Surviving the Coming Executive Job Churn

The here-today, gone-tomorrow climate of CEO changeovers has almost become routine in the past few years, and executive outplacement firms track the numbers as closely as bookies at a racetrack. But in a recent survey, one firm has discovered that it’s not just the top spot that’s seeing a dramatic turnover, but the entire executive suite.

IMD International Search Group asked its 24 offices, in multiple countries as well as the U.S., to identify the top 100 most important companies in their area. Although many were chosen because of their large size, others were seen as significant because of their market clout or innovative strategies. The top executive in human resources at each firm completed the survey, covering company trends for the past three years.

The survey was undertaken to determine client needs and get a sense of the impact of Baby Boomer retirements, notes Thomas Fuller, general managing partner at IMD. Although much business discussion has been sparked by the advancing age of upper-level management, Fuller believes that a surprising number of organizations will be affected more than they realize.

“A lot of people have their head in the sand,” he says. “The numbers don’t lie. In the U.S. alone, there will be a shortfall of 33 million workers. That means 50 percent fewer people in the workforce.”

The Baby Boomer generation dominates executive offices, with more than two-thirds representation, IMD notes, although on a hopeful note, the firm did point out that 32 percent of the executive committee members are from younger  age groups, commonly referred to as Gen X and Gen Y.

One of the most striking aspects of the survey is the lack of comprehensive succession planning at many companies, he adds. More than 70 percent of respondents noted that there is no successor identified for the top three spots in their organizations.

“So, you have seven out of 10 CEOs sitting in offices without a successor waiting in case anything should happen,” notes Fuller. “Given the pace of CEO change, that doesn’t seem to be the best strategy.”

IMD points out that there was record-setting C-level turnover in 2006, which continued into 2007. And, in the first quarter of 2008, those surveyed reported 55 percent turnover of CEOs, 11 percent for CFOs and 10 percent for other C-level managers.

According to the survey, primary factors for high executive churn include corporate performance, increasing market instability, the rising complexities of business, and growing domestic and international competition.