With CEO Turnover Rising to Record Levels, How Can Incoming, Existing Executives Build a Sustainable Role?

Russell Reynolds’ Global Lead of CEO & Executive Transition Practice, Ty Wiggins, PhD.

Ty Wiggins, PhD, is the global lead of Russell Reynolds Associates’ CEO & Executive Transition Practice. Working for an executive search multinational, ranked as one of the top five on Forbes 2024 “America’s Best Executive Recruiting Firms,”¹ Wiggins helps world-leading CEOs successfully transition into their roles to unlock business and personal success faster. Wiggins is one of only a handful of people globally with a PhD in senior leadership transitions.

Q. As the number of CEO changes at US companies jumped to 248 in February, it was a 49% increase from the 167 CEO exits that occurred in February 2023. This turnover is the highest monthly total on record, as the previous one was set in January 2020, when 219 CEOs left their posts.² Given your research with CEOs from Verizon, PepsiCo, Campbell’s, UPS, Whirlpool, and others, what do you see on the 2024-2025 horizon for Fortune 500 and start-up C-Suites?

A. Wiggins: Based upon Russell Reynolds’ 2023 inaugural Global CEO Turnover Index annual report, we are seeing continued turnover for CEOs. Our research shows that men hold CEO roles longer than women. Globally, the average tenure for women CEOs in 2023 was 4.1 years, compared to 8.7 years for men. The S&P 500 saw women holding CEO roles for an average of 2.1 years, while men held them for 9.9 years, on average.³

Also, the number of CEOs lasting less than two years in the role is increasing. Failed CEO appointments (those lasting less than two years) represented 15.1% of outgoing CEOs. This outplacement rate is up from an average of 9.6% since 2019. Moreover, our findings pointed out how women are more likely to be fired than men (34% versus 25%). As one of my colleagues pointed out, when a company is underperforming, women CEOs get fired more quickly. And if you’re a woman, you are under more pressure to visibly outperform.

With the continued economic climate for CEOs and their boards, as well as the anxiety around the upcoming US presidential election, boards are pulling the triggers on their CEOs a lot earlier. As a result, for incoming CEOs, they need to be much more deliberate around the priorities for their 100-day-onboarding plans.

Q. While an incoming CEO’s 100-day onboarding usually includes the tried and true “listening tour” of external clients and internal coworkers to help craft their strategies, what are your top three recommendations to support their success in leading business transformation?

A. Wiggins: First, as I’ve shared in my recent book and other venues,⁴ the collective wisdom from the new CEOs we interviewed in transition is that new CEOs cannot move fast enough on their teams. By this, I mean that one of the first priorities that a new CEO should do is assess their senior team (SLT) and act swiftly to make the necessary changes.

Our research revealed how the average time taken for a transitioning CEO to make the first change to their SLT was 2.8 months, and overall, it took 9.2 months to get the team right. Therefore, when you take a holistic view of the average tenure of CEOs and how long it takes to secure the right team to even begin implementing the key priorities, the timeline is very compressed and you need to swiftly execute. From our research, many new CEOs hope a good performer might become a great performer, but in our experience, they rarely do. So, accelerate the timing of your decisions.⁵

Second, smarter incoming CEOs take a proactive engagement approach with their board since they recognize how these directors play a potential supporter or blocker role for a CEO’s right to lead and right to change. An often-missed opportunity is for a CEO to discuss expectations and assumptions during the dating stage when a CEO candidate is being interviewed. For example, during his interviewing courtship days, Verizon’s current CEO had explained what he planned to do and the associated timelines to the board so that alignment and support could be secured even before his official start date.

Third, while people like to read about CEOs rolling up their sleeves, going deep, and helping to fix things, smarter CEOs recognize the importance of focusing their limited hours on key areas that only CEOs can do. From our research, these include the following elements and I’ll provide a link to the supporting details: file:///C:/Users/micha/Downloads/RRA%20-%20The%20New%20CEO%20Research%20Report.pdf.

• Culture
• Strategy
• Talent accountability
• Manage chair/board
• Manage other key stakeholders

Finally, our interviews revealed how the top regret among new CEOs was that they would move faster on making changes to and building their teams (65% of all CEOs interviewed). Regardless of if you’re a first-time CEO or serial one, move with conviction and speed.

About the Author

Michael Wong is an emeritus board member of the Harvard Business School Healthcare Alumni Association.

References

1. https://www.forbes.com/lists/best-executive-recruiting-firms/?sh=182642bc5bce

2. https://www.challengergray.com/blog/ceo-turnover-hits-248-in-february-2024-government-non-profit-women-in-ceo-role-falls-ceos-decide-to-end-pandemic-era-tenure/

3. Langton, Stephen, Le Roy de Lanauze-Molines, Marie-Osmonde , Meynell Luke, O’Kelley, Rusty, Sanderson, Laura, The Next CEO Global CEO Turnover Index Annual Report, Russell Reynolds, 20244. https://www.youtube.com/watch?v=KiSpk8ObbPY&ab_channel=RussellReynoldsAssociates, The New CEO: Lessons from CEOs on How to Start Well and Perform Quickly (Minus the Common Mistakes) 5. Wiggins, Ty, Davies, Rebecca, CEO Transitions Defining Success in the First 12 Months, Russell Reynolds Associates, 2024

4. Wiggins, Ty, Davies, Rebecca, CEO Transitions Defining Success in the First 12 Months, Russell Reynolds Associates, 2024

5. https://www.forbes.com/lists/best-executive-recruiting-firms/?sh=182642bc5bce