CEO turnover can revitalize companies in hard times

Apple CEO Steve Jobs speaks during an Apple Special event to unveil the new iPad 2 in San Francisco, Calif. Apple unveiled the iPad 2 as the successor to its popular tablet, the iPad.

Jeremy Hobson: Yahoo, which has been struggling
to compete with rivals Google and Facebook, has just fired its CEO Carol Bartz.

And Bank of America, which has been facing a drop in shareholder confidence, has just ousted two of its senior executives.

Marketplace's Amy Scott joins us now live to talk about what's behind these management shakeups. Good morning.

Amy Scott: Good morning.

Hobson: Well Amy, does executive turnover mirror overall job turnover? In other words, are the people at the top as vulnerable in a weak economy as those in the middle and at the bottom?

Scott: But I wouldn't say as vulnerable, but certainly more so.

I spoke with Jeffrey Garten at the Yale School of Management. And he says there's so much uncertainty right now that he expects to see a lot more of this sort of thing in all sorts of industries.

Jeffrey Garten: I think we're going to see much shorter tenures at the top. And a lot of this is really not the fault of the leaders, but the extraordinary circumstances in which we find ourselves.

Hobson: Extraordinary circumstances, Amy. And what about the effect of all this? How effective is it when changes like this are made? Do CEO shakeups really turn things around at a company?

Scott: Well, short-term you might see a boost in the stock as we did with Yahoo and Bank of America. But Garten says long-term, you need a particular kind of leader in times like this. Someone who is adaptable, entrepreneurial, maybe even ruthless, who can steer the ship in a storm. And one example he gave is Steve Jobs who really turned things around at Apple when he came back as CEO in the mid-90s. That was during a really rough time for the company -- and of course, Jobs just announced that he's stepping down again.

Hobson: Indeed. Marketplace's Amy Scott. Thanks, Amy.

Scott: You're welcome.

Comments

I agree to American Public Media's Terms and Conditions.
With Generous Support From...