Challenger, Gray & Christmas, an executive search firm, released figures recently stating that the number of CEO departures was declining versus the same time last year. In looking at the situation, it was not the number of chiefs exiting their posts that caught our attention, but the high-profile individuals themselves. Many of the biggest players in the crisis of the last two years are throwing in the towel. Could this be a harrowing sign of what’s to come in 2010?
There have been a number of high-profile CEO departures reported as of late. Some of the names have made national and international headlines. What these stories fail to do is acknowledge the challenging economic environment expected for next year as the reason for departure.
John Mack of Morgan Stanley, Ken Lewis of Bank of America, Fritz Henderson of GM, Al de Molina GMAC, Richard Kovacevich (Chairman-but still worth mentioning) of Wells Fargo Bank, AG Lafley of Proctor & Gamble, and several others are all stepping down at year-end, or have resigned in the last two months. (AG Lafley will stay on as CEO until February of next year.)
The biggest names in bailout are leaving, and it will be a tough climb for the next guy, come January. There are countless reports predicting corporate profits to be soft next year, and we think it’s evident these guys know what is coming.
Here is what John Challenger said about his recent report.
“We saw a record level of CEO departures in 2008, as companies turned toward executives who could help weather the economic storm. This year, the pace of planned job-cut announcements and CEO turnover have fallen, as organizations achieved some stability,” CEO John Challenger said.”
“Signs of recovery are beginning to emerge. As a turnaround gains momentum, there could be a surge in CEO changes as organizations change from a hold-the-line strategy to one focused more on risk-taking and expansion.”
Hardly…It’s wonderfully optimistic, and fitting to go on record saying how many more changes will come via growth. Let’s try this out.”There may be a rise in changes in CEO positions in the first and second quarter of 2010, because we are too optimistic about the reality of recovery, and we’re changing the way we do business. It’s back to basics.” That comment falls more in line with our view.
A 2010 CEO report conducted by NYSE magazine shows that the focus next year will be a return to profitability through efficient operation, and management orientation, rather than new product development or internal sales and distribution channels.
In answering the question. Which internal factors will have the most impact on profitability in 2010? 81 percent of the CEOs surveyed said they hope to boost profit levels through greater operational efficiencies. 74 percent put the management team at the top of their list.
