For CEOs, it’s reputation judgment day

Consider that through August 2019, there were more than 1,000 U.S. CEO departures. CNBC reports that in August alone, 159 U.S. CEOs left their posts. That’s the most ever in a single month, according to Challenger, Gray & Christmas, which ranks among the oldest and most respected executive placement firms in the country.

159 in a single month. Wow.

Of course, there are a range of reasons for the CEO exodus — among them aging Baby Boomer CEOs deciding on retirement. And then there’s this: what has been a strong U.S. economy is one that many say is leaning toward a recession. So why not get out while the getting is good, like George from “Seinfeld” did on occasion? With mixed results, I might add.

But what’s the dominant reason so many CEOs are being dismissed vs. leaving on their own volition?

In an interview with CNBC, Jeffrey Sonnefield, a senior associate at the Yale School of Management, said,

“CEOs are now being held on a shorter leash. When the puffery and the rhetoric doesn’t match reality, the boards are under pressure to hold the CEOs accountable.”

• Adam Neumann, the “rock star” CEO of shared workspace juggernaut WeWork, which recently plunged into disarray and had to ditch its highly publicized planned IPO
• Devin Weng, the eBay CEO who didn’t meet his Board’s growth expectations
• Volkswagen CEO Herbert Diess, who allegedly misled investors and has also been charged with stock manipulation

The list goes on.

Mr. Sonnenfield is so right. Though I’d say instead of a short leash, CEOs are finally being held by their Boards and the public to achieve higher standards.

A lot has been written by business journalists about the August statement by the Business Roundtable, a group of influential U.S. CEOs who promote business interests and public policy initiatives. In the now broadly publicized statement, the executives said that in addition to catering to the interest of investors, corporations must also seriously consider the interests of other key stakeholders — employees, customers, and business partners as well as the communities in which they are located.

Our research, at Reputation Institute, concurs. Three months prior to the Business Roundtable pronouncement, we reported in our annual global CEO reputation study — the 2019 CEO RepTrak — that CEOs of the world’s most significant companies are being judged by the general public on the basis of ethics: doing what’s right and much less on share price value.
In the court of public opinion, and apparently in the boardroom as well, CEOs are readily punished for moral indiscretions and falling short on less than wholly ethical, honest, and transparent behavior. By contrast, the top 10 global CEOs understand that behaving responsibly is critical to how they lead and conduct business.

In my last blog post, I presented my thoughts on leadership actions a new CEO might consider. This time around, I’m asking new CEOs or soon-to-be CEOs this: what kind of CEO will you be?

Here’s a hint: if you work to emulate any of the top 10 global CEOs recognized in our recent CEO reputation study, you’ll be off to a great start. You’ll find our list here.

You’ve got this!