Effective Ways to Reduce Executive Churn
A recent analysis of chief executive turnover at the world’s top 2,500 companies showed that CEOs lasted an average of just over six years in their jobs in 2009, versus nine years in 1995. In a 15-month period between early 2010 and spring of 2011, 100 major New York companies appointed new CEOs – among them investment bank Morgan Stanley, bookseller Barnes & Noble and sports card trading company Topps.
When there’s a leadership change at the top of an organization, the after-effects cascade through virtually all jobs, especially if a new leader is hired to fix a problem or dysfunction. As reported in the Harvard Business Review, the chance of a senior manager leaving after a new CEO is appointed from within the company is one in five. If the new leader comes from outside the organization, the likelihood doubles.
Snapshot of a “Keeper” Executive
Here are some common attributes among corporate executives who remain in their position for more than seven years:
- They act with integrity. In a recent survey, 93 percent of responding organizations ranked integrity among the top qualities an executive needs to succeed in their role. Those who operate with integrity consistently adhere to a code of conduct. They have rock-solid underlying value systems that are manifested through their behavior both on and off the job.
- They are strong communicators. Nearly 40 percent of respondents said an executive’s success is significantly affected by their ability to communicate a vision for their company’s future. This helps them – and their organization – when it comes time to navigate through change. In addition, it motivates them to achieve specific goals.
- They build and maintain relationships. This is a key component of leadership style. It ties in with having strong soft skills, so results can be consistently achieved without an executive leaving dead bodies in their wake during the process.
- They are culturally compatible. Last but not least, an executive candidate must be a fit with an organization’s culture if they have any hope for longevity in their role. It’s critical for search committees to fully understand the type of person an individual will be once they assume their new role.
How to Stop the Bleeding
What causes executive churn and how can it be prevented or slowed?
There often is no single cause. More likely, costly executive turnover is the result of a combination of factors and circumstances. It could be for unfortunate reasons, like harassment, or comparably good reasons, like underperformance. Either way, it’s the responsibility of a governing body to wrap a tourniquet around the bleeding and put measures in place for the long-term health and healing of their organization.
- Pay attention to how employees perceive an executive. This applies to all employees, from rank and file up through the senior management team. Use engagement surveys as one tool to get an accurate read on this factor.
- Create executive learning plans. Your leaders should be lifelong learners. This can get lost in the mix as executives focus on developing business plans and implementing the results. Effective thought leadership happens when they have – and take – the time to learn through such venues as reading, industry forums and networking. A good mentor or coach can slow an executive down enough to make sure the necessary learning occurs.
- Help them make their fears their agenda. A surprising number of executives are not natural extroverts. They may struggle to give tough feedback or entertain doubts about their decisions, especially in challenging times. Help them fine tune skills such as active listening, delegating responsibility and relinquishing control.
The specialized search consultants at BrainWorks can assist as your organization hires and retains an industry-leading executive team. To learn more, read our related posts or contact us today.