Recognizing When It’s Time for CEOs to Step Down

Having spent over 40 years at the helm of Whole Foods, cofounder John Mackey realized it was his moment to step away. "The thrill simply wasn't there anymore," he confessed to Business Insider.

After selling the company to Amazon in 2017, Mackey had pledged a five-year tenure with the new ownership. However, the cultural struggles with the retail giant began to take their toll, prompting Mackey to communicate his exit intentions to Amazon executives a year before his post-sale commitment ended.

Another key reason for his departure was his role as "the last man standing." His original team, who stood by him during the expansion from a single outlet in Austin to a massive natural foods empire, had already moved on. "These were the people I shared victories and defeats with," Mackey reflected.

For CEOs, deciding when and how to step down from what is often viewed as the pinnacle of their careers can be perplexing. The transition may bring challenges such as identity loss and detaching from dedicated work environments and prestigious benefits.

According to discussions with several former CEOs, each had unique reasons for stepping down, yet they all concurred on one point: leaving a beloved role isn’t necessarily an easy decision.

Today, more CEOs are choosing or are compelled to resign. Recently, Linda Yaccarino announced her departure from leading Elon Musk’s social media platform, X, after merely two years.

CEO turnover among S&P 500 companies is anticipated to reach 14.6% this year, per data from The Conference Board and ESGAUGE, marking the highest such rate since 2001.

When Familiarity Breeds Complacency

Reshma Saujani, the founder of Girls Who Code aimed at narrowing the tech gender gap, advocates for leaders to consider leaving when their roles no longer pose a fearsome challenge. "If your workplace no longer feels daunting, it's time to rethink your position," she expressed to BI.

In 2021, Saujani stepped down from her CEO position to further a non-profit initiative called Moms First, born out of Girls Who Code, driven by her itch to embark on new ventures.

Acknowledging her prowess as an entrepreneur, Saujani highlights her knack for identifying issues, articulating them, developing solutions, and assembling teams. "Girls Who Code wasn't a fledgling startup anymore; it had matured past its initial growing pains," she asserted.

Despite receiving advice from Twitter cofounder Jack Dorsey to relinquish directorial roles post-founder tenure, Saujani remains firmly on the board, declaring, "This is my creation."

Moving On for Growth

Rick Hammell cherished Atlas, the HR services company he nurtured for almost nine years, until 2023. Faced with the question of whether he was best suited to elevate Atlas further, he confessed, "Accepting this possibility took considerable humility," he shared with BI.

Recognizing he spent more time with board meetings and investors instead of clients, Hammell concluded he needed a change. This epiphany led him to establish Helios, focusing on hands-on business building once again.

Defining a Timeline

Even CEOs who aren’t founders struggle to release the reins. Such was the case for Bill George during his tenure as Medtronic's CEO until 2001. George resolved to serve no more than a decade, believing leaders exhibited optimal performance within this timeframe. Despite nearing his self-imposed limit, George grappled with the prospect of relinquishing his role.

Long-term leaders amass considerable influence, often receiving invitations to prestigious events that new CEOs might not pull. George reflects, "You begin to question why you'd let go of this status," now contributing as an executive fellow at Harvard Business School.

During the lead-up to his departure, George engaged a therapist to ease himself into the looming transition—from managing 30,000 employees to managing personal time. "Suddenly, it's just you, perhaps aided by a part-time assistant," he remarked.

George found solace in knowing he left his company "in a good place," echoing similar sentiments shared by Dave Guilmette, who departed his prior CEO role at a division of insurance brokerage Aon in 2023, with a guiding principle: "Leave it better than you found it."

Charting a New Path

George Barrett, former CEO of Cardinal Health, also aimed for a decade-long tenure, aspiring to conclude with as much vigor as he began. "This was crucial as I envisioned pursuing other interests post-CEO," Barrett confided to BI.

By stepping down, Barrett intended to make space for successors and engage in teaching, mentoring, and policy work alongside rekindling his musical pursuits, a passion from his youth.

At Whole Foods, Mackey fuelled the company's growth by persistently questioning, "What is the most pressing need for the company right now?" In 2021, he reached a novel conclusion: "What the company needs most now is for me to step back."