Reason CEO’s Get Fired

This is a really interesting topic to discuss especially when you are a young entrepreneur dreaming to lead your company to the highest level. Or maybe you are some executive who has recently been offered a position at a big firm as a CEO.  No matter which position you are in, you need to make sure to be at your best so you can continue being the CEO. It is the most important role in the company and mostly every decision made within the company has to go through the CEO. It is a tough job to handle and a lot of responsibility to take.

One wrong move and you are out of business. And it is not uncommon for a CEO to get fired. They are the ones responsible for the growth or downfall of the company and they are the ones who will be giving answers to the board of directors. So if anything goes wrong they are the first in line to get fired and replaced.  Now let’s talk about what gets a CEO fired.

The Russel 3000 index made a study to see what percentage of CEOs are fired and what percentage of CEOs resigned. The study shows that 52% of the CEOs are fired and 48% of them resigned. So why is it that suddenly we are seeing CEOs getting fired? Another study done by Linkedin shows that   20% of the CEOs are promoted internally meaning they were promoted from one position in the company to end the CEO. And the rest of the 80% came from outside. 80% of the CEOs were hired to work as the CEO of a company.

Another study was done by CNN interviewing 73 CEOs who were fired. The study was done to find out the leading reason for the CEOs getting fired. According to this study, they found out that 30% of CEOs get fired because of poor business performance and the business not reaching the milestone expected by the consumers or by the board of directors. 26% of CEOs don’t have a good relationship with the board member.

It is often seen that CEOs have a conflict of interest with the board member. One of the greatest examples of it is Steve Jobs getting fired from Apple as the CEO because of a bitter relationship with a board member. Sometimes the board member wants totally different things from the company which creates conflict with the CEO’s vision for the company. 22% of CEOs get fired because of a lack of key skill sets.

Not knowing about the business ecosystem and the development of business and technology might get you fired. Business is dynamic. So you have to be prepared for the changes around you and keep learning. And 12% of the CEOs get fired because of alienating the management team. Some CEOs don’t want to get insight into their management team and don’t talk to them. They keep themselves at distance from the management team because it is one of the most critical teams to handle.

Forbes made a very insightful study on CEOs getting fired based on 1087 board members who actually fired their CEOs. They figured out the top five reasons for the CEOs getting fired after talking to these board members and getting their insight on this topic. The study narrows down to the reason the board members decided to fire their CEOs.

1.  Mismanaging Change (31%)
2. Ignoring Customers (28%)
3. Tolerating Low Performers (27%)
4. Denying Reality (23%)
5. Too much talk, Not enough Actions (22%)

So let’s summarize and see what drives the board member to tell the CEO ‘You are Fired’.

1. CEOs lose the confidence of the Board
2. Company outgrows their ability
3. Not having a majority Control
4. Not meeting Consumer expectation
5. Not proving enough value
6. Not meeting Board member’s expectations
7. Being in the middle of a scandal
8. Loses influence over the team
9. The company was acquired by a new buyer
10. Not to take action quickly

It is not always that the Board member fires the CEO. Sometimes the CEOs fire themselves. When the CEO thinks they are not fit for the job and they feel the need for someone with much expertise can do better to grow the company, they resign. Often founders who work as a CEO doesn’t want to take the burden as the company starts to grow drastically. As the company grows the need for a better person to run operations grow with it. So they step down and make for the better ones.

There are many other reasons but these are the top 10 reasons we think the CEOs get fired. So make sure you look deep into it and hope you can avoid the most of it.

Good Luck