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The New CEO's First Year

The CEO's first year in office is not only career-defining, but also lays the necessary groundwork for success.

The New CEO's First Year
This year's report, "The New CEO's First Year," reveals the challenges for the new class of CEOs who came into office in 2011, analyzes trends in global CEO turnover, and distills important advice from veteran CEOs.

Big companies are once again appointing new chief executives in greater numbers, Booz & Company’s annual study finds. Here’s a close look at the incoming class, and some advice from veterans on how they can best navigate their crucial first year.

As the worldwide economy recovers, the number of companies appointing new chief executives is on the rise. Just as the recovery has been unevenly distributed, however, so too are those new CEOs — not just geographically, but also in terms of their backgrounds and experience. More and more in the last several years, new chief executives are coming to their position from the outside, as boards of directors look for new blood from other companies and other industries, in hopes of introducing fresh thinking into their executive mix.

In 2011, the 12th consecutive year Booz & Company has been following the fortunes of CEOs at the world’s 2,500 largest public companies, 14.2 percent of those CEOs were replaced. Although that rate is sharply higher than the previous year’s turnover rate of 11.6 percent, it essentially represents a return to the seven-year historical average of just over 14 percent, and it is 1 percentage point higher than the overall 12-year average of 13.2 percent. (See Exhibit 1, next page.) This recent return to form cannot be attributed to a single cause, but our analysis suggests that it is largely due to the improving economy in many parts of the world; turnover rates have typically been lower during periods of recession and significant stock market decline. This trend suggests that boards are more likely to keep their chief executive during times of economic uncertainty in order to maintain stability, and are more willing to make a leadership change when economic stability returns and the company outlook improves.

In recent years, to gain a better understanding of the evolving role of the CEO, we have focused on specific themes critical to that unique position. Two years...

Read more: http://www.booz.com/global/home/what_we_think/ceo_succession_2011

Jeudi 14 Juin 2012

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