Daily Management Review

PWC Strategy& notes a sharp increase in top managers layoffs for moral and ethical standards violation


05/17/2019


Strategy &, a division of PwC Consulting, released a report on the situation among top executives of companies. Experts found that in 2018, the proportion of managers displaced from their positions for violation of moral and ethical standards has significantly increased.



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The report of Strategy &, PwC's Strategic Advisory Services Division, focuses on the turnover and continuity of the managers in companies (CEO Success Study). Experts note that at the end of 2018, staff turnover among company leaders worldwide reached a record level of 17.5%. At the same time, there remains a group of managers who maintain a stable position in their firms. The study includes an analysis of turnover of managers of the 2500 largest public companies in the world over the past 19 years. According to the results, 19% of respondents remained in their positions for 10 years or more, although the average length of work for a manager is five years.

In 2018, turnover among executives increased markedly in all regions except China.

Fluidity was the highest in countries classified as “other advanced economies” (such as Australia, Chile and Poland), and amounted to 21.9%, that is, it was almost the same as in Brazil, Russia and India (21,6%).
Slightly lower rates were found in Western Europe (19.8%), while the lowest turnover rate persists in North America (14.7%). When analyzing by industry, experts found that the highest turnover of executives in 2018 was typical for telecommunication companies (24.5%), followed by raw materials (22.3%) and fuel and energy sectors (19.7%).

The lowest turnover of managers in 2018 was observed in the health sector (11.6%). The report states that “despite the emergence of new breakthrough technologies, fierce competition and investor activity, the average duration of work in this group of managers with more experience is 14 years, while they are more efficient, and the probability of their forced retirement is lower than among managers with less experience."

Speaking of regional differences, the researchers point to a higher likelihood of long-term executive work in North America (30%), somewhat lower in Western Europe (19%), followed by Japan, Brazil, Russia and India (9% each). Positions of top management are one of the most unstable (7%) in China.

In 2018, for the first time in the entire history of this study, the number of managers dismissed due to ethical violations was greater (39% of all layoffs) than due to dissatisfaction with financial indicators or disagreements on the board of directors (the most common reasons). The number of top managers dismissed for unethical behavior in 2018 grew by 50%; a year earlier the increase in the number of such layoffs was 26%.

Another trend was the decline in the share of women among new leaders in 2018 to 4.9%.

In 2017, new women executives accounted for 6%. However, the report states that, compared with the lowest level of 1% in 2008, the upward trend continues. In contrast to 2017, when the jump in the share of women among new leaders was caused by a sharp increase in this indicator to 9.3% in the USA and Canada, in 2018 the highest percentage was observed in Brazil, Russia, India, China and other developing countries. Most female managers emerged in the field of public utilities, trade and other services (9.5%), followed by communications and financial services (7.5% and 7.4%, respectively).

source: strategyand.pwc.com






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