In the past year, the average tenure of a CEO has halved. This is, of course, worrying news for top leadership teams and CEOs want to know, how can they ensure their roles are secure? Well, there is no magic formula to guarantee that; but, remaining aware of the factors (endogenous and exogenous) that have been shown to contribute to CEO failure can help them be better equipped to succeed.
What are the patterns and signs that relate to how failure at the C-Suite level can be prevented? Well, there is no consensus as to what constitutes ‘failure’, but nevertheless this Idea does shed some light on the obscure circumstances surrounding CEO performance.
‘CEO failure’ can be broadly described as “the inability of a CEO to meet the expectations of the board of directors, the shareholders and the market, leading to dismissal.” Two variables in particular can precipitate the fall of a CEO: endogenous and exogenous variables – the former being those a CEO may, to some extent, influence while the latter are given. Both may also blend with and influence one another.
Endogenous variables can include the following:
Exogenous variables include the following:
There is “no magic list” of rules for guaranteed success and it can’t be said for sure exactly what causes CEO failure; however, knowing the factors that potentially contribute the most to failure (outlined above) will make CEOs better equipped to succeed.
Parting gestures will be remembered, and in the event that a CEO faces succession, leave with your head held high. Two specific ways of doing so are as follows:
Why Do CEOs Fail? How the Mighty Are Fallen. Guido Stein & Javier Capapé. IESE Insight Issue 4 (2010).
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