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A record 1,914 CEOs left their jobs in 2023, a whopping 55 percent increase from the previous year, according to a report conducted by Challenger, Gray, and Christmas. That figure far surpasses the previous record of 1,640 CEO exits in 2019. And the trend isn’t abating. In January 2024, another 194 CEOs said goodbye, up 73 percent from the number who left their posts in January 2023.
That means companies across the US are scrambling to fill a leadership void when a CEO leaves or unexpectedly resigns. And if the trend continues, it means that every company should be preparing for the sudden need to find a new chief executive.
Here, we outline the most important steps a company should take when the CEO quits.
1. Ensure Continuity of Leadership
Everyone from the board of directors to the customers to the employees is going to be wondering what the leadership vacuum will mean for them.
Finding the right interim CEO or acting CEO who can step in quickly and take charge of the day-to-day running of the company is a critical first step in righting the listing ship.
When your CEO resigns, it might be tempting to appoint a board member, a senior vice president or some other exec who knows the company, to keep the seat warm while a permanent executive search takes place. But, this is no time to test a first-time executive who hasn’t navigated the instability that often comes with a big change at the C-suite. It is far better to bring in an experienced CEO who knows how to take charge and who is expert at stepping into periods of transition.
Interim and Fractional CEOs to the Rescue
That’s why so many companies contract with InterimExecs to have one of our vetted, experienced interim CEOs step into the job. A true interim can be on-site in a matter of days. And we say “true” because you will come across many fake interims, who are really job seekers in disguise. Now’s the time you want the battle-tested leader helping you through a period that can shake even the strongest organization.
In this interactive webinar, InterimExecs CEO Robert Jordan and President Olivia Wagner, talk about the top questions companies ask when exploring if an interim CEO is a fit for them:
2. Begin the Search for a Permanent Replacement
Once an interim CEO is in place, the company can begin the process of finding a permanent replacement. After your CEO leaves, a full-time CEO search can take anywhere from three to six months. Concurrently to the search taking place, the Interim CEO will work to stabilize the organization and establish a strong foundations and structure for the perm hire to step into.
An interim can also advise the board and management team in identifying and vetting the right CEO for hire. In recent years, many interims have been asked to stay on a bit longer to overlap with the permanent CEO to help get them up to speed quickly and ensure a smooth handoff.
3. Communicate, Communicate, Communicate
Employees, customers, suppliers, lenders, and other partners need to hear from the board of directors and the interim chief executive. The communication can take many forms, from in-person meetings to general emails to social media posts. Be prepared to answer questions as openly and honestly as possible, without making promises you can’t keep.
It is particularly important to be transparent with employees. They will be worried and anxious about the future of the company and their paycheck. You don’t want valuable employees to start job hunting while you’re getting operations back on track.
Now is the time to build trust and make the speech all new CEOs should give.
4. Focus on the Future
The CEO’s resignation is a setback, and usually coupled with many questions about what to do next. But, it’s important to remind all of the stakeholders — from employees to lenders — that the company has a bright future, and that each person has a place in it. Focus on the company’s goals and objectives and continue to work hard to achieve them.
5. Review the Company Succession Plan
Succession planning is important for the family business or company with one or more co-founders, but it’s just as important for large corporations. Ideally, you’ll have a plan in place before your CEO quits. But if not, now is better than never. Use this experience to inform the succession plan you create for the future, and help it drive a culture of mentorship and leadership development to ensure you are not caught flat footed if a future CEO suddenly resigns.
Why Are CEOs Quitting in Record Numbers?
No doubt, the trend of CEOs leaving will continue. Going back to the report on CEO turnover: the greatest number of CEO exits happened in the government/nonprofit and hospital sectors.
The search firm said companies did not always give a reason for the CEO’s exit, but of those that did give a reason:
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395 retired
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101 left for “new opportunities”
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54 CEOs found new positions within their companies
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326 “stepped down” into other C-level, advisory, or Board roles
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13 left their posts due to allegations of professional misconduct
What Are Some Signs the CEO is in Trouble?
Preparing for a replacement when a CEO quits is one thing. But a departure sometimes comes as a surprise. These are some warning signs a CEO may be in trouble including:
- The company is underperforming. If the company is not meeting its financial goals or is losing market share, this could be a sign that the CEO is not doing a good job.
- The CEO is making poor decisions. If the CEO is making decisions that are not in the best interests of the company, this could be a sign that they are not fit to lead the company.
- The CEO is losing the support of the board of directors. If the board of directors is no longer confident in the CEO’s ability to lead the company, this could be a sign that they are about to be fired.
- The CEO is facing personal problems. If the CEO is facing personal problems, such as a divorce or a health issue, this could be a distraction that is making it difficult for them to do their job.
- The CEO is simply not a good fit for the company. Sometimes, a CEO is simply not a good fit for the company. This could be due to a difference in values, a lack of experience, or a personality clash.
Which CEOs Resigned This Year?
Among the high-profile CEO turnovers since Jan. 1, 2023:
- Boeing CEO Dave Calhoun announced he would leave at the end of 2024. It’s part of a widespread management shakeup that includes Board chair Larry Kellner and commercial airlines CEO Stan Deal. The shakeup was brought on by a series of safety issues that started on Jan. 5 when a door panel blew off a 737 MAX Alaska Air jet mid-flight.
- Goodyear Chairman, CEO, and President Richard Kramer announced plans to retire.
- Morgan Stanley CEO James Gorman announced plans to step down after 14 years at the helm.
- JetBlue CEO Robin Hayes, 57, resigned for health reasons. His successor is the airline’s president, Joanna Geraghty, the first woman to lead a major U.S. carrier.
- PayPal CEO and President Dan Schulman retired.
- Dollar General replaced CEO Jeff Owen with former CEO Todd Vasos after the Board determined “that a change in leadership is necessary to restore stability and confidence in the company moving forward.”
- Pitney Bowes CEO Marc Lautenbach stepped down in response to investor pressure.
No organization is immune from changes at the C-suite. What’s your plan if your CEO leaves or is fired?
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InterimExecs RED Team is an elite group of CEOs, CFOs, and other C-suite executives who help solve challenges, opportunities, and leadership gaps. Learn more about InterimExecs RED Team here. Or contact us and request a confidential conversation to explore how we can help you.
More Resources:
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Interim Tackles Challenges When CEO and CFO Fired for Stealing From Public Company
Is an Interim Executive a Good Fit For Your Company?