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The perils of long CEO tenures


Company leaders who stay too long at the helm ultimately damage their organisation’s performance, according to Chad Brooks, writing for Business News Daily.

Brooks cites a study by researchers at Temple University and the University of Missouri which revealed that longer CEO tenures often produce negative results.

Researchers based their study after analysing 365 US companies between 2000 and 2010. They measured CEO tenure and calculated the strength of the relationships between firm and employee and firm and customer.

According to the study’s authors, the longer a CEO serves, the stronger the firm-employee relationship becomes. However, an extended period with the same CEO produces a weakened firm-customer relationship over time.

The study reveals that the average CEO holds office for 7.6 years, but the optimal tenure length is 4.8 years.

Michelle Andrews, co-author of the study, told Brooks: “We’re not saying, ‘Fire your CEOs after 4.8 years.’ But if company boards restructure CEO packages to cater to consumers more, you may find yourself with better results.”

Source Article: Time to Go? How Long Is Too Long for CEO Tenure?
Author(s): Chad Brooks
Publisher: Business Daily News