C-Suite Turnover: The Names They Are A-changin'

Nearly one half of Global 2000 companies have no women executive committee members

By James C. Hyatt 

Corporate suite turnover continues at a “torrid pace” amid turmoil in financial markets and the risk of worldwide recession, a new study finds.

IMD International Search & Consulting’s report, "The Changing Face at the Top," looked at the changing demographics of the "C-Suite" (the Chairman/CEO and executive management team) of the Global 2000 and other influential companies throughout the world.

Increases in senior management turnover in the 2008 first quarter measured 55 percent for CEOs, 11 percent for CFOs and 10 percent for other C-level management, the report said.

“This is on the heels of record setting C-level turnover in 2006, which recorded an increase of 68 percent in turnover over 2005, while 2007 figures maintained this blistering pace.”

Primary factors behind the continuing high executive turnover numbers, include: Corporate performance and its relationship with the key executives in charge; the rising complexities of business; growing domestic and international competition; and increasing market instability.

 The high turnover rate, the search firm concluded, “underscores the need to gain competitive advantage by accelerating the innovation process, sharpening sales and marketing execution and increasing the ability to respond to rapid market change.

“There is strong indication that many organizations are under pressure for talent at various levels in the organization and the current talent shortage is only expected to be more severe in the coming years.”

Indeed, it noted, the pending retirement of a high percentage of senior management executives from the “baby boom generation” raises questions, including “where will tomorrow's leaders come from, and how are today's management boards changing and adapting to position their organizations to meet this talent shortfall and maintain competitive advantage?” 

Many studies show “an upcoming 40 percent shortfall in workforce numbers across all developed nations,” the analysis said. 

Other demographic tidbits: 

Nearly one-half of the companies responding had no females among their executive committee members. 

Almost one-third of executive committee members are below age 45. Internal management development “seems to be falling short when supplying the senior ranks.”

Nearly one-third of CEOs, 30 percent of COOs, and one half of all CFOs come from outside the organization. 

Nearly two-thirds of respondents agreed that talent acquisition is among the top three concerns at the board level, but it doesn't seem to be getting any easier; almost 80 percent said that talent acquisition is more difficult today than three years ago, indicating an ever-shortening supply of superior talent. 

At the same time, 26 percent believe the C-Suite will increase in the number of foreign nationalities on their management team, indicating continuing globalization of business across all regions. 

While 78 percent of respondents believe that diversity in an important strategy, only 14 percent reported having a corporate diversity officer, and 13 percent believe the number of minorities in the executive suite will increase over the next three years.