Why Are So Many Prominent Executives Leaving Big Corporations?
In 2017, Richard Davis left his CEO job at U.S. Bancorp, and a few months later Ken Powell gave up the CEO reins at General Mills, as did Stephen Hemsley at UnitedHealth Group. On July 1, Inge Thulin will step down at 3M Co.
Why are so many prominent local CEOs heading for the exits? Since 2016, seven of Minnesota’s 15 largest public companies announced CEO departures.
“We’re going through major generational change with CEOs in the Twin Cities,” says Bill George, former Medtronic CEO and a senior fellow at Harvard Business School.
Still, “there is turnover in people, but not necessarily turnover in business strategy and community engagement,” says Paul Vaaler, a business and law professor at the University of Minnesota. That’s because five of the seven corporations decided to promote executives from within their ranks. That’s the case with U.S. Bancorp, General Mills, UnitedHealth and 3M. At Hormel, James Snee was promoted from the president’s position to succeed Jeffrey Ettinger as CEO.
An effective CEO must assemble the right team, be able to expand the business and have the “vision to understand where the company needs to go in a new era,” George says. He argues that a new CEO is poised to succeed when the person rises from within the company.
Vaaler notes that the CEO changes were much different at Supervalu and Patterson Cos.; each recently hired external candidates as leaders, and each has struggled. Mark Gross took the helm at Supervalu in 2016 after leading Surry Investment Advisors; he’s charged with turning the grocery business around. Patterson chose Mark Walchirk, a McKesson veteran, to become CEO in 2017 and address issues within the dental business. The previous Supervalu CEO served three years, and Patterson had an interim CEO.
For U.S. CEOs who left S&P 500 companies in 2016, the average tenure was nine years, according to a national report by the Conference Board. Davis, Ettinger, Hemsley and Powell each served a decade or more, and were ready to pass the baton.
George is encouraged that many of the departing Minnesota CEOs have groomed their successors to play leadership roles in the community. The new CEOs should “work closely with the mayor, the City Council, United Way and arts organizations,” he says, as well as business groups that advocate for good schools, health care and quality of life.