CEOs, Partners Face Tough Choices in Deciding When to Step Down
The toughest task for many CEOs is not running their companies but determining when it is time to step down, according to a new report in Across the Board, The Conference Board's magazine.
Says James Krohe Jr., author of the article: "For the miscreant CEO, the question of when to leave the job has an easy answer: 'Before they find out.' For the merely mediocre senior executive, the answer is different--'Before they push me out' -- but equally easy. But what about the CEO who is neither being shoved out the door nor sneaking out by the freight elevator? The CEO who is nearing the end of a career, or at least the end of the important part of it, with his mind, body, and reputation still intact?"
A consensus among former CEOs suggests that 8-to-10 years may be about the right tenure for CEOs in today's volatile economic and business environment.
Retiring means not only abandoning an old life but creating a new one. It means asking questions of oneself that one hasn't asked in decades, if ever. The real dilemma is that time often marches along faster than aging executives. "Many an aging CEO finds that the kinds of companies he was trained to manage no longer exist," says the report.
John Wareham, a noted leadership consultant, says that CEOs are driven by "a golden spur -- usually something in their upbringing ... they get to be CEO to prove something to the world. After they've proved themselves, they suffer what people call burnout. When they reach that stage, it's a good time to leave."
There is still another option: taking the retirement decision out of the hands of aging executives and installing mandatory retirement. Policies stipulating "65-and-out" relieve the executive of deciding when to quit. But while mandatory age-based rules make the exiting decision easier, they do not make it wiser. Better nutrition and medical care mean that many of today's 75-year-olds often have the energy and mental sharpness of a 65-year-old of a generation or two ago, so mandatory retirements deprive a lot of companies of perfectly good chief executives. Such rules do nothing to keep under-65 executives whose minds are wandering.
WHY 8-10 YEARS IS ABOUT RIGHT:
Corporate boards may someday impose term limits in which retirement is based on tenure rather than age. Says Marshall "Marsh" Carter, former Chairman and CEO of Boston's State Street Bank and Trust Co.: "I truly believe that in running a Fortune 500 company, eight to ten years is about right." He is seconded in that opinion by Lord MacLaurin, Chairman of British telecom giant Vodaphone, who has stated that eight to ten years is the maximum wise tenure for a CEO, because even large organizations change faster these days than CEOs can. That was the same conclusion arrived at by Walter B. Wriston, who didn't
retire as CEO and Chairman of Citicorp until he was 77 but has since publicly argued in favor of tossing out top management at 65 because, as he puts it, much of what they know isn't true anymore.
PULLING OUT OF THE RAT RACE:
For many who have spent their professional lives trying to gain a corner office, the top jobs are often not considered to be the best jobs today.
Says Krohe: "Running companies that are becoming too big, too bureaucratic, or too complicated is the cause of complaints common to every executive -- unreasonable deadlines, pointless travel, e-mail and cell phones that tether people to the job 24/7, and the meetings. The CEO also faces vexations unique to the job: an insulting business press, impatient stockholders, nosy regulators, meddling boards, middle-management saboteurs. It has become difficult to do the job well, and almost impossible to enjoy it even when it is done well."
The rat race is still so grueling that even the rats who win often lose, says the report, a reason that health is increasingly a factor in early retirements. Stress, irregular diet and exercise, not enough sleep, jet lag- being a CEO is not always a healthful proposition. To the traditional woes of hypertension and ulcers and heart disease, today's globe-trotting executive must add long airplane flights and the accompanying threat of deep vein thrombosis of the sort that in 2001 briefly forced the retirement of J. Walter Thompson head Chris Jones, at just 45.
Adds Krohe: "Baby boomers in particular tend not to agree with their fathers that it is heroic to die on the job of a heart attack at 55. This newer generation of executive anticipates retirements filled with sailing, cycling and hiking. The question they put to their physicians is not their father's, 'Am I too sick to work?' but, 'Am I still healthy enough to retire?'"
"There are some signs of a glacial movement toward appreciation of a more balanced approach to life," reports Joe Eastman, a Vice President of LeaderSource, a Minneapolis-based leadership-development and executive-coaching consultancy. Says Krohe: "The word 'retire' is considered New Deal-ish rather than New Age-ish. Life-planning professionals prefer terms such as redirect, rebalance, re-engage."
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