Turnover at the Top

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The food service industry is known for having a high turnover rate. In fact, the annual rate has even at times exceeded 100%, but it is becoming more common for the management high up in the company to have a high turnover rate as compared to other industries. This can greatly affect the company because the unsteadiness of revolving management at this level can cause poor financial decisions and  future strategic planning for the company.
In order to determine how a CEO may be compensated for the company doing well, Barber, Ghiselli, & Deale did a study to determine what incomes correlated with their compensation. For small companies, it was gross income, where as for large companies it was net income. The largest companies had a correlation with CEO compensation and stock prices of their company. This implies that the turnover in management at food service companies is related to performance measures and the company's size.
The authors also state that turnover at the larger companies is probably due to loss of shareholders when the company is doing poorly, and for this reason, the board of directors is forced to ask for resignation of the CEO.
The real question is, what will happen to the food service industry if the turnover rate of CEO's continues to grow over the coming years?
Barber, N., Ghiselli, R., Deale, C., & Whithem, C. (2009). CEO Turnover in the Foodservice Industry: Is There a Relationship to Key Financial Performance?. Journal Of Foodservice Business Research, 12(1), 2-17. doi:10.1080/15378020802671834

-SB

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