| In times of distress, boomerang CEOs are a handy pick for boards and typically require considerably less training than a new CEO.
But the second—or third—CEO tour is indicative of managerial dysfunction and poor succession planning, leadership experts say. Worse still, the data shows boomerangs aren’t always more effective than first-time corner office holders. According to a study of 167 returning CEOs from the S&P Composite 1500 between 1992 and 2017, their annual stock performance was 10.1% lower than that of their first-time counterparts. That’s a searing indictment.
Additionally, boomerang CEOs may not recognize the company they’re returning to in today’s fast-paced business environment and lack the skills to address new challenges. Over the last three years, CEOs have grappled with a global pandemic, social justice protests, supply chain chaos—the list goes on.
But when push comes to shove, and there’s no better option, ex-CEOs are a sensical choice as long as their reinstatement is temporary. A better option? Prioritize succession planning well before the current CEO’s departure. |
