The Tale of CEO Attrition…
Attrition is a hot button issue, particularly if it is about the CEO of the organization. What he does at the top send a clear signal down. However if a study by executive search firm EMA partners it to be believed the situation isn’t that encouraging. A five year study conducted across 100 companies during 2001-06, reveals that 66% of the companies have had a change of CEO’s in the last five years. There are definitely patterns depending upon the pedigree of the companies and sector they belong to. “Not a single company sacked its CEO. Clearly, in India, CEO resign, never get sacked,” says EMA partners managing partner K Sudarshan.Here’s the story behind CEO attrition in last five years, Churn due to Global Transfer FMCG and Banking sectors lead at 29% in sending Indian CEOs to man other global positions. Pharma and IT- ITeS follow suit at 13%. Outsider CEO The trend is highest in family owned businesses at 42% and MNC’s at a not very low of 37%. Succession planning is best in companies who are run by professional boards, a reason why they have a almost zero CEO Churn.
Sectoral CEO churn The industry with the fastest growth has the highest churn in the CEOs understandably due to the tempting offers oozing in for the CEO’s. IT- ITeS leads in the category at 88% followed by Banking Sector at 70% not leaving Pharma much behind at 67%.
Reasons why they moved on…CEO’s in India rarely get sacked. They just resign and move on!! The reason scored substantially high on 41% in comparison to retirement on 24%. Change of CEO due to global transfer is 17% perhaps a fair endorsement of the demand of Indian CEO overseas. Reasons like death and restructuring are once in the blue moon at 2% and 5% respectively