CEO departures reached a record high in 2019.
Among US based companies, as well as organizations in the government and nonprofit sectors, 1,640 CEOs left their posts last year, according to Challenger, Gray & Christmas. That’s more than in any previous year since 2002, when Challenger started tracking departures.
Private sector companies in the apparel, food, technology and energy sectors saw the biggest percentage jump in CEO exits relative to 2018.
While the majority of exiting CEOs left for conventional reasons – such as getting another job or retiring – 35 left due to scandal or allegations of professional misconduct.
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“Following the #MeToo movement, companies were determined to hold CEOs accountable for lapses in judgment pertaining to professional and personal conduct, creating higher ethical standards at the C-level,” said Andrew Challenger, vice president of Challenger, Gray & Christmas.
Among some of last year’s high-profile departures were Boeing’s Dennis Muilenburg, WeWork’s Adam Neumann, United Airlines’ Oscar Munoz, Alphabet’s Larry Page, Best Buy’s Hubert Joly, Nike’s Mark Parker, McDonald’s Steve Easterbrook and SoulCycle’s Melanie Whelan.
When it came to replacing the top boss, for the first time since 2013 more companies (784) chose outsiders as replacements than did companies (620) that elevated an internal candidate.
CEOs must bring more to the table than before
Seeking an outsider to take the helm is often a sign that a company is in financial trouble or needs a new set of skills to help the company adapt to future market demands.
But increasingly all new CEOs – whether from inside or outside a company – are being asked to bring more varied skills and experience to the table than their predecessors.
In assessing more than 900 companies in the United States, Europe, Australia and China, executive search firm Heidrick & Struggles found that the demands on today’s CEOs are greater than ever.
“The job of the CEO continues to expand, and the skills required for the role today are quite different than a decade ago,” said Jeff Sanders, vice chairman and co-managing partner of Heidrick’s global CEO & Board Practice.
On top of traditional expectations – managing day-to-day operations, reporting to the board and meeting shareholder obligations – CEOs must manage for a state of constant technological and business disruption. They also must oversee cultural and organizational shifts to accommodate a new ethos of sustainability, employees’ quest for meaning and diversity at all levels.
And more than before, companies are seeking CEOs who have prior C-suite experience, advanced degrees and who have worked internationally.
“In other words, today’s CEOs have to accomplish everything their predecessors did and much more,” Sanders said.