Booz & Company says the fact that higher proportion of chief executives are staying doesn’t mean that governance is growing more relaxed. “The rates of CEO turnover are still much higher in general than they were in the 1990s, and the pressure on performance remains as great as ever.”
On the basis of its in-depth experience with hundreds of corporations, Booz & Company says it has found that they tend to fall within spectrum of four different corporate models defined by the way senior management and the corporate core engage with the rest of the business.
The first model, at one extreme, is the highly diversified holding company – distinguished by its arm’s-length approach to managing its subsidiary operations. Holding companies add value through strong portfolio management. The second model is the strategic management company, which offers guidance and leadership on strategic direction and provides expectations of performance for its group of related businesses. The third model involves more active management. These corporate cores oversee more tightly linked businesses and advise on operational issues. The fourth corporate model is the highly operationally involved company, in which senior management plays an active role in day-to-day business decision making.
As part of its research on CEO succession and related issues, Booz & Company interviewed chief executives working within these models. Their experience sheds light on the operation of these models, the patterns of CEO succession that seem to follow the models, and the implications for business leaders.
• For more detail on these findings and conclusions visit www.strategy-business.com
