CEOs these days are given one term in office. If they’re very successful, they might get four more years.
John Challenger, CEO of Challenger, Gray & Christmas
This quote from a May article in The Daily Beast – Why the Speed of Business Is Dooming America’s CEOs – addresses the tenuous position of CEOs in the U.S., based on Challenger, Gray & Christmas’ research in this area. In my new Forbes article – Why Do So Many Bright Business People Fail So Impressively As CEO? – I discuss why I think new CEOs are often unprepared for the role. Thinking it’s often just the next step in their career, many CEO neophytes don’t realize that it’s a unique position with challenges they haven’t faced before. Plus, they probably haven’t been groomed for the position and even then don’t take the time to study for the job. In addition, I think CEO training and development is seriously inadequate in preparing CEOs to transition into the role, which is the whole reason for this blog.
I look forward to your questions/comments after you’ve read the piece! Here are a few sobering statistics about CEO tenure:
- The average CEO tenure has decreased from about 10 years to about 5½ years since the 1990s – Challenger, Gray & Christmas (USA Today)
- Nearly 40% of CEOs are fired within their first 18 months on the job – Center for Creative Leadership (Peter Barron Stark)
- The average tenure of a departing S&P 500 CEO in the U.S. is 8 years as of 2010, down from 10 years in 2000 – Conference Board report (WSJ blogs)
- In 2012, 15% of the world’s largest 2,500 companies replaced their CEOs—the second-highest figure in the 13 years it {Booz Allen} has compiled the data. (In 2011, 14% of this class of executives were replaced.) – (The Daily Beast) See Booz & Co. 2012 Chief Executive study
Photo Credit: Jonathan Kos-Read via Compfight cc
How involved do you advise a CEO to be involved in the day to day operations? Or should he count on reporting from management ?
Good questions! The CEO should do both. He or she should have their pulse on what’s happening in the organization via firsthand knowledge (I’m a big believer in management by walking around as I wrote about in this post: https://theamericance1.wpenginepowered.com/2013/05/07/six-hats-of-the-ceo-priest/). In addition, the CEO should have weekly meetings with all direct reports to understand issues or opportunities that need his level of attention. But, he should also have trust that his executive team knows what they are doing and are supporting the mission/vision/goals of the company. This ensures that he has time for more strategic work. As I discussed earlier this year, the CEO needs to balance between having total responsibility with limited control (https://theamericance1.wpenginepowered.com/2013/02/26/ceo-failure-modes-balancing-total-responsibility-with-limited-control/). Trying too hard to control or influence day-to-day activities can end up backfiring on a CEO by lessening their credibility and demotivating employees (https://theamericance1.wpenginepowered.com/2013/02/12/ceo-fail-the-total-control-ceo/).