The trouble with tenure

Succession vs success…

There are many new faces at the UN Climate Change Conference (COP 28) this year – and herein lies an underlying problem in tackling multi-decade projects: CEO tenure.

This is not just for sustainability, but leadership and teams in general. It’s well known that family-owned companies plan for tenure and succession far better than corporates who take on outsiders as CEOs in shorter cycles. Family-owned companies tend to think in longer tranches of time – 10 to 20 years, even, and spend years working with the right people to take over as CEO.

But in general, that is not the case and CEO tenure overall is falling, a recent study by Equilar found.

“The data reveals 39% of S&P 500 CEOs have tenures ranging from one to five years, and 28% maintain tenures falling between five to 10 years…Several factors have contributed to the trend of shortened CEO tenures in recent years. The role and responsibilities of chief executives have evolved significantly over the past decade, demanding higher levels of accountability and adaptability. CEOs now face a rapidly changing business landscape with increased competition, technological advancements and shifting consumer demands.”

And what about those who work under the C-level? My guess would be their tenure is significantly lower.

(And don’t even get onto British prime ministers…)

This is bad news for sustainability, where those making commitments for 2030-2050 are unlikely to be in the same job in ten years – probably not even five.

When most companies think in three months or at best, one-year bursts, driving long-term growth or delivering on even longer-term promises on sustainability commitments will be tough.

A study by SoftwareAG found while companies are committed to sustainability as a mission (95% say that it is either a top or a high priority),but in reality they struggle to connect it with other priorities. Some 84% admitted sustainability takes a back seat to commercial objectives in tougher economic times.

So as CEOs, what should we be asking this week?

1 – What are the levers to greater C-level tenure?

2 – How can we not kick the can down the line with our commitments to growth and sustainability?

3 – What are the short-term cycles we must get out of to think longer-term?

4 – Who can we partner or work with to focus on the long-term?

5 – How can we lead our industry on tenure and succession vs sustainability and long-term growth?

Have a great week…

Dan