Commentary: New CEOs should prioritize relationship building with institutional investors, regulators

The Pensions & Investments article, “Commentary: New CEOs should prioritize relationship building with institutional investors, regulators,” was written by Russell Reynolds Associates Consultant Jack "Rusty" O'Kelley III. In the article, he emphasizes that CEO transitions must be all-encompassing when it comes to shareholders and stakeholders, because any CEO shift produces risk for these parties. The article is excerpted below.

During that period, while the average departing S&P 500 CEO had a tenure of 5.9 years, a surprising number of CEOs departed quickly. Fully 13.1% of new CEOs left in less than three years, and 7.8% left within two years. Given the cost of and investment in CEO appointments, those are expensive misses. When looking only at external CEO appointments, the departure rates jump to 17.2% in less than three years and 11% within two years — a notable rate of failure. These are not untested leaders or unsophisticated enterprises. These failed appointments were the product of the succession and onboarding processes used by some of the world's largest and most successful companies.