What every company should learn from Manchester United’s succession saga. Step 1: Don’t set up an ossified cult around a long-serving boss. Incremental changes are easier if there is more frequent turnover in the top job.

What every company should learn from Manchester United’s succession saga. Step 1: Don’t set up an ossified cult around a long-serving boss.  Incremental changes are easier if there is more frequent turnover in the top job.

Studies of CEO tenure show that a company’s profitability generally suffers after replacing very short- and very long-tenured bosses. A study of American firms put the sweet spot for CEO tenure at 15 years, as measured by profitability of the firm three years after the boss’s departure. The average tenure of a CEO in the S&P 500 is currently around 10 years.

Boldness is required. Counterintuitively, this can mean appointing a successor with a daring new vision, perhaps one far removed from the company’s current course. This is not as crazy as it sounds, given how executives with extra-long tenures tend to work.

Instead of turning the firm into an ossified cult to the former leader, which will almost inevitably falter, a company that has grown around a dominant personality may be better off appointing a similarly bold manager with free rein to take it in a new direction. The conditions that enable a boss to stay in charge for multiple decades almost never last after the boss leaves, so when that happens a drastic change of strategy may be not just a good idea, but essential. Incremental changes are easier if there is more frequent turnover in the top job.

http://qz.com/201983/the-lesson-every-company-should-learn-from-manchester-uniteds-sorry-succession-saga/

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