A staggering proportion of workers are currently unemployed, and former senior leaders are no exception. One hundred twenty-five CEOs departed from their jobs in May 2010, up 24 percent from 101 departures in April, according to a report from global outplacement and executive coaching firm, Challenger, Gray & Christmas. The figure was the highest since July 2009 when 126 chief executives left their positions during the height of the financial downturn.
"Many companies rode with their CEOs through the recession, not wanting to change horses midstream," says John Challenger, CEO of Challenger, Gray & Christmas. "Now that we're coming out of it, we're seeing companies shift toward more growth-oriented CEOs. It's not a big movement because a lot of companies are not convinced that they're out of the recession."
Though the movement may not be big, it's certainly constant. The total number of May 2010 CEO exits was 9 percent higher compared to a year ago, when 115 CEOs left their companies. May was also the fourth consecutive month in which the numbers were higher than a year ago - there were 566 departures, compared to 506 departures in 2009 at the same time of year. Extrapolating from the current average of 113 CEO departures per month, the total number of exits for 2010 is set to exceed 1,300.
Challenger advises company leaders to make sure that there are strong programs in place to fill openings within the executive ranks and to create coherence among new management teams.
In terms of reasons that CEOs left their positions in May, the top two were resignation (42) and retirement (31), respectively. Other reasons included finding positions within new companies (9), being removed by the board (4), and economic turmoil (3).
Resignations outpace retirements because few CEOs last long enough to make it all the way to retirement, says Challenger, unless they were hired later in their careers or have long tenures.
He adds that the stress catalyzed by the financial downturn, during which "companies were really hunkered down and trying to survive," is now replaced with companies trying to capture "opportunities for global growth."
While there were no strong correlations between age or tenure and CEO turnover, the healthcare industry had the highest turnover to date in 2010, with 98 departures.
"I think healthcare reform is going to bring about several paradigm-shifting changes, and the presence of private equity and venture capital within the healthcare field can lead to a lot of CEO turnover," says Challenger. "When companies are bought out, new CEOs are most often brought in."
Other industries that have high CEO turnover to date include the government and not-for-profit sector with 76 departures, the financial sector with 51, and the IT sector with 42.
In terms of what companies can take away from this research, Challenger advises companies to "use coaching and onboarding strategies to create and speed up the process of building stronger C-suite teams during a time of heavier turnover at the top."