Why are CEOs fired
Study: Companies hesitate too long when changing CEOs due to Corona
A third fewer new CEO appointments than in the same period of the previous year: At the height of the Corona crisis in April and May, companies in Europe were very hesitant about staff changes in the executive suite. They are thus following a trend that can also be observed in previous crises: For example, during the financial crisis from 2008 in the USA, 64 percent fewer CEOs had to leave because of bad business figures or scandals. Only around two years after the low point of such lulls are there normally as many leadership changes as before.
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That was the result of a study carried out by the management consultancy Bain & Company and the executive placement agency Spencer Stuart. Reasons why CEOs tend to be more firmly in the saddle than usual in times of crisis lie with the CEOs themselves. "Many business leaders want to steer the company they helped build and establish through the crisis themselves," says Floriane Haas-Falanga , Senior Manager at Bain. Therefore, they often persisted in their post. On the other hand, the supervisory bodies, such as supervisory boards, find it difficult to make far-reaching decisions in the recession. "Supervisory committees are often at odds about future corporate strategy, the requirements that CEOs have to meet, or possible succession plans," says Haas-Falanga.
Problem: There are no overdue changes
Imeyen Ebong, head of the Bain Organization practice group in German-speaking countries, knows that companies' supervisory bodies are hesitant to dismiss their CEO for longer in times of crisis: "Anyone who postpones a necessary change in leadership in the recession is running a high risk. For a long time Overdue course changes are delayed, at the same time growth opportunities can be missed. "
In order for companies to be able to act systematically in times of crisis, the authors of the study have worked out three points that companies should adhere to during periods of downturn: First of all, it is important to have one Contingency plan with detailed instructions for future CEOs, board members and supervisory board members as well as a list of potential CEO successors in the drawer. This is important if the CEO unexpectedly falls ill or is absent - and at the same time gives security, should the decision be made to part with the company boss. Second, they recommend one consistent control of performance even in times of crisis. Should the CEO have to leave, a clear distinction is made as to whether his successor should only lead the company in the short term or in the long term. Third, the experts advise that Succession planning early on to tackle. Expected leadership roles of a successor should be clearly defined and include problem-solving skills in difficult situations as well as skills in using dynamic environments.
Self-reflection of the company bosses asked
However, the authors of the study have not only researched the dangers of delayed CEO dismissal, but also provide information on how company bosses behave correctly during a crisis. Particularly important: close cooperation with the supervisory bodies and a healthy self-assessment. That means CEOs seek help when they realize they are entering uncharted territory. They also take feedback to heart and, if in doubt, reconsider their career planning. "Board members and CEOs who tackle succession planning together are far more likely to make the right decisions at the right time," says Ebong. This also means that CEOs recognize management talents in their company at an early stage and encourage them by giving them challenging tasks and positions.
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