CEO turnover is booming. What’s going on?
Several major companies have announced exits from their C-suites recently like Dr. Martens — better known as Doc Martens — Walmart and The Body Shop. C-suite turnover ticked up last year, and according to a new report from outplacement firm Challenger, Gray and Christmas, CEO turnover hit its highest rate since 2020 last quarter.
“There’s pent up demand for change at the top,” said Andy Challenger, vice president of Challenger, Gray and Christmas. At the beginning of the pandemic, when everything in the world and in business was so uncertain, companies held onto their CEOs for dear life. But now?
“Now as things have started to even out, companies feel more comfortable selecting new CEOs and leaders,” Challenger said.
This sort of rush for change at the top at many companies all at once isn’t that uncommon. It’s often tied to big economic events. And Yo-Jud Cheng, a professor of business administration at the University of Virginia, said that creates a scramble for talent.
“It’s really not a huge pool of individuals,” he said. “So, once you start seeing some movement, it’s really quite common to start to see a ripple effect across a bunch of different companies.”
In other words, it’s poaching season. Meanwhile, expectations for C-suite executives have changed.
“Suddenly, they’re supposed to be able to be on social media, go from a meeting with an asset manager in New York to CNBC,” said Joseph Fuller, a professor of management practice at Harvard. “They can sing, they can dance, they can recite Shakespeare sonnets by memory.”
This is causing management to burn out faster, according to Fuller. The average age of exiting CEOs near the end of last year was 56, down from 60. And with more responsibility comes higher compensation.
“And that really means that many executives, when they are facing exhaustion, they’re leaving with eight and nine figure net worths,” Fuller said. Well, why not retire early?
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