely reason: Boards were reluctant to change leadership during the recession, concerned that if a CEO left, investors might think the company was coming unglued.”
But now that the economy is rebounding, experts are predicting a return to double-digit turnover in 2011 and 2011. For CEOs who slashed their workforce while they spared themselves, this trend carries with it a whiff of comeuppance.