Turnover at the Top: Executive Team Departures and Firm Performance

Abstract

In a departure from the historical focus on individual-level turnover, scholars have recently examined turnover at the collective level. Building on this work, we invoke human and social capital arguments and analyze the implications of varying rates of top management team (TMT) turnover for firm performance. Our principal finding is that TMT departures have deleterious effects on subsequent firm performance, though we find evidence to suggest that this effect is nonlinear. Results also suggest that higher levels of average organizational tenure of the TMT will modestly attenuate this negative effect. Contrary to arguments grounded in the managerial discretion literature, environmental munificence weakened the negative effects of TMT turnover rates on subsequent firm performance, whereas the hypothesized moderating effects for both industry complexity and instability were not supported.

Collective turnover: An expanded meta-analytic exploration and comparison

“…), as well as to provide the necessary data (i.e. the correlations among turnover and performance; turnoversquared and performance; and turnover and turnover-squared) as is done in few studies (for an exception, see Messersmith, Lee, Guthrie, & Ji, 2014) so that future comprehensive studies may more thoroughly explore this curvilinear relationship.…”

The Impact of Virtual Team Consistency on Individual Performance and Perceptual Outcomes Over Time

“…Prior literature in management and organizational behavior has attempted to address concerns regarding and implications of team turnover, considering working teams all the way to top management teams (TMT) that govern organizations [5]. A major concern with team turnover comes from its implications for team (and even organizational) performance [6].…”

“…A major impact from turnover and the ensuing inconsistency in team membership is the loss of human and social capital which with ensuing effects on relational development, individual interactions, and behaviors that support the healthy exchange of ideas [3,5,7]. Two theoretical perspectives provide the basis for this research, human capital theory and social capital theory.…”

“…When teams work together, performance is positively influenced by the application of both human and social capital as shown in the use of team member knowledge and skills and the leveraging of relational trust and collaborative effort. Turnover served to diminish both bases of performance by disrupting what teams know about the human capital available for tasks, and by diminishing trust and understanding about how to work together [5].…”

Becoming a Mindful Superintendent in a “Turnaround” District

“…Elsewhere, Murphy & Meyers (2009) invite researchers to investigate and make recommendations concerned with policy and practice refinement. Limited and contradictory findings from research on the efficacy of turnover strategies in both education (e.g., Malen & Rice, 2004) and organizational studies (e.g., Messersmith, Lee, Guthrie, & Ji, 2014) also support the need for further examination of how turnover is perceived and experienced by school personnel.…”