Dive Brief:
- The heads of U.S.-based companies left their posts in record numbers last month, according to a report from Challenger, Gray & Christmas, Inc. In January, 157 CEOs stepped down, a roughly 22% increase over December's 129 CEO departures and a 19% increase over the 132 company chiefs that left their posts in January 2018.
- Challenger attributed many of the exits to companies looking for new leadership in a "strong, but uncertain" economy. Most CEOs stepped down to take other positions in their companies, usually chairperson or other C-Suite member, said Challenger. Others retired or found new positions elsewhere. Scandal forced out one CEO, professional misconduct allegations drove away another and a third left because of an internal investigation.
- Industries with the greatest number of CEO departures in January were in the government/nonprofit sector (29), followed by healthcare/products (17), financial and services (13 each) and pharmaceutical and technology (10 each). Cannabis companies reported losing two CEOs.
Dive Insight:
A change in leadership is sometimes necessary when a company is failing financially or racked by scandal. Or it may come as a response to changing economic conditions or shifts in the market. Whatever the cause, companies should have a successor ready to replace the CEO. Recent research revealed that most employers aren't ready for such a change. Nearly half of U.S. chief financial officers haven't named their successor, according to a recent Robert Half Management Resources survey.
When a high-level executive leaves a post, it can be an opportunity to source diverse candidates and avoid the "mini-me" syndrome, whereby executives, hiring managers or search committee members consciously or unconsciously consider only people from the same gender, class or other group as themselves. The scarcity or absence of women, African Americans and other underrepresented groups in high-executive positions could signal that it's time to widen the talent pool.
