Competitive Analysis & Competitive Intelligence, Employer Branding, Leadership

When CEOs Leave

Outplacement consultancy Challenger, Gray & Christmas has been tracking CEO departures since 2000. While the reports make for interesting reading, how much insight do they provide?

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Perhaps more than people might realize.

A change at the top may be indicative of problems in an organization. Excessive CEO turnover in an industry may likewise suggest turmoil in that industry. Recruiters will want to weigh departures with attention to both possible scenarios.

Leadership Matters

As important, a respected, high-profile CEO becomes associated with a company’s brand, and his or her leadership speaks to innovation—and attracts job candidates. Think Mark Zuckerberg of Facebook, Jeff Bezos of Amazon, and Elon Musk of Tesla Motors and SpaceX.

When a well-known CEO departs, for whatever reason, it impacts the company and its image.

Apple CEO Steve Jobs, who resigned while battling cancer and died less than two months later, is one example. Jeffrey Immelt, CEO of General Electric, who will retire at the end of the year after 16 years at the helm, is another.

Reasons for Departure

Yet, as these examples show, there are many reasons for CEO turnover. Among the reasons Challenger, Gray & Christmas cite and track in its reports are:

  • Retirement
  • Death
  • Health
  • Resigned
  • Stepped Down
  • Ousted
  • Scandal
  • New Position Within the Company
  • New Position in Another Company
  • Interim Period Ended
  • Pursuing Other Opportunities
  • Contract Expired
  • Acquisition/Merger

There are also rather vague categories, like “Replaced” and “Buyout,” as well as “No Reason Given.”

Still, most of these categories are straightforward. They explain why CEOs leave, and serve as a reminder that CEOs face challenges and decisions like anyone else.

Industry Activity

CEO exits by industry, as detailed in these reports, provide additional insight.

Turnover at the top is currently high in several healthcare fields: hospitals, healthcare products, and pharmaceuticals. Given the uncertainty surrounding health care, this seems logical.

Likewise, in comparison to other industries, many CEOs are exiting government/nonprofit organizations. This too seems related to uncertainty, as well as reduced funding.

The financial industry, however, also has high turnover at the top. This is partly the nature of the business, but it bears watching.

High CEO turnover in what Challenger refers to as “computer” may be due, in part, to the industry, but it could be an early indicator of trouble in the technology sector. Recent reports of sexual harassment in tech don’t reflect positively on leadership, either.

Inside Track

Paying attention to CEO turnover by company, with attention to the organization for which you recruit as well as its competitors, allows for a broader view of business. Industry overview allows for a similar perspective.

Looking at recruiting from this vantage point will make you more knowledgeable, and arguably better at your job.