The results of a new study from Strategy& show that the senior-level executive market is on the upswing.
Here are the numbers: In 2010, 11.6 percent of the 2,500 largest public companies in the world replaced their CEOs. In 2011, the percentage jumped 2.6 percentage points to 14.2 percent, according to information on the CEO Succession Study in bizjournals.com.
How can we interpret these turnover numbers?
While the initial reaction could be pessimism, as more CEOs are getting the boot, there’s more to it. These increased turnover rates can actually signify an uptick in confidence in the world of senior-level executives.
Let me explain: In a down economy, risk-averse boards, investors, etc. gravitate toward sticking with the same company leadership, even if the company is struggling. This happens for three reasons — 1.) They don’t want to replace the CEO erroneously 2.) A replacement could get off to a bad start, creating shaky confidence throughout the company 3.) There’s just no easy way to determine if fault for the company’s struggles rests on the leadership or the economy, so CEOs are given the benefit of the doubt.
When the economy picks up, companies are much more willing to take action and shake things up in the C-suite, rather than clinging tightly to the status quo out of fear.
So even though the turnover rate is rising, these executives jobs aren’t going away altogether; they are being filled with new candidates.
One of the brightest points and key takeaways from the CEO Succession Study data is that the C-suite turnover rates have actually returned to the pre-recession rates.
In addition to the subject of executive turnover rates, the CEO Succession Study also addresses subjects including new executive challenges, the value of prior CEO experience, the relationship between CEO and chairman, and the top tips for first-time CEOs.
For more information, review the entirety of the CEO Succession Study.