The movement many now refer to as “The Great Resignation” has continued with strong momentum in 2021, hitting mid-career professionals most heavily, as well as those in tech and healthcare fields.
According to the December 8th, 2021 data from U.S. Bureau of Labor Statistics, job openings increased to 11.0 million on the last business day of October, and hires were little changed at 6.5 million.
But it’s important to understand that CEOs and other chief executives are not immune to this drive to leave their current role and pursue other opportunities.
According to an October 2021 report by global outplacement and business and executive coaching firm Challenger, Gray & Christmas, Inc., U.S.-based companies announced 142 CEO changes in October, up 38% from the 103 exits in September, and 54% higher than the 92 CEOs who left their posts in the same month last year. It is the highest monthly total since January 2020, when 219 CEOs left their posts, the most on record in a single month.
To learn more about the reasons behind CEOs departing from their roles, and the impact of that departure on their organizations and work cultures, I caught up this month with Rose Gailey, for her insights. Gailey is a partner and global lead for organization acceleration and culture shaping for Heidrick Consulting at Heidrick & Struggles. She advises her clients on how breakthrough leadership and thriving workplace cultures can keep employees engaged and accelerate performance.
Heidrick & Struggles is a leading provider of global leadership advisory and on-demand talent solutions, serving the senior-level talent and consulting needs of the world’s top organizations. In its role as trusted leadership advisors, it partners with clients to develop future-ready leaders and organizations, bringing together services and offerings in executive search, diversity and inclusion, leadership assessment and development, organization and team acceleration, culture shaping and on-demand, independent talent solutions. Some of its culture shaping clients include companies such as Anthem, Batelle and Helen of Troy.
Here’s what Gailey shares:
Kathy Caprino: In your work with top organizations today,what are you seeing in terms of why CEOs are leaving at a higher rate right now? What are the key drivers?
Rose Gailey: As we continue to grapple with how the pandemic has changed our ways of working, it’s clear the role of the CEO has been impacted along with all other workers. Certainly, we’ve seen many Boards of Directors at this time responding to the disruption with a change in leadership. In many cases, CEOs are motivated and energized by the shifting dynamics in the industry, and they are expanding their horizons. Many CEOs see this moment of disruption as an opportunity for them to expand their impact and influence to innovate and find new ways to grow for the future.
Consolidation, through an uptick in mergers and acquisitions, is creating a shift in CEO tenure. Finally, the pandemic is a time of great reflection. There has been an increase in opportunities around Boards of Directors; and some CEOs, who still want to have an impact, are saying they’re more interested in taking a role on a board. Still other leaders are taking a step back, choosing an earlier retirement, extended sabbatical or looking for a role that better aligns to their core values.
Caprino: What are the significant impacts CEO turnover has on workplace cultures and employees?
Gailey: CEOs cast a “leadership shadow” over an organization, essentially setting the tone for the culture of the entire organization that impacts the employee experience.
Given this very powerful and often unspoken role the CEO has, a transition at the top equals a dynamic change in the environment of any company. A new CEO may want to preserve the core of the culture, evolve the culture to accelerate shifts in strategy, or redefine purpose and values in support of a new strategy.
In 2021, we surveyed 500 global CEOs of companies and found that over 86% of CEOs recognize the importance of culture, yet only 11% had intentionally aligned culture to strategy as a path to achieving business results. The 11% of leaders making this link found that their organizations generated more than double the three-year compound annual growth rate (CAGR) in revenue, for the past three years.
So, a new CEO certainly has a huge responsibility to build a culture tied to strategy that can deliver results and sustain employee engagement and retention.
Caprino: How can companies create thriving cultures and ensure they remain intact, even amid the disruption from CEO turnover? What has to be in place and occurring to mitigate the damage?
Gailey: Thriving cultures are sustained when leaders understand that culture is a journey, not a destination. In our work with leaders at many of the leading Fortune 500 companies, we use the four key principles of culture to help drive success:
Principle #1:Build a purpose-driven, intentional commitment to culture, aligned with strategy, and measure human capital and business performance metrics.
Principle #2: Commit to personal change to become an authentic leader who demonstrates a growth mindset and inspires others in the organization to do the same.
Principle #3: Embrace agility and empathy. Both have emerged as crucial leadership traits, not only in times of uncertainty, but for the foreseeable future.
Principle #4: Drive broad engagement where a deep sense of purpose and values permeate across every corner of the organization and is embedded into the culture.
The ability to implement these four principles becomes a linchpin in challenging times like the current uncertainty we all now face. Whether employees feel connected to their workplaces, are inspired by a sense of purpose, and feel treated with equity and inclusion – these will become the antidote to the Great Resignation. In the short term, the allure of increased pay may draw employees to new opportunities, but in the long term, purpose, inclusion and values-driven cultures will foster retention.
Caprino: What are the core responsibilities chief executives must carry in creating cultures that will help organizations thrive through the pandemic and beyond?
Gailey: At the end of the day, Chief Executives are the Chief Culture Officers of their organizations. The impact they have on the organization is not always directly seen, but employees see and feel a sense of the CEO’s values every day—which impacts the spirit, resilience and performance of the entire workforce.
Since the Kotter-Heskett longitudinal study in the late 1990’s, the foundational principle of linking culture to performance has been growing in importance, and the mounting evidence of its importance is irrefutable.
In our own work, we’ve seen evidence of financial gains at companies like Helen of Troy and Aptiv, where CEOs Julien Mininberg and Kevin Clark have purposely aligned culture to strategy and recognized the impact of culture, along with a myriad of other factors, and have seen their stock prices rise.
In our survey, we found that the 11% of CEOs who are linking culture to strategy outperform their peers because they behave differently. First, they are intentional about linking culture to strategy and are relentless about communicating this link to employees.
Next, they fostered a sense of culture as a journey and encouraged activities that helped culture be developed, reinforced and supported. But, perhaps most importantly, they took ownership of living out the values in an organization and engaged in the practices that showed their commitment to purpose.
Finally, and not surprisingly, the most successful CEOs held themselves to these standards and led by example.
Caprino: How does supporting DEI efforts in the organization help companies become better equipped to deal with disruption and change?
Gailey: Thriving, inclusive cultures provide oxygen to help enhance the commitments to diversity and equity. In the past 24 months, perhaps more than in any other corporate era, we’ve seen how critical diversity, equity and inclusion are to a workplace. Our work has centered on partnership with executive search teams so that they have inclusive cultures that act as a fertile ground to nurture and sustain the increased diverse representation and elevated commitments to equity.
Without the leadership principles we’ve discussed in this article thus far, inclusivity cannot thrive.
