Leaders’ Timely Succession: Neither Term Limits nor “Golden Parachutes,” Rather Periodic Tests of Trust Ascendance

Abstract

Successful leaders tend to reach a dysfunction phase and to become conservative self-serving oligarchic. Polities and large organizations try to prevent this by term limits despite many drawbacks, while corporations use “Golden Parachutes,” a costly measure with major drawbacks as well. Despite much research, the timely succession of leaders in large organizations remains a recalcitrant problem demanding a solution. A review of current solutions points to the plausible use of intangible rewards rather than tangible ones by offering leaders possibility of multiple terms with each reelection requiring a higher majority in a proper constituency. This will reward leaders by plausible tenure prolongation, prestigious higher majority reelection, and plausible creative innovation due to long time horizon, while barring dysfunctional oligarchic continuity. Suggestions for practicing this solution and for further study of the problems it entails are offered.

Keywords

leaders’ timely succession oligarchy theory leadership life cycle term limits “Golden Parachutes”ascending trust thresholds

Introduction

Leadership is a delicate combination of multiple factors, “the process, the techniques of leadership, the person, the specific talents and traits of a/the leader, and the general requirement of the job itself” (Gini 1997:329; italics original), as well as its contexts (Bennis 1989; Haslam, Reicher, and Platow 2010; Shapira 2015). Many of these factors change throughout the leader’s tenure, but most theories and studies of leadership disregard the time dimension (Shamir 2011). Over time, effective innovative leaders often become ineffective self-serving conservatives and entrenched in their job, in accord with both oligarchy theory (Michels [1915] 1959) and leadership life cycle theory (LLCT; Hambrick and Fukutomi 1991; Miller and Shamsie 2001; Ocasio 1994; Wulf et al. 2011). Michels ([1915] 1959) analyzed repeated reelections of veteran socialist party leaders that transformed them into dysfunctional democratically irreplaceable oligarchic conservatives (e.g., Chang and Halliday 2005; Montefiore 2003; Shapira 2005). For a repeatedly reelected autocrat “Democracy is a train, when you reach your destination you get off” (Turkish president R. T. Erdogan, cited by an Israeli TV reporter).

LLCT studies were conducted among business leaders; few of them were reelected while the dynamics of their tenures was similar: Those entrenched in their job for numerous years eventually became dysfunctional self-serving conservatives who sought perks and remuneration rather than firms’ efficiency, effectiveness, and innovation. The growing remuneration disparity between CEOs and that of the lowest ranks, up to hundreds of times (Johnson 2008; Piketty 2014), and the alarming corporate scandals signal vast immorality among tenured CEOs (Ailon 2015; Smith and Emshwiller 2003; Villette and Vuillermot 2009). Corporations offer “Golden Parachutes” (GPs), generous severance benefits to CEOs for timely retirement, but the above negative developments suggest that a better solution than GPs is required, much as polities require a better one than term limits; this justifies combining the discussion on seeking a better solution for both corporate and political leaders.

The article has three parts:

A. Current solutions, their drawbacks, and alleviation efforts.

B. Proposal for a new solution.

C. Conclusions, discussion, and further research.

Current Solutions, Their Drawbacks, and Alleviation Efforts

Two Current Solutions and Their Drawbacks

Polities have recognized the dangers of leaders’ extra-long tenures ever since ancient Athens 2500 years ago, and imposed limits on leaders’ and officials’ tenures despite many drawbacks (below). Businesses recognized these dangers four decades ago and devised the GP solution, though it too suffers many drawbacks.

Succession research commenced in the 1960s; its large scale is evident from the 604 works that cite pioneer Grusky (1963; Google Scholar, accessed October 14, 2018). Presumably this research by hundreds of scholars over 55 years should have produced a better solution (or solutions for various leader types), but this didn’t happen. A plausible explanation is succession scholars’ minimal interest in bettering current solutions: Google found over 500 entries with “Golden Parachutes” and 69 with “term limits,” but among Grusky’s (1963) 604 citing papers and books, only two mentioned “term limits” and three mentioned “Golden Parachutes” (searched October 14, 2018). This signals minimal interest of succession research in learning from these solutions’ drawbacks to better them or devise better alternatives. This has seemingly two major explanations:

Both solutions are problematic and controversial but widely used; their study within the succession research framework enabled scholars’ academic success, sparing the hurdles of devising alternative solutions bound to be controversial.

Both solutions are pragmatic, with no theory of processes and results; studying specific variables without a theory did not help find better solutions in accord with Lewin’s dictum “nothing is more practical than a good theory” (Eysenck 1987).

