Term Limits for Managers


Robert M. Tomasko


[This is a revision of an article that appeared in The New York Times, February 19, 1995 ]


Term limits are one of those ideas whose time seems to have come.

They are being debated - and implemented - at local, state and national levels of government.
Regardless of their pros and cons for elected officials, they are well worthy of private sector consideration.

The past decade has seen a revolution in how American business is managing itself. Strong doses of downsizing, reengineering, quality management and team building have shored up many industries' positions in a "take no prisoners" era of global competition

But getting competitive and staying competitive are not synonymous.

Keeping these hard won gains requires rethinking many of today's taken-for-granted management practices. The current debate about term limits suggests one of the directions this rethinking can take.

Corporations have never been more concerned about being performance driven, flexible, and attuned to the long term. But the structures in which they place their managers encourage exactly the opposite behaviors: short-term myopia, turf building, and attention to the routine rather than the high priority.

Today's creative reengineering ideas too quickly becomes tomorrow's straitjackets, job-hopping the preferred way to avoid the consequences of one's missteps.

Many businesses need an orderly way to build disorder into their modus operandi. That's where the term limit idea come in.

What if, at the time a manager assumes a new position, a date for vacating that position is also announced. In effect, a limited tenure, or term appointment, is set for each manager. It might be a minimum of two and a half or three years for relatively junior managers, possibly as long as eight or ten years for some executives whose jobs involve work whose value may not be known until that far into the future.

This could solve a number of problems.

One of the greatest errors businesses make is keeping managers in place long after the reason they were selected becomes irrelevant. This is a problem visible in the mail room as well as the executive suite. An opening occurs, the best person to fill it is selected. Then the business changes (often very quickly these days), and soon what was once a good fit between the work and the person becomes another contributor to corporate inertia.

Associated with a manager's term could be one or two highest priority, multi-year missions: turning around a troubled operation, significantly improving cost or quality, introducing a new product, or capturing a fraction of the market by a certain time.

These could counterbalance the dominence of the 12 month cycle of activities that drive most American companies, i.e. annual budgets, goals, performance reviews and salary adjustments.

This would send a clear signal to each manager: this mission is what you are here for. Get on with it. Be prepared to be reassigned as soon as the mission is complete. Possibly a promotion, more likely a lateral move to challenge under exercised abilities, sometimes a shift to a senior individual contributor slot.

Those are the marching orders of a performance-driven business.

These multi-year missions are not all that should be expected of a manager. However, if they are established for every position, they can set a theme that gives shape and focus to the person's tenure - something missing in many management jobs today.

Most managers, even in senior jobs with company-wide responsibilities, are addicted to the short-term. Their attention is directed to quarterly and annual results. Wall Street is blamed for much of this, but the real culprit is the way career paths happen.

High flyers tend to rapidly job hop within many companies. Done under the sake of "management development," few are in jobs long enough to cope with - and clean up - the consequences of the bad decisions they may have made in previous years. For them, term limits will slow down the fast track, give them a chance to practice some real "organizational learning."

For the rest of a company's managers, its mere above-average performers, term limits offer an alternative to the unending daily grind. They can be a structure for renewal. They send an explicit signal that one's current job will not be available for life. Make the most of it during the period allowed, you won't be staying forever. And depending on how your multi-year performance is judged, a chance might be offered to move on to an assignment where you can really shine.

The idea here is to start managing people flow with the same care and attention that is given to cash flow. Bureaucracy-elimination has a price: eternal vigilance. Few companies have a real chance of building for the long term, if their approach to career management reinforces the short run and the routine.

A number of companies including Allied Signal and several "Baby Bell" phone companies are considering term limits. They'd be a natural next step in the evolution of General Electric's tough minded approach to matching its managers with the work at hand. T.J. Rodgers, CEO of Cypress Semiconductor, has already put the infrastructure in place to make them work, and Brazil's innovative manufacturing mavrick, Semco, has had years of success with them. At Allied-Signal these multi-year management assignments are called "sunset" jobs.

At Cypress many jobs are defined as portfolios of assignments, rather than a stream of never-ending activities. Similar to the crystallizing effect of an appointment with the hangman, Rogers uses rolling deadlines to convert manager's work from an ongoing routine into a stream of accomplishments.

Many leading professional service firms - consultants and investment bankers - consciously limit the tenures of their managing partners.

Semco has institutionalized job rotation to the point where each year between a fifth and a quarter of the managers trade places each year. Minimum stay: two years; maximum: five - too short for the U.S., but things move faster in Brazil's roller coaster economy! Perceived benefits at Semco: discourages empire building, forces managers to keep learning new skills, reduces burnout, provides many with a broad perspective of the business, forces the company to do something most hate: succession planning.

How the public sector will address term limits is uncertain. Limits may , or may not, prove effective in state and local government. But they are an idea well worth considering in all or a portion of many businesses. They are a great way to start managing as if the future really mattered.


© Robert M. Tomasko 1995 2002



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