Why CEOs are leaving their posts — and what it means for the workforce

The labor market has been difficult for workforces everywhere, and even CEOs aren't exempt from the same instability as their employees. 

Half of employees experienced the departure of a C-suite executive at their organization this year, according to a recent report from executive research firm DHR Global. The leadership changes have left 55% of those employees questioning whether their organization's mission is worth believing in or working for. And while employee turnover is normal, even at the executive level, this trend may have some deeper implications.

"What everybody's looking at right now is a tremendous amount of volatility and unpredictability," says Keith Giarman, managing partner of global private equity practice at DHR Global. "If you're a CEO that has been working inside a company trying to grow and create opportunities, it's been a very difficult situation to face as an executive." 

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In January of this year, 222 CEOs stepped down from their positions — 14% higher than the start of 2024 and the highest January turnover since 2002, according to findings from executive outplacement firm Challenger, Gray & Christmas. There's no specific data that points to why the numbers have been consistently rising, but there are a few factors that can be considered. In particular, in 2024 business leaders were optimistic and overconfident that the challenges from the years coming out of the pandemic would resolve themselves.   

"Interest rates were supposed to start going down, the Federal Reserve was going to take action, deals were going to start to go up and there was going to be more liquidity in the market — but it didn't happen that way," Giarman says. "The hardest thing a CEO can do is to look at the market and admit to investors and staff that they're not clear on what the path forward is. It makes it very hard to run a company."  

Politics plays a role

The recent cultural and political tensions haven't helped business leaders, either. Employee engagement remains low and workforces are unhappy with return-to-office mandates. In addition, the recent election and President Trump's stance on workplace culture has raised concerns about diversity and inclusion efforts that leaders have had to navigate to the best of their abilities. 

As a silver lining, almost two-thirds of employees said executive turnover increased their engagement, according to DHR Global's findings. Much of that is due to the fact that many of the current leadership roles were executives brought in either at the height of the pandemic or in the immediate aftermath, Giarman says. What the workforce needed then and what they need now is different, and a change in leadership can provide the fresh outlook many employees need.  

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"If an employee [sees that] things aren't getting better or it's more the same — whether it's the CEO's fault or not — they won't really care," he says. "They want to see some kind of change." 

The future is difficult to predict, but Giarman believes that CEO turnover will remain high and maybe even increase as volatility in the markets and in the government persists. Although the adjustment will be challenging at first, new leaders will be adaptable, which could serve as a long-term benefit. 

"Things are changing faster than ever before," Giarman says. "We're going to need leaders that are very agile and that can not only deal with that change but react to the change successfully."