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Give The Boss Some Time?

2011/7/13 10:56:00 43

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Many executives will jokingly say that they will keep on working until they are carried into the office by coffin, but few people earn this right.

Malcolm Mike Arpan (Malcolm McAlpine) is still in charge of the daily work of Sir Robert McAlpine of the construction company on the day he died at the age of 93 years old. He has served the company for 75 years.

This company is a family business.

Blood relationship

Often more important than governance.

Generally speaking, the time taken by executives to prove their value is much shorter.

According to a study just published, last year, CEO, the 2500 largest listed companies in the world, averaged 6.6 years and the age of appointments was 52.

In 2000, when the consulting firm Booz & Company first released the annual survey, CEO was appointed at the age of 50, but served for 8.1 years.

However, even in

Listed company

There are exceptions in the field.

Warren Buffett, 80 years old, is an example. But according to GovernanceMetrics International research, there are 15 CEO ages in the world equal to Buffett, or even more than Buffett. Among them, the oldest CEO is the founder and CEO Walter of the 95 year old Cubic Corporation of the US defense and pportation technology company (Walter Zable), who has served as director for 60 years. Buffett,

What is the ideal age and term of CEO? Since 2005, a boss of a large American industrial enterprise has told me that 5 years are too short, and 10 years seems too long.

Therefore, if the board changes CEO in the 7 year itch, it will be reasonable to schedule the succession plan.

But the latest research shows that 28% of CEO outperformed in less than 4 years, while more than 1/4 of CEO spent more than 8 years.

In the economic downturn, a longer term - even if it is mediocre - will give the board reassurance.

Per-Ola Karlsson, a senior partner at bor, said: "replacing a CEO with at least a general performance is too risky."

I worry that directors who replaced CEO relatively quickly, and the time of dismissing longer CEO is too slow.

The absurd signing fee, renewal fee and severance pay bring high price to investors.

There are 3 factors to consider in deciding whether to resign or retain CEO.

First of all, try to make CEO's term meet your industry and goals.

Companies that badly need to turn around are likely to be

Short-term

At the top, there is a good master who is good at everything. Instead of taking up the track of recovery, it is possible to replace it with a leading team with a long line of vision.

But many CEO think that it will take two or three years to make their plans start to produce results.

In a company that has been in the company for several decades, there is almost no reason to replace CEO frequently.

For example, the study of The King 's Fund, a think-tank in the United Kingdom, found that "a well performing medical system is likely to have long-term senior leadership."

The same may be true for energy companies or utilities.

Secondly, we should pay close attention to the attitude of CEO rather than age.

The situation of enterprises steering by the elderly must be an exception.

But don't underestimate experience.

Over the past 10 years, Cubic, the more than 90 year old executive, has performed more than the standard & Poor's 500 (S&P 500) and Buffett's Berkhire Hathaway Inc (Berkshire Hathaway).

It is said that during the recent recession, Mike Arpan's family construction business benefited from his understanding of the company's experience during the Great Depression of the 30s.

In the same way, even young business leaders are likely to go from innovation to fossilization.

The American CEO told me: "when you try to get different views, and CEO gives the same old idea, he brings nothing new unless this CEO is a special person who will actively dig out a good idea."

The third and most important point is to maintain flexibility by fostering potential alternatives, if possible, within the enterprise.

According to the survey by Mr Booth, the term of CEO held by insiders is longer, and they create higher returns for shareholders than outsiders.

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A joint result of this kind of advanced thinking is that you may save a lot of money, and those poorly prepared boards spend a lot of money on poorly targeted pay packages.

CEO, which is internally recruited, is loyal to the enterprise and knows that its term of office is limited. The next CEO is being promoted step by step.

These are more powerful incentives for them to use their brains than contract gold, gold handcuffs or parachutes.

After all, why do companies have to spend more money to retain an executive who should otherwise seek another job or to replace an executive who might make more contributions?