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E-MailLaura Sanderson Co-leads the Board and CEO Advisory Partners in Europe and Luke Meynell Co-leads the Board & CEO Advisory Partners in the UK at Russell Reynolds Associates. This post is based on their Russell Reynolds memorandum. Related research from the Program on Corporate Governance includes Politics and Gender in the Executive Suite (discussed on the Forum here) by Alma Cohen, Moshe Hazan, and David Weiss; Will Nasdaq’s Diversity Rules Harm Investors? (discussed on the Forum here) by Jesse M. Fried; and Duty and Diversity (discussed on the Forum here) by Chris Brummer and Leo E. Strine, Jr.
When we analyzed the 1,822 companies listed on the world’s leading stock indices, we found a total of 106 CEOs left their positions in the first half of 2023. This is just two fewer than we saw in the first half of 2022, which was a record year for CEO turnover.
This high level of departures should be creating an opportunity to accelerate progress on gender parity among CEOs. This year, 13% of those taking a CEO role have been women, up from 2.4% for the first half of 2018.
But the picture varies significantly around the world:
The proportion of CEOs appointed in H1 2023 who are women
13%S&P 500 |
27%FTSE 100 |
0%Nikkei 225 |
And women are still vastly underrepresented in the top job:
How many women CEOs are there?
41S&P 500 |
10FTSE 100 |
1Nikkei 225 |
While we’re pleased to see the corporate world making progress toward gender parity in CEO roles, it’s happening too slowly. At the current rate of change, the world’s leading stock indices won’t see the same number of men and women in CEO seats until the next century.
Two factors are contributing to high CEO turnover
CEOs around the world have steered their organizations through unprecedented times. From COVID-19 to the war in Ukraine, all businesses have faced exceptional challenges – and many CEOs who might have been planning to step down earlier might now feel they can do so without risking further turmoil for their companies.
Boards are also increasingly looking for new leadership. Having survived the last few difficult years, many are now reexamining their strategic goals – and whether they have the right CEO to address them. As the challenges CEOs must now address have multiplied considerably, boards are considering whether they have the right person at the top.
As higher levels of volatility and uncertainty in G7 economies persist, we expect annual CEO turnover to remain high in the years to come. If managed deliberately, this could help accelerate the world toward more equal gender representation in senior leadership.
What does this mean for companies?
High CEO turnover is a challenge for companies. When a CEO leaves, it can disrupt operations and create uncertainty for employees and investors. Companies need to be prepared for CEO turnover and have a plan to ensure a smooth transition.
To prepare for CEO turnover, boards should have a strong CEO succession plan.
A CEO succession plan should identify which of the organization’s current leaders have the potential, with the right support and development, to become CEO. It should also outline what it will take to prepare each candidate for the role.
While CEO turnover presents a challenge for companies, it’s also an opportunity. When a CEO leaves, it’s a chance for the company to reset and bring in leadership capable of delivering the next phase of its evolution. Companies that can manage CEO turnover effectively can and should emerge stronger than ever.
