The Impatient CEO
Six in 10 CEOs say they are planning to replace a senior leader in their team within the next six months. Will this new C-suite shuffle help or hurt firms
The chief financial officer was well respected on Wall Street for his strong track record of managing costs and growing margins. Investors loved how he stewarded the firm to beat earnings quarter after quarter. And the board thought he might eventually be a successor to the CEO. All of which may have contributed to the fact that he was out of a job.
C-suite stability has always been sort of an oxymoron, but amid the accelerating pace of change, it’s more precarious than ever to hold a role with “chief” in the title. According to a new report, six out of ten CEOs at companies with more than $100 million in revenue plan to replace a member of their C-suite team within the next six months. CFOs top the list of targets, with 16% of CEOs planning to change their top financial leader, closely followed by COOs, CHROs, and CMOs. “CEOs are putting a real premium on executive agility,” says Patrick Walsh, a senior client partner in the Board and CEO Services practice at Korn Ferry. “They are moving quickly to replace leaders without the skills and mindset to reinvent their function for the new business world.”
Data backs that up, with C-suite turnover trending higher over the last two years. Take CFOs as an example: Thirteen percent of S&P 500 companies appointed a new CFO in the first half of this year, the highest rate in the last eight years. “There’s a lot of movement in the function for sure,” says Dayna Keene, a principal in the global Non-Profit and Government Affairs practices at Korn Ferry, who is currently working with a few clients on CFO searches.
AI is, of course, the biggest factor driving C-suite change—and not just for CFOs. Human resources, marketing, operations, communication, and technology leaders are also on the hot seat. The pressure boards and investors are exerting on CEOs to transform with AI is creating a heightened sense of urgency, say experts. Kate Shattuck, a Korn Ferry managing partner, says that as CEOs evaluate their executive teams against long-term strategic priorities, they’re realizing they need more than just subject-matter expertise. “Leadership roles require more than that now,” says Shattuck. “They also need to be strategists.” Put another way, CFOs can’t just be about numbers, CMOs can’t just be marketers, and CHROs can’t just be people officers.
But the changing nature of business isn’t the only reason leaders are looking to shake up their executive teams. Some of it has to do with the fact that many CEOs—having been installed by boards and investors over the last two years following a corner-suite exodus in the years prior—are themselves new to the companies they are leading. Self-preservation could also factor into the equation: As the report points out, CFOs may top the list of replacements in part because 26% of CEOs view them as the biggest threat to their own job security. “New CEOs like to bring in their own people,” says Jennifer Williams, a senior client partner in the Board and CEO Services practice at Korn Ferry. “Sometimes not always for the right reasons.”
On that point, Tamara Rodman, a senior client partner in the Culture, Change and Communications practice at Korn Ferry, agrees. She says the urgency CEOs feel could lead them to make a change that could worsen, not improve, their firms’ position. “Making a change to your executive team can’t be taken lightly,” she says. “You still need thoughtfulness and care around succession planning.”
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