If you’re a CEO with more than five years on the job and performs so bad, this news would serve you well. You see, a study by the University of Miami School of Business Administration found that CEO’s with fewer than five years on the job are five to six times more likely to be fired for poor performance than those who have served longer.
The study also found out that this probability is unaffected by the power a CEO wields over the board of directors or even owners. Each negative quarterly performance report also increases by 34 to 43 percent the chance for a short-tenured CEO to be fired. For the longer-tenured ones, it’s only 4 to 11 percent, despite poor quarterly performance.
Dhananjay Nanda, a professor of accounting at the University of Miami School of Business and one of the researchers said:
“If Michael Jordan had a bad game late in his career he was likely to be benched than if a rookie had a similar bad game. The same applies to business leaders. Seasoned players, whether putting up numbers on a scoreboard or a stock exchange, get a lot more breaks than those just off the bench. Our results suggest that this is because seasoned executives have a track record that represents superior managerial ability rather than because their firm is poorly governed.”
To give sense to this study, just consider Carol Bartz, fired yesterday as CEO of Yahoo! after just over two years on the job. Had she managed to squeeze past five years, it could have been difficult to get rid of her.