With Baby Boomers retiring in droves over the next ten years, there is a shrinking pool of 35-to-50-year-olds to replace them.
The Association of Executive Search Consultants expects more than 50% of top managers to leave within five years. Last year, more than 28,000 top executives lost, left, or changed jobs, up 68% from 2005, according to Liberum Research.
Companies with a market cap of at least $1 billion changed CFOs three times more often in 2005 than in 2002, according to 10-K Wizard. And while the rate of exits slowed a bit at big companies last year, Richard Jacovitz of Liberum Research found that among public companies of all sizes, CFO exits increased from 1,867 in 2005 to 2,302 in 2006.
The number of chief operating officers (COO) at the nation's largest companies continued to drop from 219 in 2005 to 213 in 2006, according to a recent study by Crist Associates, a Chicago-based executive search firm. There are 17 percent fewer COOs today than in 1999.
According to a series of surveys by The Center for Board Leadership, the research arm of the Washington-based National Association of Corporate Directors, in collaboration with Mercer Delta Consulting, CEO succession was increasingly important to corporate boards of directors. Yet, about 50% of board members consider themselves less than effective in the area of CEO succession.
In addition, about one-quarter of those board members believe their boards fall into "below acceptable" levels of CEO succession planning. Such findings come despite directors identifying CEO succession as among the leading concerns facing their companies.
In today's era of increasing activist investors and boards, a heightened focus on fast results is making the first few months for new corporate leaders feel more like a trial by fire than a honeymoon. "Boards are more willing to toss people out and [are giving CEOs] a much shorter leash," says Michael Watkins, author of The First 90 Days and a former Harvard Business School and INSEAD professor. "Many senior executives feel they have a much shorter time frame to prove themselves."