February was a rough month in the financial markets and in the jobs markets but one group did better than any time in the last five years. The turnover in chief executive officers in February was the lowest in any month since December 2004.
Only 83 CEOs lost their jobs in February, a 26.5 per cent nosedive from January, according to the latest report on CEO from outplacement and business coaching firm Challenger, grey & Christmas. In the first two months of this year, only 196 CEOs left their posts, a 20 per cent from the same period last year. 20 CEOs of financial companies left their job or were forced out, compared to 23 during the period last year.
So what’s causing the downturn in CEO turnover? We have three possibilities.
• A Turnover Bubble. So many CEOs have lost their jobs in the last few years, particularly in finance, that there wasn’t anyone left to fire. The new guys aren’t to blame for the poor performance of their companies, so they have a bit of leeway. In short, the CEO turnover bubble has burst.
• The Bailout and Stimulus Is Working…For CEOs. Although the CEO of General Motors lost his position today, the bailouts and stimulus packages may be helping CEOs keep their jobs. The government hasn’t insisted in management changes, and boards of directors may be rewarding sitting CEOs for the ability to obtain government favours.
• An Illiquid Market. Of course, not all CEO turnover is due to the boss being thrown overboard. Many get recruited to defect to other companies. With the economic downturn and looming compensation caps in many industries, the market for CEOs may be illiquid.