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Pyrrhic victories: the cost to the board of ousting the CEO
Author(s) -
Ward Andrew,
Bishop Karen,
Sonnenfeld Jeffrey A.
Publication year - 1999
Publication title -
journal of organizational behavior
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.938
H-Index - 177
eISSN - 1099-1379
pISSN - 0894-3796
DOI - 10.1002/(sici)1099-1379(199909)20:5<767::aid-job20>3.0.co;2-p
Subject(s) - attrition , accounting , business , sacrifice , demographic economics , labour economics , economics , history , medicine , dentistry , archaeology
Going against anecdotal evidence and common perception, the findings presented here show that boards who take action against their CEOs do so only at great cost to themselves, winning only a pyrrhic victory. Indeed, the findings presented show three distinct levels of board turnover. Normal attrition in periods of continuity produced a turnover of 10.99 per cent over two years; routine retirement exists (22.35 per cent) produced a similar turnover level to forced exits which did not imply a failure of the board to perform its monitoring function (25.36 per cent). However, forced CEO exits which implied a failure in the board's monitoring and advising roles caused a dramatically higher level of subsequent board turnover (40.55 per cent). These findings demonstrate that is not only the CEO that is forced to sacrifice his or her job when a company is in distress, but that the board is also accountable for its failure to perform its monitoring and advising duties adequately. Copyright © 1999 John Wiley & Sons, Ltd.