Learning historical lessons can help promote good theory and a solution. Ancient Athens limited officials’ terms to one year and suffered grave problems, as did other term limit cases (below). Aristophanes, Athens’ famous playwright, summed them up depicting civil service as “the rule of embezzlement and evil . . . leadership is the interest of complete ignoramuses and the lowest of degenerates” (Fuks 1976:56; also Bowra 1971; Burn 1964). Imperial China, from about 1300 AD, and the Chinese Republic from 1911, limited District Magistrate terms to three years and suffered similar drawbacks, with rampant corruption that led 50 to 60 percent of them to trial (Chow 1966; Folsom 1968; Watt 1972). Latin American states limited presidents until recently to one four- to six-year term and suffered heavily due to the presidents’ weakness versus the unaccountable power of entrenched congressmen, senators, generals, and others (Davis 1958; Linz 1990; Mainwaring 1990). In Japan, from the 1970s, the two-year-limit prime ministers were dominated behind the scenes by former Prime Minister Kaku’ai Tanaka and then by Shin Kanemaru, up to 1992 when their corrupt dominance was exposed (Kruze 2015). Term limits failed Israeli communal kibbutzim (pl. of kibbutz): Innovative short-term kibbutzim officers failed to replace dysfunctional conservative federations’ leaders whose life-long autocracy backed tenured privileged heads of inter-kibbutz organizations (Shapira 2001, 2005, 2008) Likewise, officers’ term limits negatively impacted both U.S. and Israeli armies (Gabriel and Savage 1981; Henderson 1990; Vald 1987; Wilson 2011).

In many developing countries, oligarchic leaders rule for decades versus weak civil servants limited to one to two terms of three to eight years, and the total tenure rarely exceeds 12 years (Shalev and Prodan 2016). The opposite was often true of the United Kingdom: Unlimited tenured best-educated officials dominated fast-changing lesser-educated prime ministers (Lynn and Jay 1986). In the 1990s, 21 U.S. State Legislators adopted term limits, but subsequently six repealed these limits; this repeal and the most states who avoided term limits indicated their inherent problems, as also marked it term differences: adopters allow legislators up to 6, 8, or 12 year terms, senators are allowed either 8 or 12 years, seven states prohibit reelection for life, while eight states only prohibit consecutive reelection (Mooney 2009).

U.S. research has uncovered many drawbacks of term limits: They erode legislators’ professionalism and cause poor myopic fiscal decisions (Cummins 2012; Feher 2015; Kousser 2005), complicate complex relations between administrators and legislators, and cause suboptimal spending levels (Sarbaugh-Thompson et al. 2010), divert budgets from health and education to highways and aid to local governments (Yakovlev, Tosun, and Lewis 2015), encourage shirking by legislators barred from reelection (Clark and Williams 2013), curb bipartisan legislation (Swift and VanderMolen 2016), and discourage voter participation (Korzi and Hoddie 2018). In other countries, term limits negatively impacted mayors’ functioning (Klasnja and Titiunik 2017; Veiga and Veiga 2016).

Term limits’ basic flaw is empowering behind the scenes of unelected oligarchic “strongmen,” entrenched heads of unofficial hierarchies like Japan’s Tanaka and Kanemaru (Kruze 2015; e.g., Leach 2005). Latin America has a long sad history of weak one-term-limited presidents succumbing to “strongmen” (Davis 1958). For example, many of Mexico’s term-limited presidents succumbed to Fidel V. Sanchez, trade union federation (CTM) leader for 50 years (1947–1997), and Joaquín H. Galicia, known as La Quina, head of the oil workers’ union for 1950–1989 (Coerver, Pasztor, and Buffington 2004; La Botz 1992; Mainwaring 1990). China’s local “strongmen” were ex-district magistrates who returned to their home towns after a three-year term far away, and using wealth accumulated there and local ties illegally subdued “greenhorn” magistrates coming from distant areas (Chow 1966; Watt 1972). In the United States, relatively young term-limited presidents often gave in to term-unlimited veteran senators (Drury 1959). In 2015, one-sixth of the Senate, 17 senators, had served more than 16 years, as had some 20 percent of the House of Representatives; their power positions stemmed from continuing through the administrations of Clinton, Bush, and Obama (DeBacker 2011; Glassman and Wilhelm 2015).

Term limits engender succession disruption costs (Marcel, Cowen, and Ballinger 2017) and rarely fit leaders’ effectiveness period; like a Procrustean bed they cut short the tenures of leaders who remain effective beyond a term or two (see below), and are often late to replace leaders who dysfunction or/and use frauds and subterfuges. Leaders’ huge differences are exemplified by the performance of 174 CEOs of Germany’s largest firms: On the average, peak performance of CEOs in the short-term group was in their second year, declining sharply in the third and fourth years, while long-term CEOs’ performance peaked on average in their seventh year, was higher than the peak of short-termers, and declined only slightly even after 13 years when the study was terminated, suggesting that some CEOs remained effective even further (Wulf et al. 2011).

