3 Ways to Mitigate Executive Turnover

The past five years have proved a crucible moment for business leaders as volatility, uncertainty, complexity, and ambiguity (VUCA) threatened not just organizational progress but outright viability. Having an experienced C-suite has been an essential driver of performance. An October 2024 Gartner survey of 200 C-suite executives found that companies where executives have an average tenure of five years or more outperformed on revenue, customer experience, and other key metrics, as compared to companies with less tenured executive teams. Retaining senior executives, though, is increasingly difficult. More than half (56%) of the executives surveyed by Gartner said they are likely or extremely likely to leave their current role in the next two years. More than one-quarter (27%) said they are likely or extremely likely to leave in the next six months. Even more troubling, established executives—those essential to high performance—are nearly 40% more likely to leave in the next two years than new executives. Organizations looking to mitigate executive turnover and maintain performance must focus on three key actions: 1. Identify what’s driving executive dissatisfaction in your organization. Historically, executives have cited retirement and burnout as the key factors behind their decision to leave. Although these remain important, they’re not the only—or most important—drivers of executive turnover today. In fact, only 17% of executives in Gartner’s October 2024 survey who anticipate leaving their organization in the next two years plan to retire. Burnout factors like work-related stress, work-life balance, and mental health concerns only ranked 5th, 6th and 7th respectively for executives with a high intent to leave (those who are actively looking for new jobs or plan to do so within the next year) out of 10 surveyed factors. Today, we’re seeing many executives are simply looking for new challenges. Overall, executives cite growth-based concerns, including career advancement opportunities (ranked 1st in the October 2024 survey), misaligned organizational culture (ranked 2nd), higher compensation (ranked 3rd), and lack of job satisfaction (ranked 4th), as reasons for leaving their current role. To head off potential turnover, organizations must accurately diagnose the source of executives’ dissatisfaction. This is best accomplished by having the CHRO partner with the CEO to understand what is going well—and less well—with individual executives. Specifically, CHROs should: Encourage the CEO to ask about executive satisfaction and growth goals in one-on-one meetings and other informal settings. Look for outward signs of dissatisfaction, such as pushback against team decisions or an abrupt change in an executive’s communication style, particularly during unscripted moments. Demonstrate empathy to executives who may have concerns and encourage them to raise them with the CEO. Empower the CEO with insights on the broader C-suite climate, being careful to anonymize individual concerns to preserve confidentiality. 2. Develop retention criteria. Executive retention efforts can be costly, particularly if executives are being courted by a competitor. Moreover, not all executives contribute equally to organizational performance. Targeting retention efforts can ensure organizations don’t overspend to retain less essential executives. There is no single “right” criteria to use when deciding which executives to try and retain, rather the CHRO and CEO should select what best fits their organizational priorities, goals, and strategy. Examples of potential criteria include: High performer retention. An emphasis on keeping higher performing executives may be the best approach to maintaining overall performance, but it is often the costliest as these executives have more exit options. Critical capability retention. Executives who have capabilities that are critical to organizational success, such as technical acumen or institutional knowledge, may be costlier to replace. High potential retention. Focusing on retaining executives who can drive future growth versus those responsible for past performance can result in a win-win for the executive and organization as these executives may also be those most interested in growth opportunities. 3. Create a multi-channel retention strategy. Armed with a better understanding of what their executives want and need, as well as which executives they want to retain, organizations can develop targeted retention efforts. Often the first impulse for the CEO and board of directors is to increase compensation for dissatisfied executives. While this may guard against competitive outside offers, it will be less effective in keeping executives who have other reasons to move on. A multi-channel retention strategy that targets a wider range of executives’ expectations and needs will be more effective than a simple compensation-based strategy. Moreover, as it hinges on coaching and other low-cost activities, it may also be more efficient. The CHRO is key in both conceptualizing and implementing this multi-channel strategy. Specifically, the CHRO can mitigate concerns executives have around growth opportunities and culture by: Taking on the role of career coach. CHROs are well positioned to connect executives to both internal and external development resources. As a peer executive, they can do this in a way that is tailored to executives’ unique needs. Strengthening CxO-CEO relationships. CHROs can help their colleagues build trust with their CEO in order to assuage concerns about individual growth or ease conversations about new opportunities. Supporting mental health and work-life balance. Executive burnout remains a challenge at many organizations, and CHROs can help peers identify sources of work stress and encourage usage of mental health and work-life balance benefits. . . . As the adage goes, past performance is no guarantee of future results, particularly in a continuing VUCA environment. Although organizations have performed surprisingly well amidst the volatility of the past five years, they risk future performance by ignoring anticipated executive departures. Understanding and then implementing these three strategies can help organizations staunch executive turnover and ensure that they have the executive team needed to drive performance today and into the future.

3 Ways to Mitigate Executive Turnover

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