High turnover of chief executives is becoming a burden to business, claims a
report by HR consultancy iSolon.
The report, called Turnover @ the Top, claims that the average tenure of a
CEO is 48 months, and is on the decline. The average cost of replacing a chief
exec is £500,000.
Dr Rafael Gomez of the London School of Economics, who was involved in
compiling the report, believes the trend is particularly evident in companies
that finance their activities via capital markets.
"Institutional shareholders are rapidly pushing for management change
when performance falters.
Sign up to our weekly round-up of HR news and guidance
Receive the Personnel Today Direct e-newsletter every Wednesday
But Gomez also believes that a lack of attachment and loyalty among senior
management is also leading to a continual search for increased challenge and
reward.
Beverly Mann, managing director of iSolon, warned, "Companies seem not
to realise how much CEO changes cost them. Instead of changing CEOs, companies
should support them by bringing in experts with skills that supplement the
CEO’s and the company’s needs."
