Published December 10, 2024
In a recent interview with “The Daily Report” on CBS News, Andy Challenger, the Senior Vice President of Challenger, Gray & Christmas, shared valuable insights into the current wave of CEO resignations, retirements, and turnovers. Here are some key takeaways from the conversation:
Challenger, Gray & Christmas Data via CBS News
Impact of COVID-19 on CEO Turnover
Amid the ongoing pandemic, the business world has witnessed a surge in CEO departures. Andy Challenger attributed this mass exodus to the lingering effects of COVID-19. Companies, initially hesitant to make leadership changes during the tumultuous period, are now seizing the opportunity for strategic realignment with the evolving market dynamics.
Emphasis on Business Results
The interview highlighted the unwavering emphasis on business performance in evaluating CEO effectiveness. Andy Challenger underscored that CEOs are constantly under pressure to deliver tangible results, including stock price growth and profit generation. This long-standing norm in corporate leadership further accentuates the demanding nature of the role.
Industries Affected by CEO Turnover
Noteworthy trends indicate a spike in CEO turnover within sectors such as healthcare, technology, and entertainment post-COVID recovery. The observed rapid shifts in leadership appointments suggest that boards are proactively recalibrating their executive teams to align with the changing industry landscape.
Uncertain Future Outlook
While predicting the future is challenging, Challenger expressed caution regarding a potential rise in CEO turnover during economic slowdowns. Factors like market stability and policy decisions could significantly influence the trajectory of CEO departures in the coming year.
The enlightening discussion with Andy Challenger sheds light on the intricacies of CEO turnover trends and the broader implications for corporate leadership dynamics. By staying attuned to these industry insights, organizations can adapt strategically to navigate the evolving business environment effectively.
To delve deeper into the interview and explore additional perspectives on CEO turnover dynamics, you can watch the full conversation here.
Interview Transcript
Jericka Duncan: So far this year, a record number of CEOs have left their roles. According to an analysis by a career transition firm, more than 1800 chief executive officers have either resigned, retired, or simply stepped down from their positions in 2024. By October, that number was up by 19% From 2023, adding to the growing record, the CEOs of the Carmaker Stellantis and the Chipmaker Intel.
Both resigned from their positions this week. Both companies have been facing declining stock prices and in Intel’s case, it’s first expected annual net loss since 1986. Andy Challenger joins me now. He is the senior vice president of the outplacement and career transitioning firm, Challenger Gray and Christmas.
First of all, thanks for joining us, but what do you think is causing such a mass exodus from CEO roles this year and particularly the past few months?
Andy Challenger: Yeah, it’s such a high number and we do tie it back still to the effects of COVID. When there was an enormous drop in CEO turnover, when companies were in such turmoil, they didn’t want to let go of leaders in the middle of it, which created some pent up demand for change.
But we’ve also now seen a period of more certainty coming out of an extremely uncertain period during COVID so that companies can make strategies, bring in new leaders to put them in place, and also judge how some of the leaders that have been in the role for the last few years have done regardless of what was happening in the overall economy.
Jericka Duncan: A Wall Street Journal article describes these resignations of the Intel and Stellantis CEOs as quote, a reminder that business results still matter even if they were following government design. So has this always been this way? I guess I know you talked about the covid effect. But do you think that there has been more of a shift toward companies expecting a more immediate result of success and growth?
Andy Challenger: I don’t know if I would say that’s a recent change for quite a period of time. Now, CEOs are, their jobs depend on the results of the organization, the stock price, the actual profits that get created from the organization. It is one of those roles that is remains today a job that is highly judged on outcomes.
And it’s a very high pressure role. It’s been that way for some time.
Jericka Duncan: What are the sectors to pay attention to when it comes to that? Because obviously some leaders stick around a little bit longer than others in some fields. But is this just a tech sector or what? What are your finding?
Andy Challenger: Yeah, we’ve actually seen this year the highest number of turnover in the c-suite roles coming from health care products to technology, which has been significant and entertainment and leisure. Those are actually all three industries that really boomed during the years after COVID. And we are seeing now as some certainty has come back into the world, boards are making decisions about those leaders and moving them out at a surprisingly quick pace.
Jericka Duncan: Do you expect things to get better?
Andy Challenger: It’s hard to say. We often see CEO turnover increase during periods of recession. We actually didn’t see that in 2020 because of the unique nature of it. But if the economy continues to slow down, we’ve seen some signs that the economy is slowing down in the fashion that the Fed has hoped it will slow down.
If it goes further than that, if they overcorrected, we go into a recession. We could certainly start to see this number take up even further for CEOs.
Jericka Duncan: All right, Andy Challenger, thank you for breaking all of that down.
