Why the CEO Roundabout is Damaging Business
It’s been reported (Daily Telegraph Dec 9 2007) that one in five CEOs in the FTSE 100 have moved jobs or been sacked during 2007 and that this is the highest number for five years.
Whilst accros the world the average tenure for a CEO is just over 2.5 years in the UK we have fared much better at over five years but this is now changing. Notable changes have been Paul Thompson of Resolution Life who managed just two years, Northern Rock’s Adam Applegarth, John Clare of DSG International, Philip Moore of Friends Provident.
The result has been that the average tenure for a FTSE 100 co is now under five years and it’s estimated that by 2017 the UK will join the rest of the world in having their top people remain in post for only 2.5 years.
Companies that have also experienced senior people departing include BP, Barclays, Logica CMG and BT
The problem with this is that whilst it might satisfy the shareholder’s needs for returns this continual change at the top does nothing but increase instability, insecurity and ultimateley profits for the rest of the organisation. The reason, there is no chance of one strategy being implemented and showing substantial results working it’s replaced with another.
I wonder if the turnover of CEO’s will increase further as the Credit squeeze bires further and profits begin to drop?
If Top Talent such as CEO’s, MD’s etc actually engage their employees, give them “reasons to follow” and gain their commitment; then they will have a strong bedrock of support which might actually enable their strategies to work.
Like the Premiership Football (Soccer) league in the UK, if the Team does not perform, the axe often falls on the Manager.
“We have to get everybody in the organization involved. If we do that, the best ideas rise to the top.”
Jack Welch, ex CEO, GE
Paul,
I have to agree with you that it’s important to gain everyone’s commitment. However not all business situations encourage this. For instance the hire of a change catalyst will often mean that the individual will have to drive change through despite people’s feelings.
The problem is that too often change catalysts are not given enough time to implement change before they are moved on. In that respect perhaps senior executives and CEO’s in particular are much like to soccer managers you mentioned.