Top Management Turnover:Change Of Leader Or Change Of Team?

With the informatization and globalization of economics,Chinese firms have confronted unprecedented challenges.Facing such complicated and dynamic business environments,it is difficult for chief executives to manage the enterprise by their own.In fact,it counts on the collective intelligence of the top management teams(TMTs).With the development of the professional manager market,collective turnover of top management has become more and more frequent,which has drawn the attention of public.Collective turnover of top management is personnel earthquakes.What economic consequences would this"earthquake" cause for enterprises?Would the operating performance be improved by collective turnover?Are the consequences different from that of individual turnover?To give an insight into these issues,in this article we manually collect the information about managerial turnover occurred in between January 1st 200]to December 31st 2014.he large sample of data is investigated to reveal the association between collective turnovers of management and operating performances of corporations.The results show that:(1)compared with the individual turnover of core executives,collective turnover of TMT members is more conducive to improving operating performance of corporation after the change.This indicates that expanding the functional range of the managerial turnover mechanism to other members of TMT other than just replacing chief executives would significantly enhance the effectiveness of TMT,and thus to improve corporate performance.Meanwhile,replacing the "original one"with staff who are more loyal and willing to corporate is also contributed to overcome interpersonal relationship disturbance and structural inertia within the organization,clear the way for implementing strategic reform and lead the corporate out of woods.(2)Compared with large firms and state-owned enterprises(SOEs),this relationship between collective turnover of TMT and the operating performance after turnover is more pronounced in small firms and non-state-owned enterprises(NSOEs).This may results from the fact that large firms have more normative institution and governance mechanism and SOEs enjoy monopoly and resource superiority,resulting in less dependent on human capital of top managers.In addition,large firms are blocked by structural inertia caused by its relatively complex organizational structure,and SOEs suffer more administrative intervention,increasing the difficulty for successors to make strategic adjustment and transformation to improve operating performance.This study has several contributions both academically and practically.First,this article enriches the researches on economic consequences of managerial turnover,and increases pertinence by focusing the insight from general staff to TMT.Secondly,the results have meaningful implications for enterprises to treat managerial turnover properly and understand its positive significance for operation.Enterprises should take TMT as the responsibility subject of operational performance and expand the functional scope of managerial turnover mechanism to make it exert supervision and restrain more effectively.