Tension between non-executive board members and executive directors can force people to leave businesses. Fabrice Coudray and Florian Kreuzwirth, Managing Directors in the Executive Search practice at Robert Half, explain how to prevent high leadership turnover – and why the example of Sam Altman and Open AI holds answers.
When Sam Altman left Open AI in November 2023, it became a global news story. The chief executive of the business behind ChatGPT had reportedly lost the confidence of the board, who cited a lack of clear communication.
But just as quickly as he had left, so the campaign to reinstall him, gained momentum. Within hours, other members of the leadership threatened to resign, alongside swathes of Open AI employees. He also had the backing of a key investor, Microsoft. Within days Sam Altman was back, promising to improve governance and working to get the business – and its reputation – back on track.
High leadership turnover is often due to a lack of confidence. A lack of confidence in an individual, or disagreement about strategy. The non-executive board or investors might believe one thing, and the chief executive something else. But a lack of alignment, however slight, can have big knock-on effects: people leave businesses because of the people who lead them; so, when leaders start leaving, there is a risk of others walking out the door.
This is a story of how businesses can prevent high leadership turnover. It looks at the importance of anticipation and succession planning, alongside prompt decision making and clear communication – all of which are qualities of good leaders.
Chief executives and non-executive board members need to understand the people around them. Are they the right people to lead and advise the business in the next five years? If not, who are the right people? And where are they?
Consider a new chief executive of a large business. They have a five-year plan and have got to know the current executive team and non-executive board. The problem is: not all those people match up to the ambitions of the new leader. In this case, the board and potentially other senior leaders, will need to be refreshed before the business can move forward.
Consider this example, too: a business has appointed a new chief financial officer every year for the past four years. The board members have realised – and have been advised – that the problem is not the CFO; it is the CEO. They, too, will need to change the leadership, before finding the right CFO. Otherwise, there will be another CFO in 12 months’ time.
In both cases, leadership turnover will increase if nothing happens. So, the importance of anticipating the problem and planning for it, is important. Boards and CEOs also need to make these decisions. It sounds obvious, but many talk about succession planning, and don’t do anything about it.
This is especially important when businesses are navigating external market changes such as artificial intelligence, inflation and economic volatility. The right leader now might not be the right leader in the future. If these decisions are made when things are going well, a business can move forward with confidence. If they are left alone, then it will be too late.
In addition, if a business can clearly communicate why change is happening, it has a greater chance of success. If something isn’t clear, employees and the market might perceive a disagreement – even if there isn’t one – which can impact confidence, reputation and share price. Good businesses have leaders who can clearly communicate during times of change.
The story of Open AI proves the importance of getting leadership change right. But it also shows what can happen when a chief executive has gained a widespread following among employees, investors and other members of the leadership team.
As businesses prepare for their next chapter, they would do well to ask themselves this question: do we have the right people in the right roles to move forward and achieve our goals? If not, then they should anticipate what’s needed, make the decisions early, and communicate what they are doing and why. Don’t wait for a boardroom coup and the implications of a high-profile exit.
Fabrice Coudray is Managing Director for Executive Search in France.
Florian Kreuzwirth is Managing Director for Executive Search in Germany.
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