Resignations of CEOs and MDs are becoming more common than retirement in both the private sector and in state-run companies
An chief executive officer (CEO) or a managing director (MD) in India occupies the position for less than four years, which is lower than the global average of five years.
The head of a BSE 500 company stays in the role for an average of 3.5 years, according to an analysis by Mint. A global study by PwC showed that from 2004-2018, the average tenure of a CEO was five years.
Mint analysed companies that have been part of the BSE 500 at least once in the past ten years. The sample included 324 CEOs and MDs who have exited these companies since 2011, as per data provided by CMIE.
The analysis did not include chairpersons since their role could be non-executive.
"CEOs have longer tenures in mature markets but a tenure of around four years in an emerging market such as India isn't unusual," the business daily quoted Anshul Lodha of recruitment firm Michael Page as saying.
On an average, the tenure of CEOs/MDs has increased over the past few years, the report said.
In construction and real estate, for instance, the average tenure was less than three years from 2011-15, but that more than doubled to nearly seven years during the 2016-20 period.
"With policy changes such as GST and incoming foreign players, we are seeing consolidation in operations and improved corporate structures being put in place, leading to longer tenures," Prashant Thakur, head of research at Anarock told the publication.
There was barely any difference between the average tenures of men (3.6 years) and women (3.5 years) CEOs, Mint reported. However, the 10 longest-serving CEOs and MDs in the sample were all men.
According to the report, resignations are becoming increasingly common in both the private sector and in state-run companies.Out of the sample, 83 percent CEOs and MDs in the private sector resigned between 2016 and 2020, while the rest chose retirement. In the public sector, 73 percent resigned, while 27 percent retired.