New Australian findings in a study by Booz Allen Hamilton reveal that CEO turnover in Australia is higher than the global rate and the average tenure of Australian CEOs is almost half that of their global peers.

Booz Allen conducted the Australian arm of the global study in a joint initiative with the Business Council of Australia (BCA) to analyse CEO turnover in Australia's largest enterprises.

"The findings have significant implications, not just for chief executives and senior management, but also for company boards, shareholders and the Australian market generally," said Booz Allen Vice President Marion Skulley. "The main concern that arose from the study, was that because the rate of CEO turnover in Australia is higher than in Europe and North America, there is significantly less time for Australian CEOs to devise and execute their change agenda."

The study found that the average tenure for CEOs leaving office forced or otherwise, in Australia in 2002 was 4.4 years, down from 5.8 years in 2001 and half the global average of 8.6 years. Australian CEOs have just two years to achieve results or face an increased risk of being fired within the next two years.

Among the study's findings:

• CEO turnover in Australia is higher than the global rate (Australia 16.8% versus 10.1% globally).
   
• In Australia CEO turnover related to mergers and acquisition is higher than the global average (Australia 21% versus 14% globally) influenced by the strength of the Australian economy.
   
• Succession from within the company continues to be the primary source of CEO talent in Australia and similar to global trends, Australia saw a number of high profile younger CEOs exit.
   
• CEOs hired from outside the company are more polarised in their performance, with returns to shareholders much stronger in the first half of the CEO's tenure than the second.
   
• Financial Services is the safest sector for CEOs in Australia — similar to global trends.
  "Internationally, it is clear that business leaders are enduring levels of scrutiny and pressure unprecedented in recent history," said Skulley. "Emphasis globally is on restructuring costs and working down debt, while bold strategic moves and acquisitions have taken a back seat."

Some key messages emerged from the study:

It is critical for CEOs to define their strategy quickly and base it on realistic performance targets and an appropriate horizon for delivery.

Sustaining change and persistently exceeding the market's expectations will continue to be the hallmark of all enduring CEOs.

Leadership style, individual skills and personality of a CEO remain central to the company's ability to achieve alignment and successfully drive change.

CEOs need to actively engage boards and communicate their strategic plans, to ensure directors understand the complexities involved in executing change.

CEOs need to reflect jointly with their boards how to create a success story, and learn how to monitor the effectiveness of their working relationship.

John Schubert, President of the BCA, said that the study flagged important messages for Australian companies, investors and the market generally. "The study underlines the fact that our top executives must meet a growing and increasingly complex range of performance expectations within the context of having a far shorter tenure than their global peers," he said.

"It also highlights a worrying trend that our markets have an increasingly focus on short-term outcomes from CEOs as opposed to their capacity to deliver longer-term strategies of value creation."