When Target said on Wednesday that its chief executive, Brian Cornell, would step down, the company noted that he wouldn’t go very far. In February, after 12 years at the helm, Mr. Cornell will transition to the role of “executive chairman.”
It’s an increasingly common move at big companies. But it doesn’t always go smoothly, and the dynamics of having two leaders with “executive” in their titles can be fraught. High-profile examples of the pitfalls include Disney’s approach with Robert A. Iger, and there are other cases, like Jeff Bezos’ at Amazon, that appear to be going to plan.
In a study of chief executive transitions at S&P 500 companies last year, the recruitment firm Spencer Stuart found that nearly half had named an executive chair as part of the succession, and that in most of those cases the chair was the previous chief executive.
As executive chair, a person still has important responsibilities, which could include maintaining relationships with key suppliers, lobbying the government or suggesting mergers and acquisitions.
On average, having an executive chair can lead to stronger company performance, said Ryan Krause, a professor of management at the University of Iowa’s Tippie College of Business. But he cautioned that the arrangement could hold a struggling company back.
“What the data say is when the former C.E.O. sticks around as chair, what you get is less change,” he said. “You’re going to get less performance change than you would if it was a clean break and the former C.E.O. just went away.”
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The post When the C.E.O. Retires but Won’t Go Away appeared first on New York Times.
