Long-serving CEOs: how to know when it’s time to go
Unilever, Legal & General and 888 Holdings all have one thing in common – they’ve all had a change of CEO in 2023. In fact, so far this year, 10 of the leaders of FTSE 100 companies have left and it’s barely six weeks in.
In the US, meanwhile, CEO tenure for the first nine months of 2022 fell to 9.96 years on average, the lowest level since 2014, according to recruitment firm Challenger, Gray & Christmas.
But is this a good or a bad thing for business? In leadership positions, particularly those right at the top, there is often a fine line between stability and stagnancy. After a period of economic upheaval caused by the Covid pandemic and then war in Ukraine, many investors are agitating for change and many executives are tired and in need of a break.
So, what is the secret to staying at one company in the top job? Staying in any job for a long time requires a steady flow of ideas, energy and engagement. To stay in a senior one requires the holder to be bold and decisive, but also to listen.
Adapting to changing demands of the business
Robert Ettinger, the chief executive officer of his family’s eponymous luxury leather accessories brand Ettinger, has been in the role since 1995. His longevity, he suggests, is equal-parts a labour of love and a willingness to delegate.
“Obviously it being a family business does mean I am very invested. But I’ve learned, especially in the past 10 to 12 years, that things move very quickly. It is important to surround oneself with the right people. Decisions aren’t dictated, they’re discussed. So one relies on having the right body of support and opinions around oneself.”
Will Butler-Adams, who became the CEO of folding bike manufacturer Brompton Bicycle in 2008, agrees: “I am constantly benefiting from being around people who are better than me. I have certain skills; other people have different skills and I lean on them.”
Nicola Stopps, the founder and CEO of the consultancy Simply Sustainable, would go one step further. She believes that a “learning mindset” is crucial to ensure you don’t begin to get stale in the role and that you understand your own limitations. “As soon as you consider yourself to be number one, you become number two,” she adds.
One key challenge of being a CEO for a long period is not getting stuck in the past. Margaret Heffernan, professor in management at the University of Bath, warns of the issue of “change blindness”, where a CEO fails to recognise that the operating environment has changed and what worked before won’t in the future. “It’s a huge error to think that history repeats itself. Events may look similar but they will always be different from the past because of new knowledge,” she says.
Consider the example of Steve Ballmer, who served as the CEO of Microsoft for 14 years between 2000 and 2014. Ballmer was a successful salesman whose strategy had focused on keeping the Windows operating system at the vanguard of the corporate world. As Microsoft continuously improved Windows, profits did rise steadily, but it is widely considered that Ballmer neglected other, evolving, and even more lucrative, technology markets such as gaming or mobile phones. The company then had to spend millions trying to play catch-up – and, in the case of mobile phones, failing to do so.
Ettinger agrees, pointing out that both his business and the fashion industry have changed “drastically” since he took over. However, he says he has relished the chance to adapt. “When I first started,” he recalls, “it was just a matter of manufacturing and sales. Now you have communications, websites, social media, photographers, graphic designers – and more.”
Knowing what staff need and want
Another key challenge for a CEO, Ettinger suggests, is to never get too far away from the real business of the company. He believes he has been able to stay abreast of changing staff needs and wants “because I ask them”.
“Even as we’ve grown [to around 300 employees], I’ve been sure to not spend my time locked away in my office. If they have comments on what we could be doing differently, I want to know,” he says. “[A CEO must not] get too far away from the factory floor.”
However, Ettinger concedes that any major changes to working conditions, including pay rises, must be set within the context of “what is sensible and what a business can do while still making the distance. That’s the dilemma that businesses face and it’s about approaching it carefully and cleverly.”
For Rebecca Masri, the founder and CEO of luxury hotel curation app Little Emperors, one of the guiding principles of her 14-year tenure is trying to foster a working culture that respects autonomy, flexibility and work/life balance. “We have embraced the hybrid working scenario,” she explains. “This may seem standard but in my industry, travel advisers can be expected to be online at all hours to service clients and not miss booking opportunities. Unlike our competitors, my advisors work by hours, not by client. My team want to stay with me, and it’s because I make sure they do not burn out and actually enjoy their role.”
At Simply Sustainable, Stopps says that she has tried to make sure that the working conditions reflect the “value-led” nature of the organisation. She likes to have a close working relationship with her team but realises that leadership and values have to come from the top so that they’re embedded and ”become second nature”. And while these are important, she also knows people need to be paid fairly and feel appreciated.
“A lot of people who work in our profession feel it is more of a vocation then a 9-5 role,” she says. “But we know it’s not just cultural enjoyment and a feeling of pride that attracts and retains top talent; we provide our employees with attractive salaries and perks.”
Another key to longevity, according to Masri, is trust. There is some authority that comes from being in a role for a long time and a feeling among others in the company that you’ve proved yourself and can be trusted to make the right decisions.
She adds: “I believe there is merit in authority, when you’ve proven yourself to be a capable member of the team, at whatever level. It doesn’t matter how long you’ve been at a company, [as long as] you’ve proven yourself. [At Little Emperors], we’re a close-knit team. It’s about respect and working towards a common goal.”
Ettinger echoes this sentiment, adding that “empathy is probably what got us through the worst of Covid… It was important for people to understand that we [collectively as a business] were taking on the challenges together, and everyone from the top down was pulling their weight.”
CEO stability, stagnation and succession
Even though Ettinger is a family business, its current CEO does not see succession planning as a foregone conclusion. “We’re probably at a stage now, as we have grown more internationally, where we might benefit from some new blood and new ideas.”
Heffernan believes that strong leaders should seek to create working environments that allow for “aspirant” employees. If a CEO stays in the job for too long, she warns, more junior staff “may lose hope of ever having a chance of getting it [the top job]”, which could lead to valuable talent leaving a company.
Imposing set “term times” on CEO tenures, as is the case for politicians, Heffernan muses, could have both pros and cons. “There might be advantages,” she says, “if you could see into the future, but you can’t. The accumulated experience and insight of a long-serving CEO can be invaluable because they often know their complex organisation very well. But the longer they stay, the more demotivated many potential successors become.”
What term times could do, she suggests, is give the board the confidence to update the leadership. “In my experience, many boards are simply afraid to replace a CEO. The board cannot possibly know the business as well as the CEO does and so fear what a new person might do persuades them to keep people for too long.”
Ultimately, there is no one-size-fits-all solution and Brompton’s Butler-Adams is philosophical. “It’s a bit of a British obsession to always be thinking about an exit strategy,” he says. “I’m only 48. I think you should stay in a job as long as you feel that you have something to offer, but equally you should be mindful that a company can always benefit from fresh ideas. It’s about weighing up, honestly, whether you think those new ideas are going to take the company further forward than you can.”