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Leadership and Change: CEOs have less time to Succeed

Friday, August 10, 2012
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​An interesting evaluation point here for students who need to consider the potential for new leadership to achieve strategic change. Will a new CEO be given enough time to develop a successful, sustainable long-term strategy?

This article suggests not, particularly for new CEOs of publicly-quoted firms. According to Tom Saporito in the Harvard Business Review...

“Executives no longer have the time necessary to develop the leadership skills for long-term success”

“A highly competitive marketplace that moves at lightning speed has replaced the days of legacy building”

Saporito points to some evidence from a recent survey of US CEOs which found that the average tenure of a departing CEO has declined from 10 years in 2000 to 8.4 years in 2011.

The evidence seems to suggest that CEOs are being given less time to achieve success.  Investors (and Boards) are becoming more impatient & less forgiving of under-performance. A consequence?

“Fewer CEOs are capable of building a company from the ground up and seeing it through its various life cycles”

Saporito also points to evidence that CEOs are increasingly sourced via external recruitment, rather than the internal promotion of candidates who may have worked their way through the ranks at a firm over the longer-term:

“In 2011, 19.2 percent of S&P 500 CEO successions involved an outside hire, a dramatic increase from just 8.3 percent in the 1970s.”



 

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