http://www.forbes.com/2008/03/07/executive-ceo-tenure-lead-manage-cx_mk_0307turnover.html
CEO Turnover Increased In 2007
Matthew Kirdahy, 03.07.08, 2:15 PM ET
It's still early, but turnover among the nation's chief executives may not turn out as badly this year as it did in 2007, when it seemed there was a high-profile boss making headlines every couple weeks.
According to new research, CEO departures at the world's 500 largest revenue-producing companies increased 10% in 2007 from the previous year to a total of 27, as reported by ReputationRX, the corporate-research arm of Weber Shandwick. North American CEO departures increased 50% year over year, although they haven't quite hit levels seen two years ago. In 2005, 34 CEOs in North America left their posts.
Leslie Gaines-Ross, chief reputation strategist at Weber Shandwick, said stagnant markets, fierce competition and a complex business environment heated the C-suite seats.
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"Just as CEOs receive most of the credit when things go right," she said, "they are expected to accept the majority of the blame when things go wrong."
Last year, some of the infamous C-suite talents were in the banking and financial services industries. For example, Stanley O'Neal of Merrill Lynch (nyse: MER - news - people ) and Charles Prince III of Citigroup (nyse: C - news - people ) were casualties of the subprime mortgage crisis that resulted in the loss of tens of billions of dollars for their organizations.
In other sectors, shareholders pushed Terry Semel out the door at Yahoo! (nasdaq: YHOO - news - people ), while Ed Zander bit the dust at Motorola (nyse: MOT - news - people ) in the second half of the year.
"I think the bulk of all leaders are trying to do the right thing," said Mark Mactas, CEO and chairman of management consulting firm Towers Perrin.
He said each business didn't get bruised because of one man or his inability to prudently manage risk. However, someone always has to take the fall. The mistakes made in 2007 won't be repeated, but corporate America will most certainly face another crisis; that's just part of the cycle. Maybe the next time around, big-business leaders will just do a better job of assessing risk.
Exits as a result of poor performance are defined by the report as a "non-traditional" reason for a CEO departure. Over the past three years, the world's largest company CEOs continued leaving office primarily due to "traditional" reasons, such as succession planning or reaching the mandatory retirement age, the study said.
In 2007, 32% of CEOs left "against their will," versus 28% in 2006. The North American CEO departure rate was 37%, compared with Europe (32%) and Asia Pacific (24%).
It's probably no shock, then, that tenure for the North American CEO is on a downward trend.
The average tenure of a global chief who left office in 2007 was 6 years, down from 6.5 years in 2006. North American CEOs' tenure dropped to 6.8 years from 8.6 years. In the Asia Pacific region, CEO tenure increased to 5.7 years from 4.3, while Europe's C-suite activity remained stable.
Elisabeth Marx of the leadership consulting firm Heidrick & Struggles said it's likely the trend of a shortened term for CEOs in the U.S., as well as Europe, will continue, depending on how the markets develop.
The men and women in these jobs have spent most of their time in the hot seat because of increased visibility in the media, she said.
"I would argue that we need to look at what tenure makes sense to produce [an acceptable] performance," Marx said.
She argued that people with a vested interested in a corporate leader's performance are impatient. After all, the CEO isn't the only one making the decision.
