Management Turnover as Change Agent

Tuesday, April 10, 2012

Quarterly Executive Turnover Continues on a Tear

What a difference a year makes. For the last number of years, executive turnover at the top ranks of public companies was extremely low. As the nation and the world faced the huge financial crisis in 2008 and thereafter, companies were loath to change executives unless absolutely necessary but were often eager to layoff off general employees. For the last 12 – 14 months, Liberum Research has seen a real shift in the trend. Executive turnover overall has continued to rise while overall employment has finally showed signs, while tepid, of growth. Last week, ADP which tracks overall private employment, announced more positive news for the month of March. According to ADP’s latest Employment Report:
Employment in the U.S. nonfarm private business sector increased by 209,000 from February to March on a seasonally adjusted basis. Estimated gains for previous months were revised higher; the gain from December to January was revised up by 9,000 to 182,000, and the gain from January to February was revised up by 14,000 to 230,000. Employment in the private, service-providing sector increased 164,000 in March, after rising a revised 183,000 in February. Employment in the private, goods-producing sector rose 45,000 in March. Manufacturing employment added 23,000 jobs.
Later in that same week, the U.S.Labor Department released its employment numbers and to most analysts’ surprise, they were less than encouraging. Liberum expects the numbers will be revised upward but the lower than expected totals were a cause for some concern. According to the Bureau of Labor Statistics‘ employment numbers for March released on Friday, April 6,

Nonfarm payroll employment rose by 120,000 in March, and the unemployment rate was little changed at 8.2 percent, the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing, food services and drinking places, and health care, but was down in retail trade.

Liberum has put together below a six plus year quarterly breakdown of executive turnover totals for CEOs, CFOs and C-level executives covering North America. Most of the below quarterly numbers showed continuing declines until the second quater of 2011. At this point, the numbers began to reverse themselves. Turnover at the executive levels of corporate America began to grow. Companies began again to consider new blood and often looked to change their corporate strategies as kernels of opportunity began to sprout ever so slightly. We also saw a number of major companies change leadership after major declines in revenues and/or profits.
2005 – 2012