Leadership Tenure: The Argument for Term Limits

A short time ago, a leadership change in a particular function was announced at a large professional services firm (not the Managing Partner) with which I’m familiar. A Senior Manager at that firm asked me whether changing a leader with 7 years tenure was good or bad. I responded in a rather Talmudic fashion, both, but it depends. Over 35 years ago, two sports researchers, Eitzen and Yetman, in an obscure article titled Managerial Change, Longevity and Organizational Effectiveness (1972) reported on a research finding that has significance to any debate on leadership tenure.

These two academics found, from a large sampling of college basketball coaches, that a relationship actually exists between coaching tenure and team performance. The duo discovered that the longer the coaching tenure, the greater the team success. However, after a certain period –13 years on average, the team’s performance consistently began to decline… steadily. Fast forward nearly twenty years and in 1991 two Columbia University Professors, Hambrick and Fukutomi building upon this initial research, proposed a model outlining five discernable phases in the evolution of a CEO’s tenure in office. Initially, the leader works to develop an early track record, legitimacy and a political foothold.

The incumbent then achieves small successes and established credibility sufficient to be willing to consider exploring new directions. In the third phase, the leader tends to select a theme for how the firm/company should be configured and run from that point on – in other words, the leader selects those elements that seem to work the best and that are the most comfortable.

Finally, there’s a period where only a few new changes are made and those changes are largely designed to fine-tune earlier directions. At some point, job mastery gives way to boredom; exhilaration to fatigue; strategizing to habituation. Inwardly, the leader’s spark becomes dim and responsiveness to new ideas diminishes.

As this happens, and even though the leader may be disengaged psychologically, his or her power may be at an all-time high. In a professional firm context, this partner may have appointed many of the current practice group leaders and office directors, retains loyal supporters throughout the firm, and may even have developed an aura as the senior statesman. And none of these constituents are likely to have much of an appetite for disrupting a good thing.

For such firm leaders, even though the excitement of managing a function or even the firm may be long gone, giving up the title is generally an unappealing option. As a result, the duration of this dysfunctional stage in the leader’s tenure can be protracted. Thus the primary risk to any firm or company from having overly long-serving firm leaders can be malaise and lethargy.

“The question of forestalling deterioration assumes a skilled leader can and should go on indefinitely despite the trajectory of the organization – not a sound premise.

What are the reasons why leaders depart, other than forced retirement for performance transgressions? Many depart at mandatory retirement age or at a time when they just want to do it. Because the leader typically accumulates power as a function of time in office and because leaders become comfortable over some years of prolonged firm or company success, mandatory term limits may be the only realistic way to ensure that the leader leaves office before his or her performance deteriorates.

Those that argue for term limits would say that while age is irrelevant, according to this empirical research, tenure may be very relevant. The central argument that this research proffers is that there are discernable phases within a leader’s tenure and that these phases give rise to distinct patterns of attention, behavior, and ultimately firm or company performance. They suggest that organizations need to be alert to the dangers of their leaders staying too long in office. Aside from performance aberrations that need addressing, there is an optimum time to serve. Hence, the concept of term limits.

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