CEO changes come after tech turned upside down

CEO turnover at large cap public tech companies is accelerating . We believe that this is a positive indicator of future resilience in the industry.

As tech companies pivot from growth at all costs to a more profitable approach—contending with capital constraints and increased investor scrutiny—boards are being forced to make changes. Separately, some CEOs and founders are realizing that the next chapter requires new skill sets to navigate an evolving operational dynamic and stay ahead of the blistering pace of technology change.

Confidence among tech leaders about their executive teams has declined over the past year amidst a challenging market – but in our conversations with tech leaders we hear and feel a sense of resilience from many who are pushing hard to turn this around. We are often asked: how can leadership teams bolster confident and cohesive cultures that will be effective and successful in the market ahead?

In a world where confidence is dropping, thoughtful succession planning is important.

75% of tech execs critical of their company’s succession processes cite them as suffering from being informal or unstructured, while fewer than 20% say that succession plans are created well in advance of their need. When confidence in succession processes is low, the consequences for executive talent loss are high. Our data shows that when tech industry executives lack confidence in their company’s C-suite succession processes, they are twice as likely to leave to find “a different company culture” and six times more likely to leave due to “having greater faith in the stability or long-term success of a different company.”

Succession planning, particularly CEO succession, is most effective at ensuring a steady pipeline of future leaders when approached as a continuous process.

And this process should begin on a new CEO’s first day (or, in the case of founder-led companies, today)—starting with identifying the essential skills and characteristics for the next CEO, choosing and nurturing potential contenders, calibrating against external candidates, and revisiting and refining criteria over time. A robust process leverages specialized development programs tailored to bolster leaders’ skill sets and readiness for future roles.

Do you agree that an increase in CEO transitions is an indicator of industry resilience? 
Reply to share your perspective with us.

Until next time, we hope you enjoy the articles below.