Canadian HR Reporter

CANADIAN HR REPORTER March 21, 2016 6 NEWS W S P S T r a i n i ng J H S C C er t i f i c ati o n APPROVED MOL JHSC CERTIFICATION TRAINING New standards. New courses. WSPS o ers certifi cation training under the new standards in classrooms across Ontario or on-site at your workplace. At WSPS, we want everyone to go home safe. LIMITED TIME OFFER! Until May 1, 2016 Only REGISTER TODAY! 1 877 494 WSPS (9777)  |  wsps.ca/cert SAVE 15 % OFF If you register for both Parts One & Two* *Certain conditions apply. compared 2,881 cases of CEO turnover from public and private firms in the United States from 2001 to 2008. In a given year, 10 per cent of public firms will re- place their CEOs, compared to eight per cent of private firms, she said. Risks of high turnover High turnover is obviously never desirable, but there are particu- lar risks to an organization when that turnover is happening at the top, said Bob Schulz, professor of strategy and global management at the Haskayne School of Busi- ness at the University of Calgary. "When there's high turnover at the CEO level, it's similar to sports teams in that a new team comes in, some people get promoted, some people don't, some people that had aspirations for the top position may go somewhere else. So it provides more instability and uncertainty which is not good for companies that are trying to oper- ate beyond just the quarterly re- ports for analysts and sharehold- ers. So instability and uncertainty are the key aspects there," he said. "Now, the question is why is that? One reason is that the job of CEO has become increasingly complex because of activist share- holders and the social licence to operate, and the glare of the media when things aren't going well." Another factor complicating this is the underlying speed of technology and media, particu- larly social media, said Schulz "e groundswell that's created by social media creates problems for CEOs that were not around even five years ago." It's important to remember that the increasing pressures CEOs face result in both involuntary and voluntary CEO turnover, said An- drea Plotnick, national director of organizational effectiveness at Hay Group in Toronto. "On the voluntary side, I think part of it is there is tremendous pressure on CEOs today. e job has changed significantly — orga- nizations are so much more com- plex with connectivity, with activ- ist shareholders, with institutional shareholders demanding more and more pay and holding the CEO to the fire, with the whole digital landscape and connectivity and all the requirements from that perspective. I think from a volun- tary perspective, many of them fi- nancially don't need it and are get- ting to the point where they just say, 'I've had enough,'" she said. "Is the amount of stress and pressure worth what they're hav- ing to contribute, at the end of the day?" Anecdotally, there may be something of a generational com- ponent as well, said Plotnick. "That tends to be… 60-plus CEOs that are more of that mind- set, probably as a function of they are more financially secure, but probably also as a function of the whole digital landscape." In the past, perhaps it was easi- er to "wrap your arms" around the organization and what it needed to accomplish, said Plotnick. "What's being required even more now is the ability to function with really complex teams, and really being able to enable others. And it calls on some of the softer skills, I think, maybe even more than in the past. So technical ex- pertise and deep industry exper- tise is not always enough to make you successful in that role," she said. "e demands have changed so significantly." When it comes to involuntary turnover, there may be different factors at play — one of which is poor succession planning, which leads to poor cultural fit, she said. "We use the term 'the CEO life- cycle.' So if you start at the begin- ning of the lifecycle, I think part of it is there's been a lack of attention to effective CEO succession plan- ning within many organizations, so the default is they turn to ex- ternal hires," said Plotnick. Organizations tend to over- value what's outside and un- dervalue what's inside — it's the classic "grass is always greener" conundrum. "ere hasn't always been suf- ficient attention to growing your resources internally," she said. "So (the external hires) may have some of the technical skills and the industry knowledge but they may not be a good fit for the organization." ere's also a need to under- stand there is not a generic CEO slot to be filled — it's about look- ing at the specifics of what the or- ganization requires from a strat- egy perspective. "What is happening within the sector? (Use) that as a basis for identifying your success profile for your CEO and what's going to be required going forward," said Plotnick. "ere has sometimes been too much reliance on big names and not enough (attention to) making sure those big names have a track record in what's specifically re- quired for that organization." In addition, particularly with activist shareholders, if the CEO is not actively reaching out and bringing them onside, there isn't a great deal of patience, said Plotnick. "ere is more of a focus on the short-term, and if you're not do- ing things quickly enough, (share- holders) have increasingly more power in… calling for the head of the CEO when that quarter or that year is not quite what is expected." Pressures lead to turnover CEOs < pg. 1 Credit: Aaron Harris (Reuters) Doug Campbell was president and CEO of Sears Canada for just one year before he left in 2014. High turnover in the C-suite puts public firms at a disadvantage, according to a study from UBC in Vancouver.

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