Talented managers may make it to the top, but many these days don’t stay for long. Turnover at the executive and CEO levels has hit all-time highs. In response, says the Center for Creative Leadership’s Michael Campbell, boards of directors should re-examine their CEO selection processes. Meanwhile, leaders at all levels can learn from the mistakes made by short-time CEOs.
Just how bad is the turnover? Eight out of 10 major companies worldwide changed their top leader at least once during the 1990s – two-thirds of them in the 3-year span from 1998 to 2001. Campbell led a year-long research project to gain insights into the shrinking tenure of executives and to discover the skills that are needed for senior-level positions. Campbell surveyed CEOs, operating officers, presidents, vice presidents, directors and board-level professionals to identify the key factors that impact executive churn.
The study revealed six differences between long-term CEOs and those who are replaced after fewer than seven years:
No. 1: Delivering Results. Today’s businesses – especially publicly held companies – emphasize the bottom-line more than ever. That makes the ability to produce results the single most important factor impacting tenure.
No. 2: Acting with Integrity. Ninety-three percent of those in the survey ranked integrity among the top skills an executive needs to succeed in the workplace. Those who operate with integrity consistently adhere to a code of conduct and have an underlying value system that is manifested through their behavior.
No. 3: Communicating and Executing a Clear Vision, Goals and Strategy. Nearly 40 percent of surveyed leaders said an executive’s success is affected by the ability to communicate a vision for a company’s future, helping employees to navigate through change, and motivating them to achieve specific goals.
No. 4: Maintaining Key Relationships. CCL’s survey also ranked the ability to build and maintain relationships with key stakeholders critical to tenure. As one participant wrote: “To have a long-term view you need to have strong political ties, good shareholder relations and the skills and knowledge to allow people to understand and buy into the long-term view.” In the case of the CEO and other members of your company’s most senior leadership team, a successful relationship with the board of directors is of particular importance.
No. 5: Exhibiting an Appropriate Leadership Style. More than 60 percent of our respondents reported that a poor leadership style ultimately had a negative impact on an executive’s tenure at their company. “People-skills are not routinely evaluated,” one respondent noted. “I have known executives (who) can clearly get the job done quickly, but the ‘dead bodies’ left in their wake can take years for the organization to recover.”
No. 6. The Cultural Fit. A candidate for a top job might look great on paper but must be compatible to the organization’s culture in order to build relationships and add true value. Often, boards or hiring managers emphasize the need to challenge old thinking and move in new directions. But if an executive is too far out of step with an organization, the resulting culture clash can overwhelm the benefits.
Delivering results, acting with integrity, communicating and executing a clear vision, goals, and strategy; maintaining key relationships; exhibiting an appropriate leadership style; and having the right cultural fit. Got that? Every single one may be necessary to keep your top-level job this year.