Even during the crippling global pandemic, while facing unprecedented turmoil and massive uncertainty, many companies have made major changes in their senior leadership ranks. Among the marquee brands that have named new CEOs in the past year are Amazon, Disney, Ford, Harley Davidson, HKEX, Honda, IBM, Intel, LinkedIn, Mastercard, Merck, MGM, Patagonia, UnitedHealth Group, Volkswagen, and Walgreens. The Gates Foundation, one of the largest charitable organizations in the world, welcomed a new leader as well.
Although 2020 saw less turnover at the top than 2019 overall, according to CEO tracking specialists, hundreds of exits and onboardings occurred at prominent global companies. As always, the organizations involved were under tremendous pressure—from shareholders, employees, customers, and others—to make the right choices.
Unfortunately, many choose poorly. Botched CEO appointments, Thomas Keil and Marianna Zangrillo observe in the Winter 2020 issue of MIT Sloan Management Review, cost companies tens of billions of dollars annually in market value. Short tenures are common, even among “seasoned executives with previously unblemished track records,” they note, observing that research they’ve been conducting indicates that “more than 15% of all CEOs depart within two years.”
“The best-laid plans—especially succession plans—often fall apart when they encounter reality. What is surprising,” they add, “is how shocked and appalled boards are when their CEO choices fail—sometimes repeatedly.” What accounts for the failures in these CEO choices? READ MORE
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