Christopher Adams

The Business Herald’s markets and banking reporter.

Bosses average 6.4 years

Don Braid, managing director of Mainfreight. Photo / NZ Herald
Don Braid, managing director of Mainfreight. Photo / NZ Herald

Research suggests there is no "magic number" for chief executive tenure in this country, with the most poorly performing companies having a mix of short and long-serving bosses.

Auckland-based executive recruitment and board appointment firm Seqel Partners and fund manager NZ Funds studied chief executive turnover and total shareholder return among the 150 largest companies, in terms of revenue and market capitalisation, between 2000 and 2013.

Average chief executive tenure was 6.4 years, according to the study.

Research by the Harvard Business Review found the average tenure of Fortune 500 firms in the United States was 4.6 years.

Don Jaine, of Seqel Partners, said long-term chief executive tenure may hurt a company's performance, as enthusiasm could be replaced by established routines.

"However, the New Zealand companies that measurably out-performed the market have long-serving chief executives, particularly Don Braid at Mainfreight, Simon Challies at Ryman Healthcare and Mark Waller at Ebos," Jaine said.

On the flip-side, he said, the poorest performing firms - which Seqel didn't want to name - had both short and long-serving chief executives.

"Taken as a whole, our data suggests that there is no strong correlation between CEO tenure and organisational success," Jaine said. "There's no magic number."

Jaine said the research also found there had been a lot of "churn" in the top positions at large New Zealand companies after the onset of the global financial crisis. Chief executive turnover peaked in 2008 and 2009, he said.

- NZ Herald

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