More than 1,300 CEOs of American companies no longer hold the same jobs today that they held in January according to Challenger, Gray & Christmas. The Chicago-based global executive placement firm has been monitoring CEO departures of companies in business for at least two years and with 10 or more employees since 2002.
What’s even more alarming is that the firm said October 2019 set a new high in what’s already a record-setting year that even surpassed the Great Recession in 2008. 172 CEOs stepped down in October compared to 151 in September. And despite some of those flashy headlines, the primary reasons aren’t because of office romances.
Several theories abound. Online business journalism and business guidance publisher Quartz identified retirements as one of the most obvious and logical reasons. They cited data gathered earlier this year by Crist|Kolder Associates showing that the average age of a male CEO today is 58. It’s just slightly lower at 56 for female CEOs according to the Illinois executive search firm.
Quartz believes many CEOs are electing to spend more time with family. But with so many Baby Boomers in those offices, this also means that even more CEOs will be retiring each year for the next several years. The loud message is that companies with boomer CEOs need to plan for sound and effective transitions in anticipation of these exoduses.
Challenger, Gray & Christmas cited a couple of other reasons. They attributed one to prior successes where these larger and more successful companies required new leadership. Another they cited was a need to adapt to changes in technology as well changing economic conditions or forecasts.
Replacements: Not As Easy As It Sounds
Accounting giant PriceWaterhouseCoopers also did a survey and reported earlier this year that new CEOs hired to replace the boomer CEOs will not likely remain with the company as long. Worse yet, they concluded that the performance of the younger CEOs may be inferior than their predecessors and are more likely to be forced out of office.
Wise corporate boards will not only need to formulate a viable transition plan but also think more deeply about some of these predictions. Plans to deal with the other possibilities need to be well thought out, both in terms of little or no impact on transition, as well as any potential of crisis communications if an indiscretion were to indeed occur. In its report, Challenger, Gray & Christmas cited six CEOs who were forced to leave this year because of various scandals.
Company boards will not only need to look at the changing landscape within their industry in determining the kind of CEO they wish to hire. They will also have to seriously consider the new values and needs of their next leader who will likely be a Gen X’er and maybe even a millennial.
Unlike their parents, Gen X’ers hold very different values They seek a work/life balance as well as flexibility. They also lean towards being more independent and resourceful. The good news is that they’re more technologically savvy, belief in working and playing hard but also like to have fun, even at work.
Company boards that recognize and plan for a new generation of CEO’s will fare better and can anticipate a smoother transition.