The Great Resignation may be over for most workers — but for some top honchos, it’s only just begun.
The number of chief executive resignations this year hit a record high, according to a recent report by Challenger, Gray and Christmas Inc.
Over 1,400 CEOs have stepped down from their positions between January to September, marking an almost 50% rise from the 969 departures over the same period last year. The career consultancy firm noted that the figure is the highest since it started compiling data in 2002.
“This increase in CEO turnover isn’t particularly surprising,” said Alexander Kirss, senior principal at the human resources arm of consultancy firm Gartner, explaining that leaders tend to remain at the helm to help steer companies in times of uncertainties.
“Oftentimes, we see CEOs stay in their seats during periods of turmoil. And we had just that during the Covid pandemic, Russian invasion of Ukraine and other recent events” he told CNBC via telephone, adding that the board of directors for companies usually prefer working with someone they already know during a period of crisis. As such, they are more likely to keep the CEO in place.
But as the world slowly moved toward a new norm of living with Covid and away from crisis mode, CEO turnovers also rose.
Chief executives are taking a chance on new opportunities as well.
“CEOs are looking around and thinking: ‘I prefer a position in another company,’ or ‘I prefer retirement. I don’t want to be a CEO anymore,'” Kirss said.
From the start of the year to September, 68 CEOs left their positions for new opportunities, Challenger’s report found. No reasons were offered for almost one third of CEO exits, while 22% of the departures were due to retirement.
“In other cases, CEOs are being forced out,” the consultant said, attributing these circumstances largely to businesses being plagued with challenges like persistent inflation, tangled supply chains and hiring difficulties — all of which have made it hard for CEOs to meet the objectives of their board of directors.
There are a number of business challenges such as persistent inflation, tangled supply chains and hiring difficulties that have made it hard for CEOs to meet the board’s objectives.
“Boards are looking at their CEOs’ performance, they’re looking at their peers, they’re looking at the market, and then they’re thinking the organization might be better off with a new CEO,” Kirss said. “I think it’s safe to assume that a lot of these changes we’re observing are actually performance based, rather than self selecting.”
Challenger also echoed similar sentiments.
“Companies are revving up for economic changes in the coming months. With the rise of labor costs and interest rates, companies are looking to new leaders,” said Andrew Challenger, senior vice president of Challenger, Gray & Christmas.
The Challenger report highlighted that the highest CEO turnovers are happening in the government and technology sector. Hospitals also reported a high number of CEO changes.
Leaders burn out too
Like everyone else, CEOs are not spared from burnout.
“CEOs stepping down seems less about retirement and more about burnout and the challenges of navigating an unprecedented workforce landscape,” said founder and human resources consultant at The HR Plug, LaShawn Davis.
Davis highlighted that a CEO’s duties go beyond the typical 9-to-5 and round the clock attention. This leads to “a blurring of lines between professional responsibilities and personal life,” and the “relentless pace” does not just risk burnout, but also comes at a substantial toll on their families.
The consultant added that employees may not necessarily understand the dual pressures that CEOs face, caught straddling behind genuine intentions in addressing employees’ needs, but also bound by strategic and shareholder constraints.
And amid a growing emphasis on employee wellness, there’s a notable gap when it comes to CEOs, Davis highlighted.
“Occupying the top position in an organization often comes with unique mental health challenges. While businesses rally to ensure the mental well-being of their workforce, CEOs might find themselves isolated in their struggles.”
Kirss expects the pace of CEO turnover to remain at high levels, or to trend higher, and cited that many economic, political and social challenges that company leaders face will likely stick around for a bit longer.
Another sign pointing to this could also be the shrinking tenure for CEOs over the past few years, Kirss noted. “That means the folks are turning over more frequently,” he said.
CEO tenure rates saw a sharp decline in the past 10 years. The median tenure among S&P 500 companies dropped 20% from six years in 2013 to 4.8 years in 2022, according to a study by Equilar published in July.
“This could indicate that we’re entering a new period of volatility in the C suite, particularly when it comes to CEOs,” said Kirss.