Should your company have CEO term limits?

Companies must evolve and change or become a victim of change

As the saying goes, “Nothing lasts forever, and all good things must come to an end.” This applies to CEOs as well.

Today more so than ever— for a variety of real and sometimes elusive reasons — CEOs seem to be thrown under the bus with increasing frequency. The catalyst for this draconian action has been everything from egregious bad behavior all the way to the more typical reason — sales and earnings shortfalls.

The good news is the best CEOs leave for the right reasons, which includes knowing when to give up tightly clutched reins that have produced exemplary results and bring in new blood with a fresh perspective that isn’t bound by history and precedence.

Numerous benefits accrue to a quasi-tenured CEO who has the experience of travailing through numerous economic cycles and the institutional knowledge gained from growing a business over time.

Success or failure of a public company is typically measured in increments of a 13-week report card when a company must bare its soul and either celebrate results or beg for forgiveness. In private companies, it’s a different story, but some of the same issues of their public brethren prevail, particularly if the CEO must answer to banks or private equity investors.

No matter the company’s ownership structure, virtually all entities must innovate to stay in the game, have access to capital and, equally as important, engage a motivated team. A continuous infusion of previously unimagined directions and ideas are spawned by reinvigorated leadership.

From a personal perspective, I was a CEO of a large publicly held company for about 16 years. During that time, it never crossed my mind that I was overstaying my welcome. I pulled the ripcord solely for economic reasons because I, fortunately, guessed right that the company was at its peak. I always believed that the secret sauce of success depends upon innovation and disrupting the norm. No matter how good a CEO is, he or she has his or her way of doing things. Success many times breeds further success, but it also can breed a certain degree of complacency, even if the accomplishments are in the upper quartile of like companies. I have also come to further appreciate that predetermined term limits make good business sense.

Making leadership changes on an organized and civilized basis can motivate others within the organization to strive for the brass ring, and it engenders healthy internal competition. The number of years a leader serves is not as important as creating the ongoing awareness that there are opportunities for others who, by their performance and deeds, can ascend to the very top.

As Kenny Rogers crooned, “You’ve got to know when to hold ‘em, know when to fold ‘em.” From a CEO standpoint, there comes a time to smell the roses or move to another challenge and allow a successor to deal with the next crisis of biblical proportion, which occurs no matter the skill level of the leader. Change can be evolutionary or revolutionary, but all businesses must change or become a victim of change.

Michael Feuer co-founded OfficeMax and in 16-years, as CEO, grew the retailer to sales of $5 billion in 1,000 stores worldwide. Today, as founder/CEO of Max-Ventures, his firm invests in and consults for retail businesses.