Millennials and Gen Z employees might get all the press for their “Great Resignation” but they aren’t the only ones who are leaving their jobs in droves. CEOs are too. The Great CEO Turnover, which peaked in 2021 and early 2022, has leveled off a bit. But it certainly doesn’t mean that your CEO is planning to stick around for the long haul.
Outplacement firm Challenger, Gray & Christmas compiles a monthly report on the CEO turnover rate. The July 2022 report shows that CEO changes at U.S. companies fell to 58 in July, down 45% from the 106 CEO exits recorded in June. It was the lowest monthly total since the early pandemic departures of April 2020.
However, departing CEOs are hardly a thing of the past.
When Deloitte and independent research firm Workplace Intelligence surveyed 2,100 employees and C-level executives in the United States, United Kingdom, Canada, and Australia, they found that an eye-popping 70% of top management are seriously considering quitting for a job that better supports their well-being. And 81% of the top execs say that improving their well-being is more important than advancing their career.
When you own the company, it’s nothing like being an employee. You might as well compare lifting up a hundred pound weight versus a feather.
Through the years I’ve owned or been a shareholder in a number of companies. So when I initially started a career taking on interim assignments – in my case helping companies prep for sale and ultimately exiting to a financial buyer or strategic investor – I approached every company as if it was my own.
Only in running and owning a company can you know firsthand the sleepless nights.
Pondering everything. Like cash flow.
Hiring and retaining your best people.
The questions are endless: how do we compete better? How do we win ridiculously large contracts? What do we do if the market goes down? How do we make our marketing viral?
Ownership is not for everyone and it is easy to feel….well, alone.
When smart owners hire managers with the intent of working together for a long time, it’s easy to call their relationship – if it works – a partnership. It’s not a partnership in the legal sense and it’s not a partnership in the investment sense, where partners share costs and gains.
But in great working relationships between employer and employee, each looks out for the other. Each invests to build and maintain a good relationship and share the gains of working well together and advancing the mission and economic and social health of the organization.
The problem with rampant outsourcing is that it leads to thinking on the part of employers and contractors that relationships are reduced to a transaction. Pay me X and I’ll perform as ordered. Stop paying me and I’m gone.
The logic is the same whether it’s one contractor or ten thousand. While it is transactional in the letter of the contract, it is not in the spirit of one.
The danger of a purely transactional mindset is that loyalty goes out the window. Loyalty from a boss to an employee and loyalty from an employee or manager to the organization.
In organizations with a strongly transactional bent you can bet that any corporate talk about integrity is a watered-down concept at best.
We just experienced possibly the largest wave of CEO departures in recent history. Was it due to falling profits? Poor succession planning? Or is there more drama behind the scenes? Think firings, hurt egos, politics, and personal infighting. Author Isabelle Nüssli uncovers one of the big reasons for turmoil at the top ― the fractious relationships between egos at the executive level, particularly between CEO and chairperson. Hence the brilliant title of her new book, Cockfighting: Solving the Mystery of Unconscious Sabotage at the Top of the Corporate Pyramid.
“When you read the news, usually the reason [given for the CEO leaving] was strategy misalignment or different leadership style or different chemistry, etc. But the story that is not put out to the public is that there was a relational conflict, which apparently is the case most of the time,” says Nüssli.
We have spent years developing a methodology for matching companies and executives, but ultimately at the top of the list is chemistry between the executive, private equity fund, company owner, or management team. So once we suggest an executive or team to fit a company’s needs, the question usually arises: what questions should I be asking in an interview to see if it’s a good fit?
Here are a few recommendations so you will be armed with targeted questions for the interview process:
“A man’s got to know his limitations.” Clint Eastwood’s immortal line as San Francisco detective Harry Callahan in the movie Dirty Harry stands true today when board of directors and management teams think about how to evaluate executive candidates. If you have been in management, ownership or board leadership long enough, sooner or later you’ve learned that no one has a perfect track record when it’s come to hiring.
So how do you increase your chances of success?
You’ve already taken the first step – by thinking of interim executives in order to mitigate your risk. You are making sure you have a clear roadmap and understanding of the leadership skillsets needed to get you where you want to go before committing to anything permanent too soon. That’s good.
Whether interim or permanent, there are questions to ask and ways to evaluate your organization’s fit with an executive leader.
The project-based executive, also known as an interim executive has been around for 30+ years, having originated in the Netherlands, later expanding to the UK, the rest of Europe and finally reaching America around 2000.
The early model for interim engagements was invariably focused on turnaround and distress situations: an organization in pain would eventually decide they couldn’t solve the problem on their own, and would seek an outside resource, often through executive search firms, where the executive was never a permanent employee.
Interims have played a part since the early days of private equity funds, where fund managers would use executive search services as part and parcel of their post-acquisition ownership strategy. A fund would see big potential in a struggling company, and would realize big returns by bringing in an outside executive to turn the company around. Thus the early version of interim – interim 1.0 – was all about fixing what was broken.
The next phase in interim executive deployment launched in the US, arguably emerging out of the tech community.
Many owners and boards are new to the game of hiring an executive specializing in interim management.
As the gig economy has gained momentum, more companies are drawing on executive level resources for specific growth initiatives or to help troubleshoot inefficiencies or problems. Interims come in on a project basis as contractors, therefore not adding to permanent overhead.
Because the majority of companies have never written a contract for an interim, they draw on what they know – the playbook for searching and hiring a full-time exec.
Yet, interim management and permanent employment are two different worlds.
Most HR execs have been trained to look for candidates who have a track record sticking with companies for long periods of time. For many companies going through upheaval, rapid growth, or dramatic changes in their markets, that long-term permanent employee mindset may actually be more detrimental. When a company must evolve quickly, an executive hired on full-time may not be the right leader nine months or a year down the road.
The speed at which companies move in today’s world to stay relevant has paved the way for the new specialty of interim management, which includes executives focused on operations to finance, technology, sales and marketing. Interims are skilled operators who run, build, grow, and fix businesses. They take on accountability in C-level roles making decisions, reporting to the board, and being held responsible for the results.
Unlike executives who choose long-term, permanent jobs, interims are wired for transformation and usually are called in when companies need a leadership boost to get them on the right path. Once an interim brings an organization, division, or department to a better state of affairs, that new-found clarity and direction gives the HR team a cleaner slate by which to recruit and hire the next permanent person in the role.
“Action and feeling go together, and by regulating the action, which is under the more direct control of the will, we can indirectly regulate the feeling.”
– William James
One of the biggest benefits business owners report when they take on fresh leadership, whether an interim or fractional executive is a sense of relief. Of having done the right thing. They report the feeling that someone else shouldered a burden that was becoming impossible. Just too large to handle alone, or with the current resources on hand.
The real reason behind this for all of us business owners is that the challenge is just too painful to deal with on our own. Whether it’s family dynamics, lack of future planning, or declining business, we get embroiled in the inertia of our organizations. Sometimes the pain is so vast, the only solution is to sell the company.
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
*$200 additional charge for Accelerator Program only applies for first-year members. After the first year, membership renews at $485/year.
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