Beyond The Great Resignation: Navigating The Surge In Executive Turnover

Turnover rates began to steadily climb in 2020 and continued to do so over the next two years. In 2022 alone, voluntary departures hit historic highs, with an estimated 50.5 million workers leaving their jobs for other opportunities — be it for a higher paying gig, a company that better aligned with their values or to pursue their passion project. While the Great Resignation has finally wound down, another phenomenon is now picking up speed: Executive turnover. More than 1,400 chief executives abandoned their posts between January and September 2023. That’s almost a 50% year-over-year increase in c-suite turnover.

Retirement is mainly driving the trend, with many executives having already planned to step down. It was just a matter of timing — and uncertainties stemming from the pandemic, trade tensions, supply chain disruptions, the Russia-Ukraine war, and a host of other factors. However, all the ups and downs over the last few years have left an increasing number of executives burnt out and in need of a break or a change of scenery. Regardless of the reason for the surge in separations, companies are now in quite a predicament, and it’s often a result of their own doing.

Countless companies have not properly invested in their leadership pipeline, so much so that, for some businesses, the pool has almost completely run dry. Not to mention, when they arrive at a qualified candidate, many are well past retirement age or even older than outgoing CEOs. This hiring trend puts the company and investors at risk, especially with another executive transition right around the corner. It also underscores the importance of CEO succession planning. Without absolute stability in leadership, business continuity can quickly go out the window and erode employee engagement, morale, customer confidence, brand reputation, and more.

For example, over the last few years, Gap Inc. has made an unfortunate habit of ousting its CEOs without a successor on deck — first in 2019 with the sudden exit of Art Peck and then again in 2022 with the removal of Sonia Syngal. While an interim leader was brought in on both occasions, the abrupt and repeated c-suite turnover speaks volumes about the retailer’s approach to talent development and succession planning. Something shareholders certainly noticed, as Gap stock plummeted almost 45% during that time.

The Importance of CEO Succession Planning

Succession plans have always been built on timely qualified options. The more qualified options you have at your disposal at the time of need, the safer your company will be. Investing in your CEO pipeline, inside and outside the organization, will save your board, investors and yourself a tremendous amount of headache in the event of a sudden resignation, illness or death. It all boils down to understanding the criteria and competencies required to succeed in the role and then assessing the talent available internally to determine who might be the best fit should an executive vacate the company.

Of course, when everyone is reevaluating where they work, why they work, and what they do, it’s also essential to take a second look at your organizational culture. Even the best companies can’t expect to encourage leadership talent to join their ranks, let alone reduce executive turnover, if their culture isn’t employee-centric.

According to the Academy to Innovate HR, 82% of workers want to work for companies with a purpose. As such, boards would do well in supporting their CEOs with long-term strategic plans that are adaptable to future ebbs and flows. Companies and their leaders need a purpose — especially with the rise of belief-driven workers — if they want to reduce executive turnover and increase their chances of long-term stability.

Ensuring Greater Stability in Leadership

Even with a healthy culture and a strong purpose, mission and vision for your organization, C-Suite turnover is inevitable. Leadership will leave, whether the departure is anticipated or out of the blue. No matter the size of operations, companies should be proactive in how they plan to tackle such an event. Here are a few tips to ensure you’re ready when the time comes:

1. Invest in leadership successors.

Developing a formal succession development plan, on top of a formal succession plan, increases the chances that the heir-apparent will thrive in the new role. What that development plan looks like varies from company to company, but consider incorporating people-first initiatives into the mix that can help them expand their skills and experience to take on such a role. Mentoring can also be beneficial, as it offers the opportunity to transfer knowledge with the incumbent.

2. Address leadership burnout.

Anxiety, exhaustion and loss of productivity are just a few signs of burnout. While the symptoms aren’t always easy to spot, you should still take the necessary steps to address the problem.

For example, EY offers their employees free resources to help them strike a balance between work and life, going so far as to provide 25 counseling sessions each year, as well as meditation sessions, mindfulness training, and so on. Microsoft takes a similar approach, with counseling sessions, workshops and support groups for its employees. In other words, companies should provide leadership and the rest of the team with the support they need to get better results and reduce unnecessary turnover.

3. Communicate during transitions.

Purpose, continuity of mission, and steadiness from the board and C-Suite are all things that everyone will need during times of transition, especially if you hope to stay the course without unnecessary turnover. Constant communication during a transition, showing strength in having an effective succession plan and naming a qualified successor, can quell most staff and investors’ concerns.

4. Prioritize transparency.

Transparency will be necessary when C-Suite turnover rears its ugly head, and that goes double when working with an executive search firm. Secrets will only cost your company time and money and create unnecessary delays in the succession process. Besides, whoever you’re working with will always find out anyway. If need be, have the firm sign an NDA upfront and then put your cards on the table. They’ve likely encountered your problem before (i.e., scandals, conflicting personalities, etc.).

C-Suite turnover is just the cost of doing business; there’s no getting around that fact. What can be challenging to gauge are the reasons for the departure. Is it retirement? Perhaps burnout? Is it time for a change of scenery? Maybe organizational culture is to blame. Regardless of the cause, the solution is clear: You must be committed to planning for the future of your business now. Whether internal or external, candidates will be ready to execute your plans. If you genuinely believe in a stable future, take the steps to make it a reality today.