Last week, Intel Corp CEO Pat Gelsinger and Stellantis NV CEO Carlos Tavares unexpectedly announced their departures after mounting pressure from investors and failed turnaround plans. Gelsinger and Tavares are joining the more than 1,800 American CEOs who have left their positions this year, data compiled by global outplacement and career transition firm Challenger, Gray & Christmas Inc showed.
As boards of directors in the corporate US have become more independent and are increasingly holding CEOs accountable for underperformance in earnings and share prices, the number of CEO departures this year has hit the highest level since Challenger started tracking CEO changes in 2002 and is up 19 percent from the more than 1,500 departures during the same period last year, the firm’s data showed.
That high turnover rate also reflects a decline in the average tenure of US CEOs as a result of not just rising performance pressures, but also the ever-increasing complexity of the business environment — from tech transformation to sustainability, geopolitics and social issues — regardless of the industry. In other words, it implies investors’ strong desire for leaders who can navigate challenges decisively, quickly and effectively, in addition to prioritizing short-term gains.
Whether through voluntary resignations or involuntary dismissals, the increase in CEO changes has become a global phenomenon, subject to various factors such as performance, retirement, scandals and personal reasons. Nonetheless, successfully navigating such transitions in today’s fast-paced business world is crucial for outgoing executives and the firms they leave.
The second volume of Taiwan Semiconductor Manufacturing Co (TSMC) founder Morris Chang’s (張忠謀) autobiography, which covers his career from 1964 to 2018 and was published late last month, revealed how Chang began planning who would succeed him in 2005. In 2013, Chang stepped down as TSMC CEO for the second time, handing over the leadership to Mark Liu (劉德音) and C.C. Wei (魏哲家). In 2018, Chang retired from TSMC, with Liu becoming chairman and Wei assuming the CEO role.
Despite Chang’s retirement, TSMC’s performance remains strong and the company has expanded to the US, Japan and Germany. However, TSMC’s succession planning highlights how most Taiwanese firms have yet to be serious about their strategies in developing action plans for passing leadership roles to important people within their organizations.
Not having a feasible succession plan could have devastating consequences for firms’ management stability, corporate reputation and talent retention, which is especially obvious in Taiwan, where most family business leaders expect next-generation family members, rather than professional managers, to take over the business. Even so, about 46 percent of family businesses believe that cultivating a succession team to identify and develop future leaders is the most urgent challenge, a Taiwan Institute of Directors survey released on Nov. 12 showed.
A survey by Robert Walters Taiwan released on Nov. 29 found that about 87 percent of companies face challenges in succession planning, with 54 percent saying that their organizations do not have a succession plan and 43 percent believing their existing strategy could be more effective. Moreover, the professional recruitment agency links two important factors to Taiwanese businesses’ implementation of effective succession planning: a sufficient supply of senior talent, and a balance between organizational needs and traditional cultural limitations.
While succession planning is essential, firms in peacetime must also be ready for unexpected CEO departures. Efforts such as establishing contingency plans, developing crisis management protocols and finding experienced interim leaders can help mitigate risks and navigate transitions smoothly.
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