Since 2019, the chief executives of 90 companies – about 40% of 220 surveyed – have jumped ship, according to a study commissioned by ET. The banking and financial services sector (59%), followed by retail (51%) and industrials (49%), saw such peak attrition, according to a study of listed and unlisted frontliners by the company. Global Executive Search EMA Partners.
Separately, independent data compiled by ET showed that of the roughly 200 departures of professional CEOs from the NSE 500 companies over the past 10 years, 27 (13%) lasted less than a year, while 119 (59% ) are gone in less than five years. . Only 17 CEOs (8%) have worked more than 10 years in a company. Turnover prompts boards to proactively pursue succession planning and re-examine compensation, with an increasing emphasis on longer terms, as frequent departures of CEOs can disrupt a business, in addition to having a negative impact on the share price.
“The unprecedented attrition of corner rooms can be attributed to the market reach for the top position, which has widened significantly in recent years, particularly in certain fast-growing sectors such as technology , digital and new era businesses that also offer strong opportunities for wealth creation and growth,” said K Sudarshan, Managing Director, India, and Regional President, Asia, EMA Partners.
The exodus is also due to leaders reassessing their professional and personal priorities.
“Executives are looking to revamp and re-examine their work-life balance,” said Shailesh Haribhakti, chairman of auditing and accounting firm Haribhakti & Co, and independent director of several Indian companies.
“They are now starting to look for purpose in a more focused and accentuated way and the boards are aware of that,” Haribhakti said.
According to leadership consultants, one of the pet peeves of professional CEOs is interference from the owner/developer’s family or board of directors.
Suresh Raina, a partner at global leadership consultancy Heidrick & Struggles, cited the example of a chief executive of a large infrastructure and energy company who is considering quitting less than a year after joining. — and without another job offer — due to too much interference.
“The CEO feels it’s not worth it to him,” Raina said, without revealing the name of the person or the company, adding that the plethora of opportunities at the top of the pyramid allows people to take such risks, as a leader. knows that he will soon be able to find another job.
With the quality of management becoming an important consideration in evaluating companies, CEO turnover has become a concern at the board level.
“The abrupt departure of a CEO is the strongest signal a company gives to the market that something is wrong with the business,” said Arun Duggal, chairman of
and an independent director on several boards. “It’s also an important signal to other stakeholders, including employees and customers, and raises many questions about the company’s strategy, stability and future.”
Conversations in boardrooms increasingly focus on having leaders more involved in the game and a longer-term association with the company. Family businesses are expanding the scope of decision-making so professionals feel more empowered, board members and chief executive consultants said.
“The unstable external environment as well as high attrition – at CEO level and among senior executives – makes it imperative for companies to enter into contracts that can bind senior professionals to a longer association,” said Naina Lal Kidwai. , senior adviser, Rothschild & Co, and non-executive director of several boards of directors.