4 ms·

Random idea- has any corporation operated with something akin to term limits?

by Apocryphon 4y ago

rogerkirkness 4y ago
Huawei does this, I think every 18 months they change CEO among the leadership team.
- granshaw 4y ago
  Super interesting. Def think there’s lots of room for experimentation in corporate governance and corporation structure
  - 3a2d29 4y ago
    Obviously not corporate, but I believe Rome had 1 year term limits for its 2 consuls.
- Scoundreller 4y ago
  Founder’s daughter has been CFO for over 10 years though
- JamesianP 4y ago
  I understand they also don't get compensated much, relatively speaking. I think it fits with an Asian approach to business where companies are big conglomerates with much more cautious leadership (and therefore less expectation from them). At least historically.
- zac_hudson 4y ago
  Huawei has a very unusual leadership/ownership structure, even amongst its peers in the tech industry. Legally, its a worker-owned cooperative, but unlike most cooperatives, its workers don't directly vote on policy; rather they choose 51 shareholder representatives and 9 alternate representatives, who in turn select a politburo, which in turn selects a CEO from the standing committee.
  - taberiand 4y ago
    Sounds great, what's the catch?
thesuitonym 4y ago
Seems like it would be a terrible idea. CEOs are already incredibly short sighted, neglecting long-term disasters for short-term gains. Sometimes it seems as though CEOs aren't able to see beyond the next quarterly earnings report. Having a limit would incentivize running the company into the ground to get the highest quarterly profit possible. What do they care? Someone else will be CEO next year.
- 3a2d29 4y ago
  But surely if CEOs had term limits then the good ones would be jumping from one company to another, so if they think too short term then no board would hire them. Boards would hire the CEOs that set the next one up for success. Kinda like how term limits for the us president doesn’t usually result in that type of behavior since it would screw over their party.
  - afarrell 4y ago
    That only works if you assume high-quality objectively-understandable information.
  - danaris 4y ago
    Boards are the ones hiring the bad CEOs now. They're not equipped to tell the difference, even when they're not actively colluding to juice the short-term share prices so they can get out with a yachtload of money.
- yuppiepuppie 4y ago
  Maybe tying their severance, retirement package or stock options to the performance to the companies long term growth would help alleviate that problem.
- Apocryphon 4y ago
  The terms could be 5 years long, and re-electable.
- ISL 4y ago
  It is possible to combine term-limits with a long share-vesting period in order to (potentially) reap the best of both strategies.
venantius 4y ago
It’s actually quite common at certain types of organizations (typically foreign-owned) to appoint a local as CEO on a specific term and then to revisit when that’s up.
Gibbon1 4y ago
I had an airplane conversation with a manager at a multinational. He said they shuffled managers every couple of years. Bunch of reasons for that but partly gave the company better visibility into what's going on with a group because you have several managers on tap who've managed that group before. And if they have to fire a manager they have a number of people to tap for that role.

Random idea- has any corporation operated with something akin to term limits?

rogerkirkness 4y ago

Huawei does this, I think every 18 months they change CEO among the leadership team.

granshaw 4y ago
Super interesting. Def think there’s lots of room for experimentation in corporate governance and corporation structure
- 3a2d29 4y ago
  Obviously not corporate, but I believe Rome had 1 year term limits for its 2 consuls.
Scoundreller 4y ago
Founder’s daughter has been CFO for over 10 years though
JamesianP 4y ago
I understand they also don't get compensated much, relatively speaking. I think it fits with an Asian approach to business where companies are big conglomerates with much more cautious leadership (and therefore less expectation from them). At least historically.
zac_hudson 4y ago
Huawei has a very unusual leadership/ownership structure, even amongst its peers in the tech industry. Legally, its a worker-owned cooperative, but unlike most cooperatives, its workers don't directly vote on policy; rather they choose 51 shareholder representatives and 9 alternate representatives, who in turn select a politburo, which in turn selects a CEO from the standing committee.
- taberiand 4y ago
  Sounds great, what's the catch?

thesuitonym 4y ago

Seems like it would be a terrible idea. CEOs are already incredibly short sighted, neglecting long-term disasters for short-term gains. Sometimes it seems as though CEOs aren't able to see beyond the next quarterly earnings report. Having a limit would incentivize running the company into the ground to get the highest quarterly profit possible. What do they care? Someone else will be CEO next year.

3a2d29 4y ago
But surely if CEOs had term limits then the good ones would be jumping from one company to another, so if they think too short term then no board would hire them. Boards would hire the CEOs that set the next one up for success. Kinda like how term limits for the us president doesn’t usually result in that type of behavior since it would screw over their party.
- afarrell 4y ago
  That only works if you assume high-quality objectively-understandable information.
- danaris 4y ago
  Boards are the ones hiring the bad CEOs now. They're not equipped to tell the difference, even when they're not actively colluding to juice the short-term share prices so they can get out with a yachtload of money.
yuppiepuppie 4y ago
Maybe tying their severance, retirement package or stock options to the performance to the companies long term growth would help alleviate that problem.
Apocryphon 4y ago
The terms could be 5 years long, and re-electable.
ISL 4y ago
It is possible to combine term-limits with a long share-vesting period in order to (potentially) reap the best of both strategies.

venantius 4y ago

It’s actually quite common at certain types of organizations (typically foreign-owned) to appoint a local as CEO on a specific term and then to revisit when that’s up.

Gibbon1 4y ago

I had an airplane conversation with a manager at a multinational. He said they shuffled managers every couple of years. Bunch of reasons for that but partly gave the company better visibility into what's going on with a group because you have several managers on tap who've managed that group before. And if they have to fire a manager they have a number of people to tap for that role.