Departures among chief executive officers fell to the lowest level of the year in July 2012, as 83 leadership changes were announced during that month. This marks the slowest month for CEO turnover since December 2011, according to the latest report on CEO turnover released Aug. 8, 2012, by global outplacement consultancy Challenger, Gray & Christmas, Inc.
July CEO departures were down 16.2 percent from a June 2012 total of 99 and 20.2 percent lower than the 104 CEO exits announced in July 2011. Challenger has now tracked 692 CEO changes in 2012, 2.5 percent lower than the 710 CEO departures recorded during the same period in 2011.
Health Care C-suite Transitions
For the year, health care continues to see the heaviest turnover, according to Challenger data. It leads all other sectors with 140 CEO changes so far in 2012, including an industry-leading 13 departures in July.
But many CEOs of health care organizations are staying put. Nearly three-quarters of recently polled health care CEOs between the ages of 55 and 59 reported having no current plans to retire or that they are at least five years away from retirement, according to a national survey report released June 2012 by executive search firm Witt/Kieffer, which specializes in health care and higher education.
Witt/Kieffer in May 2012 surveyed 200 hospital and health system CEOs nationwide over the age of 55 about their future plans for retirement and transitioning out of the C-suite. Seventy-three percent of respondents are between the ages of 55 and 62, while about one-quarter are age 63 and over.
The report, Future Plans for Transitioning Out of the C-Suite: A Confidential CEO Survey, reveals that 71 percent of health care CEOs aged 55 to 59 have no plans to retire. About one-quarter (24 percent) are planning to retire within four to five years; 14 percent will retire within two to three years; and just 8 percent plan to retire within one year.
Further, many respondents feel their organization is not prepared for their departure; more than half of respondents said that no one at their organization is ready to step into the CEO role.
“Sixty has become the new 50,” said Elaina Genser, Witt/Kieffer senior vice president and western region managing director, in a statement about the results. “While it’s encouraging that so many want to see through the challenges health care faces, these CEOs will transition out of their role at some point, and the need for succession planning in health care organizations is clear.”
But this argument might be falling on many deaf ears. Eighty-eight percent of respondents also said they have goals to achieve before retiring, and 83 percent feel they need to help solve the challenges in health care.
Nearly three-quarters of respondents also said that the board does not want them to retire yet. Less than 40 percent of respondents reported having worked with the board to develop a formal succession planning process, and only about one-third have mentored their successor.
“The time is now for CEOs to work with their boards and senior management teams to identify and mentor potential successors and develop a succession plan,” said Genser. “Planning today will make the transition smoother for the CEO, board and entire organization when retirement becomes a reality.”
Other Industry Transitions
The government/nonprofit sector, which has seen 94 CEO departures to date this year, had 11 CEO changes in July 2012, while computer and financial firms each announced nine departures that month, Challenger reported. The financial sector has seen 57 CEO changes through July.
The computer sector is the industry with the third-highest turnover so far this year. Computer companies have announced 70 CEO changes to date this year, including another at Yahoo in July 2012 with the handoff of the reins from Ross Levinsohn to former Google executive Marissa Mayer.
Thirty CEOs cited resignation as the reason for their departures last month, and this continues to be the most cited reason for leaving; 205 CEOs have resigned during the first seven months of 2012, according to Challenger data. Retirement is the next highest cited reason for leaving, with Challenger noting 143 retirements in 2012, only six of which came in July. To date, 114 chief executives, including 15 in July, stepped down, usually staying with the company as a board member or other C-level executive.
Six CEOs were removed or ousted from their positions in July 2012.
Theresa Minton-Eversole is an online editor/manager for SHRM. To read the original article, please click here.