Survey: Sustained CEO turnover in retail companies

New York City -- Retail companies are experiencing a period of sustained turnover at the top, according to the a new report by Russell Reynolds Associates, which examined turnover and recruitment trends between January 2006 and April 2011 at 81 retail chains headquartered in the United States with annual revenues of $1 billion or more.

The study,” A Perfect Storm: CEO Challenges in Retail,” found that 59% of the retail companies studied experienced a change in CEO leadership during this five-year period. 
In other findings:

  • Retail companies have a harder time than other companies in selecting CEOs that “stick.” Forty-two percent of the CEOs who left did so having served five years or less, compared with 32% of Fortune 1000 CEOs. More important, more than a quarter (27%) left after serving three years or less. In contrast, only 16% of Fortune 1000 CEOs who stepped down during the same time period did so having served three years or less.
  • While most boards traditionally prefer to fill CEO slots with current CEOs, there simply are not enough sitting CEOs to meet demand. Of the 18 external CEO appointments made during the period studied, only eight were sitting CEOs making a lateral move.
  • Retail companies seeking a new CEO are further constrained because of the tendency to recruit from the circle of immediate competitors rather than casting a wider net. Of the 18 retail CEOs in the report’s five-year sample who were recruited externally, 16 — or 89% — were recruited from the same subsector of the retail industry.

Comments

The problem with this story

Submitted by madgonia0451 on Tue, 03/27/2012 - 10:22pm.

The problem with this story is that it’s not true. The facts, revealed this year by Booz & Company’s annual study of CEO turnover at the world’s largest companies, suggest the opposite. To be sure, corporate boards have indeed become somewhat more likely to dismiss their chief executives since 2000 than in the previous decade. But there is no evidence that those boards are moving hastily to fire CEOs because of poor short-term results, according to our analysis of 10 years’ worth of data. In fact, we find that even the worst-performing CEOs face a low probability of being forced from office in the short term. Rather, the uptick in dismissals is due largely to an increase in board struggles.