Management Turnover as Change Agent

Friday, March 6, 2009

U.S. unemployment Jumps to 8.1% While Executive Turnover Remains Slow

The bad numbers continue unabated.  Today the United States Labor Department’s Bureau of Labor Statistics (BLS)announced the latest unemployment figures and they were not comforting.  According to the BLS,

Nonfarm payroll employment continued to fall sharply in February (-651,000), and the unemployment rate rose from 7.6 to 8.1 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today.  Payroll employ-ment has declined by 2.6 million in the past 4 months.  In February, job losses were large and widespread across nearly all major industry sectors. The latest unemployment of 8.1 percent came close to matching the rate back in 1983 which had been the worst recession since the Great Depression.         

These terrible unemployment figures have not been matched when compared with the turnover figures tracked by Liberum for top executives.  Liberum’s 2009 February executive turnover totals have remained low, particularly when compared to the same figures registered in February 2008.    

February 2009 CEO turnover declined 41%, CFO turnover declined 38%, C-level (defined by Liberum as board of director all the way down to VP level) turnover declined 41% and board of director changes declined 37% as compared with February 2008 numbers.       

Liberum has also broken February’s CEO and CFO turnover totals down into market cap categories.  Here too, the number changes have been very small particularly for the larger market cap firms.  Part of the reduction for the largest market cap firms can be attributed to the fact that so many blue chip companies no longer meet the large cap figures of the past but that is just part of the story.  Executives continue to focus their efforts right now on reducing company costs, production and employee levels.  As a general rule, the executives themselves, despite a number of very high profile executive changes, have managed to remain immune from being laid-off.  Below find two charts outlining the market cap related changes for CEOs and CFOs for the month of February.

   February 2009 Breakdown of CEO Changes By Market Cap Categories -


 February 2009 Breakdown of CFO Turnovers By Market Cap Categories -

 Liberum expects executive turnover to begin rising in March and through the spring.   Hopefully that will not be the case for general employment but it is likely the unemployment trend upward will continue for a number of months.

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