Future: Plan for Shorter CEO Tenures
Baby boomers are known for their commitment to their employers. They often stay with their company for years or even decades, gradually climbing the corporate ladder until they take over senior leadership positions.
However, baby boomers are nearing retirement age. Born between 1946 and 1964, the youngest of the generation will reach 67 by the year 2031.
That means companies must turn to Generation X employees, born between 1965 and 1980, and millennials, born between 1981 and 1996, for senior leadership support.
Nevertheless, people in the younger generations aren’t as likely to stick around for long tenures with the same company. This means that organizations may struggle to maintain the same level of continuity they relied on with baby boomers.
Employee Tenure Length Is Changing
According to a recent 2022 survey by the U.S. Bureau of Labor Statistics (BLS), the median employee tenure for men was 4.3 years, and for women’s was 3.8 years in January of 2022. Just 28% of salaried male workers had a tenure longer than ten years with their current employer, compared with 26% of women.
Comparing tenure across generations, the BLS found that the median tenure of workers between 55 and 64 was approximately 9.8 years, making it triple the 2.8 years of workers between 25 and 34. Racial demographics didn’t impact the findings much; while Whites had longer tenures, the difference was negligible between Blacks, Asians, and Hispanics.
Education appears to impact tenure. Workers over 25 with less than a high school diploma have a lower tenure than those with a college education. The tenure for people with less than a high school diploma varies between 4.3 to 4.5 years, while the tenure for college graduates varies between 4.9 and 5.1 years.
People working in the public sector have longer tenures than their private sector peers. On average, the tenure for a public sector employee is 6.8 years, compared with 3.7 for workers in the private sector. Some public sector jobs, such as the military, require long-term commitments, which may be part of the reason for the longer tenures.
Occupations play a role in employee tenure. People in management and professional positions have an average tenure of 5 years, while workers in the service industry have the lowest tenure, which averages approximately 2.8 years.
Why Younger Generations Don’t Stay for the Long-Term
Most baby boomers believe in company loyalty and dedication. Their parents were often long-term workers who stayed in the same job for decades. Their strategy for reaching the top rung of the ladder was to wait until everyone else retired or sought other opportunities. Companies saw their commitment to the organization as positive, and most would sooner hire someone who stuck around for decades than another candidate with no experience within the company, no matter how qualified they might be.
However, younger generations have a different outlook on staying with a company for the long term. They usually seek fresh challenges, so once they master the responsibilities of a role, they’ll need additional projects to stay engaged. If extra work isn’t forthcoming, they’ll look for other options inside or outside the company.
Younger generations also find that moving from one organization to another can lead to better pay and benefits. Since companies are always looking for qualified talent, a worker with specialized skills may be in demand. They won’t need to look too hard to find another role that provides a higher salary, more vacation time, or other attractive perks.
Sometimes, younger workers like to branch out into other areas they haven’t worked in before. For instance, a staff accountant may move into auditing, or a marketing executive might try their hand at operations management. A broad array of experience makes workers more appealing than their counterparts who stayed in the same role for five or ten years.
Encouraging Longer Tenures Is Possible
That’s not to say that younger workers won’t stay with your organization for lengthy periods. They just need a solid reason to do so.
Companies that can’t afford to change their CEOs every few years should focus on making their organization the optimal choice for qualified senior leaders. Organizations offering higher-than-market-level salaries and equity packages are likelier to see their CEOs stick around for lengthier tenures.
Board members and other senior executives can:
- Adopt practices that encourage lengthier tenures
- Offer CEOs more authority
- Avoid clamping down on CEO aspirations
- Be mindful of giving the CEO due respect
As simply as those efforts may seem, they can go a long way toward:
- Greater CEO engagement
- CEO retention and longer CEO tenures
Another way that organizations can limit the impact of regular turnover is by making the CEO responsible for their succession plan. When the CEO must name their successor, and properly mentor and train them for the job, there’s less disruption to the business when they leave. The remaining staff is already familiar with the new CEO, and they’ll have the training and support they need to take the original CEO’s strategy forward.
Implement a CEO Mentorship Program
Another way that organizations can plan for shorter CEO tenures is through an ongoing leadership development program. An in-house mentorship program between current senior executives and promising mid-level employees can help ensure you have a pool of talent to pick from when a CEO or other executive decides to move on from the organization.
Mentorship programs offer other benefits, too. Your employees who join the program will learn strategic skills to help them perform better in their current roles. They’ll also develop stronger relationships with executive staff members, which can improve retention rates and lead to higher engagement levels.
A mentorship program can help you attract top-tier talent to your organization. Candidates who learn of the mentorship option may find your company more attractive than another organization without similar possibilities.
CEOs May Move on Sooner from Their Roles, but It Isn’t Necessarily Negative
You will probably see less commitment and dedication to your organization once your baby boomer team members retire. However, that doesn’t mean you can’t maintain optimal performance among your leadership team.
Ensure you meet the needs of your CEO and other senior executives by offering competitive compensation. You should also have succession plans so your company doesn’t suffer any hiccups during executive transitions.
National CEO Search Firm Ready to Help Your Organization
Our hands-on executive recruiters have experience working with private, public, pre-IPO, and non-profit organizations. Clients are typically $50 million in revenue to Fortune 1000’s or have assets between $500 million to $15 billion. Successful placements span the entire C-Suite – CEO, Chief Operating Officer, Chief Financial Officer, and include vice president, general counsel, and other director-level leadership roles.
Cowen Partners delivers 3X more qualified candidates than the competition. Through our proven retained executive search process, we find, vet, and deliver the top 1% of candidates for positions across the C-suite. Our process works for all industries, including technology, healthcare, manufacturing, retail, real estate, financial service, private equity, and more.
Learn how we deliver top talent, no matter the need, with our industry-leading research and resources. Discover the strategy that made Cowen Partners the top retained executive search firm in New York, Chicago, Seattle, Atlanta, Dallas, Indianapolis, Los Angeles, and beyond.
- What Is Retained Executive Search? Retained Executive Search v Contingency
- The Making of a Private Equity Portfolio Company CEO
- When to Hire a CEO for Your Startup
- What Should a SaaS CEO Earn?
- What Makes a Great Chief Operating Officer
- What Private Equity Firms Want CFOs to Know
- The Difference Between a Chief Legal Officer and a General Counsel
- The Role of the Modern CHRO: Unlocking the Value of Human Capital
- Chief Information Officer vs. Chief Technology Officer
- Moving From Theory to Practice When Recruiting for Executive Diversity
Get in Touch.
Fill out the email request form to learn more about our approach.