It may seem a bit early to use the term, but the fact is, President Obama is now a lame duck. CEOs don’t face term limits, so a lame duck period is kind of a rare luxury. Many get fired before they can even think about the end. But some know when they’ll go, either by choice or because of mandatory retirement age, which some companies set at 65.
These situations make for an interesting comparison of corporate and presidential last bows. In both cases, a firm end date can actually be liberating, say those who study leadership.
“I think it kind of frees people up a little bit,” says Columbia Business School professor Katherine Phillips. “They don’t have to be so worried about ruffling feathers, I guess you could say.”
Ending Bush-era tax breaks for the wealthy is reliable feather-ruffler for conservatives. And the president has drawn a line in the sand on this for households making over $250,000 per year.
A key difference between the boardroom and the Oval Office is that it’s quite rare for a CEO departure to be announced four years ahead. The public is lucky if it gets four quarters advance notice. The CEOs themselves must use that shorter span to wind down their tenure, which impacts their effectiveness. They can struggle to cut deals when those they negotiate with know they’re leaving.
“Once the end date is known, it can cast a very, very long shadow,” says Shreevardhan Lele, a University of Maryland business professor. “When the other party knows that ‘well, we can wait it out,’ other parties now have an incentive to dig their heels in, to be less cooperative.”
Second-term presidents worry about their historical legacy. Joe Magee, a professor at NYU’s Stern School of Business, notes that history skips over most corporate leaders, with the rare exception of company founders and business icons. CEOs tend to focus on shorter-term goals, such as boosting their final quarterly earnings.
In early 2017, President Obama will face the question of what to do with the rest of his life. His most recent predecessors provide two very different examples. He could campaign for global causes and Democrats like President Clinton. Or he could lead a quieter life outside the spotlight, like President George W. Bush.
Business consultant and Georgetown adjunct professor David Heenan has thought a lot about what to do after exiting a lofty gig. He’s the author of “Leaving on Top: Graceful Exits for Leaders.” He’s found that CEOs are often poorly prepared, even terrified of the end.
“A chunk of them treat retirement or moving on as something akin to either castration or euthanasia and in fact have not planned the next season of life very well,” Heenan says.
He advises corporate leaders to have an exit strategy when they start the job. Departing CEOs may find other opportunities in the corporate world. But the constitution limits presidents to two terms, so President Obama will eventually need such a plan for his own next phase.