CEOs that remain in office for a longer period of time perform better
The Les Echos article, “CEOs that remain in office for a longer period of time perform better,” quoted Russell Reynolds Associates Consultant Jean Van den Eynde on how CEOs must act quickly to shape a company and its strategy.
A major study, carried out by PwC, indicates that CEOs of listed companies, both globally and in Europe, on average remain in office less and less time. In 2000, an average CEO of a listed company could still expect to remain in office for at least eight years. In last couple of years, this period dropped to mere five years.
“The duration of a lifecycle of a CEO is also reducing in Belgium,” says Jean Van den Eynde, Consultant at Russell Reynolds Associates. “The pressure on the shareholders and investors increases.”
Like soccer coaches, CEOs come with an expiration date. If the results are disappointing, they are the first to suffer the consequences. In 2018, 17.5 percent of the CEOs of the 2500 biggest companies of the world were replaced. That’s the highest number since 2000.
This complicates the work of a CEO: As their expiration dates decrease, they must act faster to shape the company and the strategy. “CEOs don’t get a lot of time to prove themselves”, Van den Eynde confirms. “They have to act quickly. They make the biggest impact during the second through fifth year of their mandate.”
Van den Eynde adds that a lot depends on the personal attitude of the CEO. “The ones that stay humble and not let leadership go to their head, will remain in power longer,” he says.
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