Average CEO tenure research summary: The average CEO tenure has changed over time, with CEOs spending far fewer years holding their position today than they did just over five years ago. Like everything else, the COVID-19 pandemic had a profound effect on companies.
So, if you’re a curious entrepreneur who wants to know more about the average CEO tenure in 2023, stay tuned. We’ve investigated the average CEO tenure over time and in different industries, and according to our research:
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The average CEO tenure for the S&P 500 is 7.2 years.
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The median CEO tenure is 4.8 years.
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The average CEO tenure has decreased by 34% since 2017 (10.9 years).
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39% of CEOs have a tenure that lasts between 1 and 5 years.
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The Finance and Insurance industry has had the longest average CEO tenure between 2001-2017, at 13 years on average.
Average CEO tenure by years
While the average CEO tenure did decrease dramatically in the wake of the 2020 COVID-19 pandemic, the true number of years CEOs maintain their positions can vary. For more insight into the average number tenure, consider the number of years employed by share of CEOs:
CEO tenure in years by share of CEOs
| Years employed | Share of CEOs (2023) | Share of CEOs (2017) | Percentage change |
|---|---|---|---|
| <1 year | 13% | 10% | +30.0% |
| 1-5 years | 39% | 38% | +2.6% |
| 5-10 years | 28% | 26% | +7.7% |
| 10-15 years | 9% | 13% | -30.7% |
| 15-20 years | 4% | 6% | -33.3% |
| 20+ years | 8% | 6% | +33.3% |
By far, the largest share of CEOs have tenure for between 1 to 10 years in 2023 (67%), and the numbers were similar in 2017.
However, a few important trends to note since 2017 are:
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A sharp increase in the share of CEOs with tenure less than 1 year (30% increase)
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A noticeable decline in the share of CEOs with tenure between 10-20 years (a -30.7% and a -33.3% decrease, respectively)
CEO tenure by industry
When measuring the average CEO tenure between 2001-2017, the Finance and Insurance industry has the longest average tenure of 12.99 years. Here are some other industry averages:
CEO tenure by industry
| Industry | Average CEO tenure |
|---|---|
| Finance & Insurance | 12.99 years |
| Services | 11.36 years |
| Consumer Product | 10.31 years |
| Transport & Communications | 10.20 years |
| Wholesale & Retail | 9.43 years |
| Manufacturing | 8.55 years |
Of the industries listed, the average tenure for a CEO in Finance and Insurance is over 50% more than that of a CEO in manufacturing. Of course, it’s worth mentioning that all of these averages have likely dropped since 2020, but trends from industry to industry have likely remained similar.
CEO tenure over time
The average CEO tenure has faced many ebbs and flows from year to year, and saw a significant drop in recent years. Here is a chart showcasing how CEO tenure has changed over time:
CEO tenure over time
| Year | Average CEO tenure |
|---|---|
| 2001 | 9.4 years |
| 2002 | 11.3 years |
| 2003 | 7.4 years |
| 2004 | 9.3 years |
| 2005 | 8.1 years |
| 2006 | 8.0 years |
| 2007 | 8.8 years |
| 2008 | 8.6 years |
| 2009 | 7.2 years |
| 2010 | 7.7 years |
| 2011 | 8.4 years |
| 2012 | 8.1 years |
| 2013 | 9.7 years |
| 2014 | 9.9 years |
| 2015 | 10.8 years |
| 2016 | 9.0 years |
| 2017 | 10.9 years |
| 2018 | 7.6 years |
| 2019 | 7.4 years |
| 2020 | 7.3 years |
| 2021 | 7.3 years |
| 2022 | 7.2 years |
As you can see, the average tenure for CEOs can fluctuate a lot from year to year. However, there is also a clear trend of an increased tenure between 2009-2017, followed by a decrease in tenure between 2017-2023.
Overall, between the peak of 10.9 years in 2017, and the current 7.2 years, the average length of CEO tenure has dropped by a stark 34%.
CEO tenure FAQ
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What is a good tenure for a CEO?
Good tenure for a CEO in the US is around 5-7 years in 2023. In previous years this average has been over 10 years, but currently, any tenure over 5 years is more than acceptable in the industry. Around 28% of CEOs have a tenure of between 5-10 years, compared to 38% at 1-5 years.
With that in mind, and including those who serve longer than 10 years, just under half of all CEOs will have tenure for 5 years or more.
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Can long CEO tenure hurt performance?
Yes, long CEO tenure can hurt performance even after replacing the CEO. When a new CEO assumes leadership following a lengthy tenure by their predecessor, there is a notable decline in operational efficiency and stock performance.
Here are some further examples of issues:
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Stagnation and complacency. Long-tenured CEOs might become complacent or resistant to change, leading to a stagnant corporate culture and outdated strategies.
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Diminished accountability. The CEO may consolidate power and influence, potentially reducing accountability to shareholders and the board of directors. This lack of oversight can lead to poor decision-making.
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Risk aversion. CEOs can become risk-averse, avoiding necessary but bold decisions in favor of maintaining the status quo. This can hinder the company’s ability to seize opportunities or address emerging threats.
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Talent drain. Younger, high-potential executives may leave the company if they perceive limited advancement opportunities, leading to a talent drain.
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Succession challenges. The longer a CEO stays in power, the more challenging it can be to plan for a smooth succession, potentially leading to disruptions when leadership changes eventually occur.
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Is CEO tenure getting shorter?
Yes, CEO tenure has been getting shorter, even if it naturally fluctuates year-over-year. For example, there has been a 34% decrease in average CEO tenure since 2017, from 10.9 years to only 7.2.
The last major dip in CEO tenure occurred in 2009 after the housing market crash and recession, which also reached a minimum average of 7.2 years. In this way, economic difficulties nationwide seem to be a factor in decreasing the average CEO tenure.
Conclusion
Average CEO tenure has experienced ebbs and flows for over 20 years, but recent declines are more prominent than ever before. Compared to 2017, average CEO tenure has fallen by 34%, with CEOs only having an average tenure of 7.2 years in 2023.
However, not all CEOs are created equal, with the share of CEOs having tenure of over 5 years at 49%, and the share with tenure under 5 years at 51%. The largest share of CEOs, 38%, spend between 1-5 years at a company.
Overall, every company and industry is different, opting to keep an individual CEO for various lengths of time. However, if these trends continue, we might expect to see CEO tenure decrease even further.
References
Author
Jack Flynn is a writer for Zippia. In his professional career he’s written over 100 research papers, articles and blog posts. Some of his most popular published works include his writing about economic terms and research into job classifications. Jack received his BS from Hampshire College.
