In one of the latest issues of The Economist, today’s corporate boss was compared to a shipwrecked Gulliver tied to the ground by Lilliputians. Two decades ago bosses were relatively unbound, but now things have changed, and they have to face bigger challenges. |
First of all, they do not last long. According to the consultancy Booz & Company, among the world’s 2,500 biggest public companies, today departing CEOs keep their place for 6.6 years, compared to 8.1 years in 2000.
Moreover, fewer chief executives now chair their own boards. Even in the US, imperial bosses are not trusted anymore: the Corporate Library, a pressure group, stated that the proportion of CEOs of S&P 500 firms who are also the chairman fell from 78% in 2002 to 59% in 2010. The rise of institutional investors, such as mutual funds, has changed the way investors interact with managers.
Today, the vast majority of board members are outsiders and are more demanding, which has led to a big improvement in quality. In his new book Winning Investors Over, Baruch Lev of New York University’s Stern School of Business writes that investors often are a team of rivals for the CEO.
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