Michael Williams, Tom Curley, Wayne Gattinella and Scott Thompson all have something in common: each has been replaced as the head of a major company, reflecting a trend that continues from last year.
About 14 per cent of the chief executives at 2,500 global public companies were replaced last year, a figure close to the historical seven-year average, according to a study released yesterday by the management consultancy Booz & Company. The personnel movements included instances of chief executives who were fired, who retired or who moved for better prospects.
Some of those replaced most recently include Mr Williams as chief executive of the US mortgage company Fannie Mae, Mr Curley as president and chief executive of the Associated Press, Mr Gattinella as president and chief executive of WebMD Health and Mr Thompson, who resigned as the chief executive of Yahoo this monthamid a furore over an apparent embellishment of his résumé.
Booz & Company says the turnover rate among chief executives has returned to pre-financial-crisis levels, as economic stability returns to some parts of the world. In 2010, which is considered the year in which the global downturn ended, the turnover rate among company chiefs was 11.6 per cent versus the 14 per cent rate noted by Booz & Company for last year.
"That the overall turnover rate is back to historical levels suggests that some companies are making a real effort to rethink strategy and drive performance," Per-Ola Karlsson, a senior partner at Booz & Company and the managing director of its European division, said in the study.
The movements of chief executives were unequally distributed in Bric countries last year. While more chief executives were on the move in Brazil, Russia and India, where the rate was close to 22 per cent, in China they were more likely to remain in their jobs. China's turnover rate was about 7 per cent.
The figure in the United States, Canada and Western Europe was about 13 per cent, the report said.
The highest turnover last year was in the energy, telecommunications and utilities sectors, at 19, 18 and 16 per cent, respectively. In the diversified sector, the rate was 6 per cent.
"These turnover rates are mostly observed in markets where we have seen an accelerated pace of industry consolidation, and this was not the case for the [energy, telecoms and utilities] industries in the Middle East," said Karim Sabbagh, a vice president partner at Booz & Company in the Middle East. "Conversely, what we have seen in the region is an accelerated pace of consolidation in selected sectors such as real estate, retail and specific segments of financial services. As a result, we could expect higher turnover rates in these sectors."
Some of the executive-level movements are natural, having been delayed because of a lack of opportunities during the downturn, said Greg White, a vice president of Cerner and the managing director of its Middle East and Africa division, based in Dubai. Cerner specialises in healthcare information technology. "Many executives have been staying with roles beneath their capabilities for several years to take a conservative approach while the market has pulled back, and now they are ready to move to their next higher-challenging role," Mr White said. "I do see this occurring within the tech industry, and I see performance expectations being higher as well."
The turnover among top management during mergers and acquisitions is traditionally highest among the smaller companies in the transactions. Separately, companies with large market capitalisations are more likely to replace their chief executives than are smaller firms, the analysis found.
One of the toughest periods of a chief executive in a company, including those from the Middle East, is the first year on the job. Of the 17 chief executives interviewed for the study, one of the three Middle East-based chiefs said the key was to execute a new strategy from the first day.
"Organisations are not as patient for [chief executives] to deliver results, therefore some of the turnover is from [top executives] not performing in their roles and organisations making changes sooner than they would have a decade or so back," Mr White said.
twitter: Follow and share our breaking business news. Follow us
iPad users can follow our twitterfeed via Flipboard - just search for Ind_Insights on the app.