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What To Do With Old CEOs?

About 15 percent of all CEOs reach mandatory retirement age each year-some call it mandatory senilization.”These talented men and women …

About 15 percent of all CEOs reach mandatory retirement age each year-some call it mandatory senilization.”

These talented men and women have worked for more than 40 years, learning how a business operates; how to lead people; how to organize to get things done; how to control, finance, and market. They possess one of the rarest talents in corporate America: knowing how to manage a company effectively. In truth, they are a natural resource of American Capitalism; they are a National Treasure.

Unfortunately, too many of these CEOs did not prepare themselves adequately for retirement, and too many current executives do not see clearly what they can do. There is a dichotomy here. Virtually all corporate pundits and consultants agree that the retiring CEO should leave his or her company and not stay on as chairman or a director, or even have an office at company headquarters. It has all the earmarks of a bum’s rush. Yet, at the same time, we say, “These retired executives are a valuable commodity we should utilize.”

Of course, many retiring CEOs are overjoyed at the prospect of moving to Florida or Arizona, playing endless rounds of golf, becoming acquainted with their grandchildren, throwing away their jackets and ties, and never darkening an office or boardroom door again. If that’s what they want, I say, “More power to them.” They have earned their R and R.

Increasingly, however, more and more retiring CEOs don’t feel “used up” and are not ready for an indolent retirement. At 65, they are still physically and mentally alert and want to continue doing something useful and interesting.

What are their alternatives? There are many.

The most logical use of retired CEOs is as outside board members. Experienced, independent directors are difficult to find. Practicing CEOs usually can serve on no more than two outside boards, but a retired CEO can easily take on four or five. With careful planning, board duties can be spaced so he or she has enough flextime to relieve any pressure.

I’m not talking about Fortune 100 boards; they never have trouble finding directors. I am talking about the thousands of good, medium-sized companies all over America that do not have enough experienced outside directors on their boards.

I am also talking about the myriad small, entrepreneurial companies, often run  by young people who pay minimal director fees and who ordinarily would not have the audacity to ask an important CEO to serve on their boards. I have served on the boards of a number of my former students’ struggling young enterprises and have coerced some of my retired CEO friends to join me-and it has been an interesting, fruitful experience.

These “new” boards do not have to be for-profit corporations. Nonprofit organizations cry out for experienced executives, with a modest amount of time available, to serve on their boards. Most CEOs did their duty on an occasional nonprofit board during their tenure, but it is different when you do it after retirement. The experienced director has time to work with the managers, “learn the business,” serve on board committees, and contribute to the enterprise’s welfare. And, oh, how good it feels.

In addition, universities, especially business schools, have a wealth of attractive opportunities for retired CEOs. I have been an executive-in-residence at Columbia Business School for nearly 19 years, and it has been more rewarding than I ever could have imagined. Seven of us now act in that capacity: counseling students on-their careers, teaching classes, working on a variety of school projects. Working at a keeps me in circulation, up-to-date, in touch with young people from all over the world-and probably keeps me from being thrown on the compost heap for a while longer.

The amount of time it takes is highly variable whatever you wish to put in.

If you don’t need the money, it’s a great job.

Keep in mind, though, that you don’t simply retire, and the next day all these things happen to you. It takes a modicum of planning, talking with people, and familiarization-just like any other investment a prudent person makes. The time to start thinking about it is several years before the actual fact. For most CEOs, that time is now.

Formerly the CEO of F.&M. Schaefer (19721977), Robert W Lear is chairman of CE’s advisory board. He also teaches at Columbia Business School, where he is an executive-in-residence. He is an independent general partner of Equitable Capital Partners and holds directorships with Scudder Institutional Funds; Korea Fund; and Welsh, Carson, Anderson, Stowe Venture Capital Co.; and is a partner of Lear, Yavitz & Associates. 

About robert w lear