CEO turnover down during height of COVID-19, except at hospitals

Dive Brief:

CEO turnover fell for the second month in a row in March, with 94 CEOs leaving their posts, according to a report by outplacement firm Challenger, Gray & Christmas. CEO turnover was down 27% from February and 30% from this time last year, the firm said in a statement.
Though monthly totals fell, 441 CEOs left their posts in the first quarter of 2020, which is the second-highest quarterly total recorded by Challenger, Gray & Christmas since 2008. This is second only to the previous quarter, which saw 480 CEO departures — the highest-ever quarterly total in the firm's analysis.
Among industry segments, hospitals had the highest number of CEO departures in March, which may be reflective of the COVID-19 pandemic. "CEOs of Hospitals and Hospital systems are truly being tested right now," Andrew Challenger, vice president of the firm, said in the statement. "Many are losing money due to the need to cancel elective procedures that typically propel these entities into the black at a time when cost-cutting would only hurt communities, patients, and health professionals."

Dive Insight:

It's understandable that companies might prefer to keep leadership steady during a global pandemic. It should be noted, however, that turnover had been trending upward ahead of COVID-19's emergency, particularly in industry segments like retail. Following a 2019 that saw a number of CEO departures in the industry, others in leadership positions have been put under the microscope. For example, half a dozen retailers had either laid off or announced a new chief marketing officer by Feb. 18, HR Dive sister site Retail Dive reported.

Last year, a number of high-profile incidents led to CEO and other executive departures across industries ranging from food service to aerospace. This continued into January, with Challenger, Gray & Christmas recording an estimated 219 exits, which marked a 37% jump from December.

Losing those in leadership positions necessitates a transition plan, and HR executives may need to step up to ensure such plans are formulated and executed properly. Specifically, HR must develop a communication strategy that anticipates and addresses employee concerns while articulating a plan for the future, sources previously told HR Dive.

But many organizations lack a formal plan to break out in case of executive departure. Nearly half of U.S. chief financial officers in a survey last year by Robert Half Management Resources had not named a replacement, and only 37% of those working at small businesses said they had an "heir apparent." A survey released in January by Gartner found that HR leaders are encountering obstacles in developing new company leaders, with 45% saying they struggled to fill mid-level management positions.

The dynamic between CEOs and CHROs is increasingly complex and evolving in the current landscape, with CEOs in some instances stepping in to lead organizations through transformation, potentially displacing CHROs, according to Infosys Knowledge Institute. But leading HR organizations, including the Society for Human Resource Management, believe that CHROs are important strategic partners to CEOs when it comes to solving challenges. CHROs may even be confidants to CEOs, one executive search firm leader previously told HR Dive.