There’s a record amount of change happening in America’s C-Suites.
A study by outplacement firm Challenger, Gray, and Christmas, showed that a record number (219) of CEOs left their jobs in January, 2020. This flight from the executive suite topped the previous monthly record (172 in October, 2019) by a significant 27%.
For all of 2019, 1,640 CEOs left their jobs, according to Challenger, Gray data. That’s a significant amount of movement.
Some of this change is surely attributable to natural market forces. The hot growth environment of the last ten years has created a hungry market for executive talent, increasing hiring demand for executive talent and turning competitors predatory. Some demand has resulted from changes in business strategy or disruptive market conditions that require a fresh vision for the organization. Some of the movement has resulted from ethical lapses which have forced the immediate removal of leadership, for good reason: an organization cannot tolerate behavior that takes advantage of executive power (Nike) or endangers customers (Boeing). Some was needed to correct for poor business performance or poor strategic leadership by the CEO.
But these reasons alone might not account for the speed of executive exits/replacements occurring now. Could it be that an underlying sea change is occurring in executive hiring?
Ten years ago, as we slowly climbed our way out of the low point of the Great Recession, companies sought out CEOs with traditional talent sets: steady leadership hand, the ability to deliver quarter-over-quarter earnings improvements, and experience driving operational efficiency.
Today, those requirements are less important as the market demands of digital-age companies require a different skillset: strategic vision, global growth-orientation, an ability to build a high-performing culture, digital/tech-savviness, M&A experience, and the ability to work at high speeds in compressed timeframes. These skills have all moved front-and-center in many executive hiring requirements.
Growth requires transformation. And transformation requires Leadership that is ready to rethink strategy, attack new markets, pursue new product lines and extensions, and create new brands and find new customers. These capabilities are typically associated with entrepreneurs, not traditional corporate CEOs.
Building entrepreneurial skills in leaders who have risen through the ranks of traditional organizations is a tall order. The very skills that served them well in their careers — political prowess, command and control orientation, risk-avoidance, and a focus on managing upward — are skills that will not carry the day in high-growth, digitally-driven organizations, which continue to form, grow, and change at accelerated speeds. Business transformation is not possible without transformation leaders, and the quality of leadership makes a huge difference in accelerating business performance.
A well-regarded study by Gallup in 2013 found that work units with well-trained leaders outperformed bottom-quartile units by 10% on customer ratings, 22% in profitability, and 21% in productivity. Work units in the top quartile also saw significantly lower turnover (25% in high-turnover organizations, 65% in low-turnover organizations), shrinkage (28%), absenteeism (37%), as well as fewer safety incidents (48%), patient safety incidents (41%), and quality defects (41%).
One thing is clear in the Digital Age — the pace of business formation, acceleration, and maturation is faster than ever before. Meeting the challenges of compressed business cycles requires different leaders with different skill sets. Organizations of all sizes, and at all stages of development, will be well served by taking a look at the transformational changes they will need to undertake, and take the steps needed to assure their leaders have the right skill sets to get them through.
