Average CEO tenure declines two years since 2000

CEOs need to deal with increased demands from corporate boards.
CEOs need to deal with increased demands from corporate boards.

In this era of increased scrutiny for those individuals who work from the corner offices of businesses, the days of decades of service for a particular organization may be well in the past.

The average amount of time a CEO spends in a particular position is now 8.4 years, after being about 10 years in 2000, according to The Conference Board's 2012 CEO Succession Practices. Tenure has remained fairly stable throughout most of the last decade, with the exception of a brief dip to 7.4 years in 2003, in the wake of a brief recession and the Enron scandal, which eroded away at the public's trust of business leaders.

"The stronger independence and accountability of directors registered during the last decade and increased scrutiny from shareholders and activists might motivate corporate boards to be more inclined to dismiss a CEO who is performing below expectations," report co-author Matteo Tonello said. "In addition, the pressure of serving as the CEO of a large company in an increasingly competitive global marketplace could contribute to voluntarily shorter tenures."

When looking for a new CEO or other C-level officer, many businesses are more than willing to embrace an external candidate for a particular position. Just more than 19 percent of all CEO successions last year involved an outsider being appointed as a replacement, according to the survey.

Startups and small businesses may prefer to keep CEOs who have led an organization through its early stages, but this continuity may not be possible as companies expand. Businesses can more easily find external candidates for C-level positions when they transfer global executive search responsibilities over to an experienced retained executive search firm that has proven its ability to recruit C-level officers in other organizations.