New Study Shows Global CEO Turnover Increase in Last Year

CEO departures at the world’s 500 largest revenue-producing companies jumped 10 percent from 2006 to 2007, according to Weber Shandwick’s ongoing CEO Departures analysis. The CEO departure rate is returning to 2005 levels.

“Given stagnant markets, fierce competition and a complex business environment, it is not surprising that CEO turnover has risen sharply,” says Weber Shandwick’s Chief Reputation Strategist Dr. Leslie Gaines-Ross. “Although many CEOs leave for ordinary reasons such as retirement and succession planning, an increasing number also leave involuntarily. Just as CEOs receive most of the credit when things go right, they are expected to accept the majority of the blame when things go wrong.”

Proportionally, Asia Pacific companies experienced the highest turnover in 2007 compared to other regions, losing over one in five of their largest company chief executives. CEO turnover within Asia Pacific’s most elite companies also climbed 25 percent from 2006 to 2007. This increase is partially due to unusually high turnover in Australia, which lost four CEOs in 2007, compared to none in 2006. However, Asia Pacific CEO turnover is primarily due to retirement and normal succession planning.

North American CEO departures increased 50 percent from 2006 to 2007, although it failed to reach its 2005 high. This is attributable not only to a 33 percent increase in U.S. turnover, but also the retirement of three Canadian chief executives, up from zero in 2006.

In contrast to its regional counterparts, CEO turnover among Europe’s largest global companies decreased 15 percent from its peak in 2006. This reduced departure rate augurs well for the region. “As CEO turnover rates among the world’s largest companies continue to shift year by year and region by region, straightforward leadership communications to all stakeholders rises in importance,” said Weber Shandwick President Andy Polansky. “In today’s uncertain economic environment when information and news are at a premium, CEOs would be wise to actively over communicate and regularly meet employees and customers face-to-face.”

Source: Weber and Shandwick