A significant 83% of business leaders expect to be replaced within just five years, according to a poll of business 503 CEOs published yesterday by SkillSoft, a global e-learning company.
The top spot is even more temporary in the largest of companies. A third of CEOs with more than 1,499 employees, anticipated leaving the business within just two years, SkillSoft found.
Kevin Young, managing director of SkillSoft EMEA, commented: “CEOs need to up their game if they want to keep their roles in such a competitive market. Businesses are becoming more ruthless, especially after the recession, so business leaders need to ensure they are cutting edge and can outshine competing candidates.”
SkillSoft’s survey came after management consulting firm Booz & Co last week launched its latest annual CEO Succession report, The New CEO’s First Year.
Key findings from Booz included:
· CEO turnover globally has returned to pre-recession rates – at 14.2 %, it is up 2.6 % from 2010’s 11.6 %. In the UK this is slightly higher - at 14.7%
· CEOs continue to bring in higher returns to outsider CEOs – 4.4% annual shareholder return on local market indices on average, compared to just 0.5% from outsiders. However, the appointment of outsider CEOs remains high – this is because companies are looking for fresh insights and expertise from outside their current sector and markets
· By sector, the top three for turnover in the UK are: healthcare, telecommunications services and utilities
· Average age of UK CEOs leaving office is older – 58.4 years, compared to 56 in all of Europe
· Tenure of UK CEO is similar to Europe – 7.2 years on average, compared to 6.9 years on average in all of Europe
Ashley Harshak, partner at Booz, said “Boards are more likely to keep their chief executives during times of economic uncertainty in order to maintain stability, but they are more willing to make a change when economic stability returns and company outlooks improve. The appointment of outsider CEOs is on the rise because in this time of economic uncertainty, industries in turmoil often look for fresh insights and expertise from outside their current sector and market. However, the countervailing trends – better-performing insiders and increasing numbers of outsiders – should be a key consideration for any board thinking about making a change at the top."
Booz research methodology: The report drew on two main sources for its research: a survey and analysis of the world’s largest 2,500 largest public companies, defined by their market capitalisations (from Bloomberg) to identify companies that had experienced a chief executive succession event; 18 in-depth CEO interviews, from global heavyweights such as BT, Roche, Levis and significant regional players such as Etisalat and Komatsu.
