the health of a corporation, and there is much less patience with anything short of spectacular success. If there is a racial double standard, it might be that black CEOs do not have the luxury of pursuing a corporate strategy that pays long-run dividends but requires short-run trade-offs in terms of corporate profitability. They only have the opportunity to win.”
Black advancement may, however, suffer a brief pause, says Gerald D. Jaynes, Ph.D., professor of economics and African American studies at Yale University. “Any African American who has been around will understand that we don’t get the same level of opportunities to fail as white Americans do,” says Jaynes, another be Economist. For the individuals who are resigning under pressure, there is always going to be a case for it not simply being looked at as a CEO whose time is up, but a black CEO whose time is up. Whatever negative things anyone has to say about that are going to rub off a little bit.”
CEOs have been changing jobs more frequently of late. In addition to the departure of Parsons and O’Neal, Citigroup chairman and CEO Charles Prince also stepped down amid the company’s billion-dollar losses from investing in bad debt. Last October saw 216 CEO shuffles, while CFO and all other C-level management changes were up 8% from October 2006, according to Liberum Research, an independent investment-research firm based in New York City and part of The Wall Street Transcript, which focuses on management changes and how it affects the investor. Citing research conducted by executive search firm Spencer Stuart, Brooks says, “In 2005, under 60% of S&P 500 CEOs had been in their position less than six years.” Only 12% had served more than a decade, 20% had been CEO for six to 10 years, and 21% had been in their posts for one year or less. Boston blames the high CEO turnover rate on globalization. “In recent years, this has forced CEOs of leading corporations to make drastic cuts in costs and pursue risky business strategies to maintain above-average profit margins,” Boston says. “Black CEOs have given in to this temptation just as white CEOs have. It is a high-stakes game with big rewards for winners and big penalties for losers. E. Stanley O’Neal and former Fannie Mae chairman and CEO Franklin Raines gambled and lost.”
Anderson attributes the turnover to a post-Enron environment, where the Sarbanes-Oxley Act of 2002 requires a new or enhanced level of CEO accountability to corporate shareholders.
Despite the challenges, Brooks believes the future remains bright for up-and-coming African American mid-level managers who are gaining the experiences and competencies needed to move into, and be successful in, senior corporate positions.”
But they must be aggressive, says Boston. “Black CEOs cannot survive if they pursue a cautious strategy. They have to pursue bold strategies, and they have to be fortunate enough to be successful at them.”
October 2007 C-Level Breakdowns by Status
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