Why Do CEOs Have Such Short Tenure?

This article talks about the rarity of long-term CEOs in companies today.

The old saying used to be: You can't keep a good man down. Today it might well be: You can't keep a good person in the chief executive suite for long.

It's getting harder to retain chief executives. Institutional investors are more actively monitoring firms' performances and calling for changes when managers stumble. And new accounting rules put more pressure on top executives.

But it isn't just that they are being ousted by investors, many think of quitting after just a short time.

One reason CEOs are more likely to leave: greater demands on their time in a global economy. "They're on the road 250 days a year on average, for most of the largest companies," Gaines-Ross said.

At a time when CEO commitment is on the wane, more than ever a company's reputation rides on its CEO.

Some 40% of respondents to the Burson-Marsteller survey in 1997 linked a company's reputation directly to its CEO. In the 2003 survey, 50% said there's a direct link.

The corporate scandals led to laws like the Sarbanes-Oxley Act of 2002. It forces stricter codes of conduct on firms and their top officers.

"Being under a microscope can tire CEOs out. They have to have real thick skin or a real upbeat, optimistic view of life," Gaines-Ross said.

I think there are a few reasons for this. First of all, investors are often focused too much on the short-term, and one or two bad quarters will get a CEO canned. Secondly, the wrong people are often being promoted to the top spot in the first place. I would love to see more introverted, introspective Michael Dell types in the CEO position, instead of the extreme power seeking extroverted supermen that too often find their way into that spot. Finally, I think we are on the verge of seeing a change in corporate structure. Companies need a final decision maker, but CEOs have taken on too much. I think the future will hold positions like Chief Strategy Officer, Chief Aesthetics Officer, and Chief Knowledge Officer, and these people will help the CEO, CFO, and COO by distributing power and making decisions as an oligarchy.

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