Wednesday, July 28, 2010
We have all heard of the compensation packages it takes to bring someone into this role. It takes months of working with a search firm just to decide who and what type person is needed in the role to take the firm to the “next level.” But one perk that is not discussed is tenure, and based on recent research, that is not one that any company or organization favors today.
When I heard the news about CEO Lon O’Neil of SHRM resigning with just under two years under his belt, I decided to take a closer look at CEO tenure within organizations. The findings are not all that surprising.
To give some background to the CEO’s role, 40 percent last no more than two years in the corner office. The average CEO tenure dropped from 9.7 years in 1999 to 8.3 years in 2006, the most recent year for which statistics were compiled by consultants Challenger Gray & Christmas, Crist Associates, and SpencerStuart. The median tenure – the number separating departures on the higher and lower halves – stood at 5.5 years in 2006.
According to the Nonprofit Leadership and Transition Survey, there will be more transitions at the top of non-profits during the next five years than there have been in the previous 10 years, forecasting what could be a damaging blow to the non-profit sector. The authors concluded that in the chief executive position at non-profits, an “era” of transition is imminent.
Slightly more than half — 56 percent — of the nation’s hospital chief executives have held their current job for fewer than five years, and 14 percent for less than one year, according to the American College of Healthcare Executives. The group’s analysis, conducted in January 2009 and based on American Hospital Association data from 4,464 facilities, determined that the median CEO tenure was 4.16 years.
According to a Labor Department study on employee tenure in 2008, the median tenure for men was 4.2 years, about unchanged from January 2006. For women, median tenure in January 2008 was 3.9 years, also unchanged from January 2006.
So while we may be surprised over this recent departure at SHRM, it basically fits the profile at the C-Level, and the tenure numbers are dropping for all workers as well. And while no one knows the true reasons for anyone leaving a job, I have always figured there are always three sides to this equation: the person resigning, the company, and the truth. I have never bought into the “spending more time with the family” or “pursuing other opportunities” that so many give as reasons for leaving before they hit the door.
So while that great CEO hire may appear to be a great fit, don’t get too caught up in them (or anyone) hanging around too long. It’s simply not going to happen and I doubt if CEO tenure will ever rise again.
So to Lon: so long and thanks for your service. Our HR organization will find another superstar and maybe, just maybe, they will make it long enough to celebrate their second year anniversary.
Posted by Ron Thomas at 3:35 PM