Diary of a CEO (2024)

When we are young, we think we know it all. After I graduated, I was fortunate to be hired in one of the largest bluechip companies on one of the most prestigious graduate training schemes. Compared to my fellow students I had landed one of the best paid and highly regarded graduate training schemes.

When I joined a Blue Chip company as a graduate recruit, like my fellow graduates I had a vague notion of rising to a senior position and I was chuffed to have gotten such a good well paid job but had little idea of a career plan on how and what it would take to make it to the boardroom and get to a "C" level position/GM/SVP role.

I had done some limited research on functions and roles and "the path to becoming a CEO" and didn't want to work in the family business....

Like many young graduates one initially thinks if one works hard, one will rise to the top. I had had plenty of achievements and successes but these of themselves are not sufficient.

Getting to the top isn't just about results and performance but also about exposure and networking and getting the right "gig" and planning and building one's brand and network.

Only in hindsight and with exposure to these top teams and subsequent interviews does one reflect on how naive one was and what the true cost one often has to pay.

Are you ambitious and do you desire to rise to becoming a CEO or rising to a "C" level position in a large organisation.

Is Power, Status, Fame and Wealth a motivator and are you prepared to take the risk and the cost in terms of stress, health, time, relationships and freedom/quality of time to rise to the top?

What is your chance of making it to a "C" level position?

The probability of someone rising from a graduate trainee role after university to become the CEO of a major company is fairly low:

How long does it take to become a CEO and what is the route to the top?

Most new CEOs are in their 50s and have progressed through multiple c-suite and senior executive roles across different companies over 20-30 year careers before reaching the chief executive office.

Here are some typical statistics on the age and career paths of new CEOs:

What is the Average Tenure of a CEO & the reason for their departure?

Here are some key statistics on average CEO tenure and common reasons for CEO departures:

Average CEO tenure at large public companies is about 5 years according to multiple studies. Tenures have been shortening over the last few decades.
For S&P 500 companies, the average CEO tenure declined from 9.5 years in 1995 to 5 years in 2020 (Equilar data).
Around 12-15% of CEO turnover is due to forced dismissal or firing, according to research by PwC, Equilar, and others. Reasons include poor financial performance, unethical behavior, faulty strategy.
Around 2/3rds of CEO exits are considered voluntary for reasons like retirement (more common recently), resignation, health issues, or accepting a new position elsewhere. Many CEO contracts have age-based retirement clauses.
Failure to renew an employment contract accounts for around 1/4 of CEO departures. Boards may avoid firing through non-renewal.
Mergers and acquisitions drive around 15% of CEO transitions as integration often involves selecting a new CEO post-merger.
Only about 5-7% of CEO departures are due to death or illness in office, as per PwC and other analysts.

It's Risky being a CEO

CEO terminations that were linked to poor decision-making:

A study looking at major company CEO turnover found that in 2018, 13% of outgoing CEOs at large companies were explicitly fired for poor financial performance or making bad strategic decisions.
Another study by Equilar of CEO transitions at S&P 500 companies in 2018 found performance problems accounted for around 15% of CEO exits.
A 2019 study published in the MIT Sloan Management Review examined CEO dismissals and found that failed strategies and bad investments were associated with 18% of forced turnovers.
PwC's 2019 Annual CEO Survey found that among CEOs forced out of their roles, 23% of departures were related to bad decisions tied to M&A strategies, growth plans, or other core business initiatives.
A Leadership advisory firm tracked CEO departures in 2018 and reported poor financial performance led to the firing or stepping down of over 200 chief executives that year.
An analysis of high profile CEO dismissals by Harvard Business Review found strategic blunders, such as unwise acquisitions or defensive mistakes against competition, were a driving factor in forced resignations.

Research indicates that somewhere between 13-23% of CEO turnover annually can be attributed directly to faulty strategic decision-making, illustrating the high costs and risks of poor judgment at the executive level. Boards are increasingly holding leaders accountable.

The Importance of a Moral/Ethical Compass

A significant share of CEO terminations involve lapses in ethical or moral judgment, not just flawed business strategy. Unethical leadership erodes stakeholder trust and ultimately the leader's credibility and tenure. Strong ethics and values are now seen as inextricable from effective corporate stewardship.

A study in the Journal of Business Ethics found that around 25% of CEO dismissals involve some form of unethical or illegal activity like financial misconduct, fraud, insider trading, ethical lapses, inappropriate personal conduct, etc.
High profile cases include CEOs forced out for overseeing corporate fraud (e.g. Enron), facilitating money laundering (e.g. Danske Bank), enabling workplace harassment and discrimination (e.g. Wynn Resorts), and data privacy breaches (e.g. Equifax).
The 2022 PwC Annual CEO Survey reported 39% of CEO and boardroom conversations in the past year involved addressing ethical challenges, reflecting rising stakeholder expectations of principled leadership.
A survey by the Ethics & Compliance Initiative found nearly 20% of employees observed misconduct by their leaders in the prior year, indicating ethical lapses at the top are still common.
Boards are taking corporate culture more seriously, and forcing out leaders whose actions do not align with company values or who foster toxic workplace environments.

Politics VS Corporate

There are some interesting parallels and differences between the paths to the top in business vs politics:

Political leaders tend to rise to high office at a younger age than corporate CEOs. For example, US Presidents are typically in their 40s or 50s when taking office.
However, many politicians have prior experience in lower roles before becoming President, Prime Minister, or party leader - such as mayor, governor, MP, or cabinet secretary - similar to CEO career ladders.
The average tenure in high political office is often shorter than for corporate CEOs. For instance, most US Presidents serve 4-8 years while UK Prime Ministers average 3-5 years in power.
Reasons for political leadership changes are more varied than for CEOs, including term limits, election losses, party leadership spills, retirement, or death in office. Forced resignations over policy failures, ethics violations, or scandals do occur.
Political leaders are often recycled - losing an election or leadership vote does not necessarily end their political career permanently as we often see with CEOs. They may return in a different role.
Unlike CEO tenures which are shortening, heads of government today generally serve longer terms than past historical averages of just 2-3 years in power.
However, there is high turnover and short job tenures for many lower level political roles like cabinet ministers, reflecting volatile political environments.

So in summary, attaining the pinnacle of politics often comes earlier in one's career but lasts for shorter periods of time compared to the CEO journey