A new report which shows dramatic increases in the number of senior managers being dismissed for misbehaviour indicates that businesses are acting when employees of all kinds behave in unacceptable ways.
30 percent climb in dismissals
The research conducted by The Conference Board a member-driven non-partisan, not-for-profit think tank focused on delivering trusted insights on the future of business identified that
- Nonvoluntary departures of chief executives had climbed to 30.5 percent, up almost eight percentage points from 2017.
- #MeToo-related dismissals accounted for nearly half (five) of the 12 dismissals, compared to just one CEO departure for personal misconduct in the S&P 500 from 2013-17.
High dismissal rates for consumer products and transportation CEOs
The transportation industry and consumer products sector dismissed CEOs at the highest rates: non-voluntary departures were 40 percent and 33.3 percent, respectively.
Succession planning becomes essential
If there is a growing trend towards businesses being less tolerant of poor performance or behaviour from senior executives, and increased willingness to terminate employment they are also going to have to improve their succession planning.
Boards will need to proactively plan for a range of scenarios and to make succession planning a high priority.
Good news for employees
The good news for employees is that the majority of CEO positions 90% are being filled by people that the business already employs.
Almost half are being filled by employees who have at least twenty years’ experience with the business.
So, whilst boards are increasingly willing to remove a CEO who is not performing successfully or behaving well, it seems that they still value the value the continuity that in-house experience, and organisational knowledge provides offers.
Fewer women in top jobs
The number of women in top CEO positions has declined. In 2018 there were just 22 female CEOs in the S&P 500, down from a record 27 in 2017.
Last year, just one additional woman joined the CEO ranks: Kathy Warden of Northrop Grumman.
While the number of women CEOs has increased significantly since The Conference Board began to produce the report began reaching their highest levels in 2017, the trend has suddenly reversed with the number of women CEOs dropping to pre-2016 levels.
Bonnie Gwin, Vice Chairman and Co-Managing Partner of the CEO & Board Practice, and senior level recruiter Heidrick & Struggles, suggested that as companies increasingly look internally for their next CEO, they must also do more, earlier in women’s careers to develop and train those women with high-potential and add them to their CEO-ready lists.