When a house sits on the market for a while, we tend to think the people who passed on it rejected it for a reason. The same goes for a job, especially an executive-level one.
If a CEO position stays open for too long, it could indicate a couple of things, none of them all that promising to a potential candidate.
Sears had an "interim" CEO for three years, until Lou D'Ambrosio took over this past May. Lloyds Bank (LYG) CEO António Horta-Osório recently stepped down claiming it was on account of chronic fatigue, and the company's interim CEO, Tim Tookey, plans to leave at the beginning of 2012. If Horta-Osório doesn't feel better, Lloyds will bring on a replacement interim, CEO David Roberts.
Time Inc., a division of Time Warner (TWX) (and Fortune's parent company), is no stranger to this problem. An "interim management committee" has been running the ship at the magazine publisher for the past nine months and a replacement, Digitas CEO Laura Lang, was announced last week.
Investors get restless about these types of management gaps, and for good reason. For one, lag time between CEOs can indicate a problem with leadership development within a company, says Sydney Finkelstein, a professor of management at Dartmouth's Tuck Executive Education School.
Unsurprisingly, companies with clear succession plans can sidestep leadership blips. CEOs who keep a close watch on talent rising through the ranks tend to have a good sense of the ideal candidates, Finkelstein says. Organizations that have an HR person in their C-suite also tend to prioritize leadership development.
