Being a CEO has its perks, but tenure isn't one of them

Carly Fiorina led Hewlett-Packard's takeover of Compaq, but was canned afterward. (Susana Gonzalez/Bloomberg News/file 2007)

Pity the put-upon CEOs. Let us count their burdens:

Heavy expectations from impatient boards of directors. Intensified pressure from shareholders, unions, and competitors. Onerous scrutiny from regulators. And zero job security.

The tenure of chief executives, those richly compensated princes riding herd on America's publicly traded companies, ranks among the shortest of any professional group. And it's continuing to be whittled down, according to recent data from consulting firms.

Forty percent last no more than two years in the corner office. The average CEO's tenure dropped from 9.7 years in 1999 to 8.3 years in 2006, the most recent year for which statistics were compiled by consultants Challenger, Gray & Christmas, Crist Associates, and Spencer Stuart. The median tenure - the number separating departures on the higher and lower halves - stood at 5.5 years in 2006.

Remember the gold watches presented at retirement parties honoring decades of devoted service? The most fitting gift for CEOs heading out the door today might as well be a gilded boot.

"You have only one chance to get it right," warned Mark Gottfredson, a partner in the Dallas office of management consulting firm Bain & Co., who's analyzed CEO turnover trends as disruptive technology and globalization have scrambled the game over the past decade. "And if you don't, you're out on your bum."

Not that the penalty for being bounced is too harsh. Robert Nardelli walked away from Home Depot Inc. with a $207 million severance package last year after failing to lift the company's sagging share price. Nardelli, a protege of Jack Welch at General Electric Co. who left the home-improvement retailer after a rocky six years, was quickly snapped up to run automaker Chrysler Corp.

Despite the cushioned landing, there's no shortage of advice for chief executives who'd rather stay in the saddle a bit longer before being bucked off - and maybe enrich their investors as well as their bank accounts. Gottfredson and Steve Schaubert, a Bain partner in Boston, last month published "The Breakthrough Imperative," a kind of how-to-succeed book for new CEOs intent on beating the odds.

They recommend sizing up a company's prospects and crafting a winning strategy in alignment with "four laws" they'd earlier laid out in a Harvard Business Review essay: Costs and prices will decline over the long term. Competitive position will determine your options. Profit pools will be constantly in flux. And, customers will reward simplicity.

"You've got 90 to 100 days to do a diagnostic on your point of departure," Gottfredson said. "You've got another 30 days to turn that into a compelling, motivating, realistic vision for the point of arrival. Then you've got to have a path for getting from Point A to Point B."

That's four months to take stock and design a road map, and another year at most to wrestle the enterprise onto the right track.

But executing is far from simple in today's business world, where a turnaround plan has to encompass everything from product innovation and market segmentation to technology shifts and changing customer tastes. There's a sense that tectonic plates are moving as global markets have accelerated the pace of change while new, tough regulations have forced greater transparency.

"All of the warts, all of the mistakes that used to be hidden in the past, are out there in the open today," maintained John A. Challenger, the chief executive of Challenger, Gray & Christmas Inc., a Chicago outplacement firm that tracks CEO tenure. "Every time you make a bad decision, you get crucified. There's much less potential for a long-term tenure, and more potential for an ignominious exit."

Think of Jim Donald, fired in January after three years at the helm of coffee maker Starbucks Corp. amid slowing same-store sales. Think of Charles Price, knocked from his perch at financial goliath Citigroup last November after four years of piling up subprime mortgages. Think of Carly Fiorina, who engineered technology giant Hewlett-Packard Co.'s controversial takeover of Compaq Corp. in 2002 only to be canned three years later by a disenchanted board.

In many ways, the increasingly tenuous ties between boards and their hired guns is a reflection of trends in the broader society. Nearly all forms of commerce have gotten quicker and meaner.

"Boards want to see results immediately," said Lauren Mackler, an executive coach and corporate consultant in Newton who advises her clients to adopt a collaborative mindset and seek buy-in from their charges. "That's not the best way for a new CEO to acclimate into an organization. If you come in with a machete and produce fear, you're not going to get the results from people that you want to have."

But failing to act rapidly and decisively can be fatal.

"You can look at the CEO relationship with their companies as a form of marriage," Mackler suggested. "And roughly one of every two marriages right now is going to end in divorce. We've become a disposable society. Everything is dispensable, including people."

That would include the privileged tribe of CEOs. Sure, they have their generous salaries, fat bonuses, stores of stock options, and lavish perks. And, unlike their worker bees, when they get tossed out the window, they have their "golden parachutes" to ease the fall.

But they still can't hold down a job.

Robert Weisman can be reached at weisman@globe.com.

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