The problematic term limit solution encouraged U.S. corporations and other firms to use GPs. Vancil (1987:83) found this a success, as only 13 percent of CEOs remained longer than the maximum anticipated tenure of 12 years (Vancil 1987:79), but these 13 percent included crooks such as Enron’s CEO Ley who dispossessed millions of their savings. Many grasp GPs as immoral (Ailon 2015; Villette and Vuillermot 2009); in 1984, the U.S. Congress tried to limit the size of GPs by the Deficit Reduction Act (Bress 1987) and further in 2010 by the Dodd-Frank Act (Choi, Lund, and Schonlau 2018). Expensive GPs damaged shareholders’ wealth unless GPs helped conscripting talents which save troubled firms (Bebchuk, Cohen, and Wang 2014). GPs encourage egotism, for instance, CEOs increased their own GPs using nominations of loyalists to Boards of Directors (Davis 1994:220; Wade, O’Reilly, and Chandratat 1990). GPs don’t bar fraudulent CEO entrenchment and GPs unrelated to CEOs’ performance reinforces their image as unfair and unethical, harming employees’ trust in managers (Grover, Nadisic, and Patient 2012; Hosmer 1995; Johnson 2008). Distrust damages hierarchic relations and communication and leaves executives ignorant of their own ignorance of firm problems and functioning (Collinson 2005; Kruger and Dunning 1999; Shapira 2017).

Pitfalls of Efforts to Alleviate the Term Limit Solution

As far as known, GP drawbacks did not encourage efforts at alleviation, while in 1797 and 1809 Presidents Washington and Jefferson (respectively), after serving two terms, set a normative term limit by avoiding a third term; their norm was retained for 131 years until violated by F.D. Roosevelt in 1940 and 1944, and reinstated in 1951 as the 22nd Constitutional Amendment (Sobel 1975). After World War II more democracies adopted the U.S. two-term limit (Korzi and Hoddie 2018) and Portugal and some Latin American states similarly limited mayors’ tenures (Klasnja and Titiunik 2017; Veiga and Veiga 2016). As cited, many states limit the term of civil servants but not that of leaders, explainable by recognizing that even an eight-year limit often prunes successful leaders who are at their peak effectiveness in their ninth year or later after learning many lessons of experience, enjoying vast followers’ trust that empowers them to solve major problems by radical innovations, overcoming entrenched tenured conservative powerholders. For example, prestate Israeli leaders Ben-Gurion and Tabenkin made such radical changes in their 13th and 15th years in power, respectively (Segev 2018; Shapira 2016b).

Allowing a second term only partially alleviates term limits’ drawbacks. This can explain why both the corporate world and other large organizations avoid this solution; it did not suit many top-level German CEOs who remained effective in their 9th to 13th years and beyond (Wulf et al. 2011), nor U.S. basketball coaches who achieved peak performance, on average, in their 13th year (Eitzen and Yetman 1972). No wonder that all top ranked and paid coaches of the Colleges Basketball League continued more than 14 years (Oxley 2017). In the U.S. food industry, CEOs’ performance improved up to their 10th year, then some declined but others did not (Henderson, Miller, and Hambrick 2006).

There is no optimal term limit; each leadership is a unique delicate combination (Gini 1997) with its own life cycle and timing of becoming job-dysfunctional conservative and self-serving oligarchic. Exceptional are extra high-moral transformational leaders like Gandhi whose total devotion to their movement’s cause succeeds due to creativity which they continue for decades, ignoring personal considerations in view of the movement’s formidable mission (Bass 1998; Burns 2004:chapter 9). Even a two four-year term limit is far short of their effectiveness period, while their creativity, aimed at a movement/ organization’s high-moral cause, prevents them from becoming conservative dysfunctional; constantly seeking new ways to serve this cause they are oblivious to the personal advantages plausible due to empowerment and enrichment (Burns 1978, 2004; Downton 1973; Greenleaf 1977). Such leaders are quite rare but their social contribution is often enormous and replacing them after eight years is clearly mistaken.

However, even the deputies of an entrepreneur who remained effective, innovative, and high-moral for a dozen years missed when he became a burden rather than an asset for the corporation; without any limit he continued another two decades until the firm collapsed (Rifkin and Harrar 1988). A succession solution must empower leaders to overcome conservative entrenched officials and other “strongmen,” but not to overcome deputies and other stakeholders who discern when a leader reaches the dysfunction phase and initiate her/his succession. Leaders need a long creativity-enhancing time horizon (Jaques 1990) that encourages high-moral jeopardizing authority by vulnerable involvement in followers/employees’ deliberations, exposing one’s own knowledge gaps, and gains their full trust (Zand 1972) through ascending trust spirals that gain one’s followers’ tacit know-how and phronesis (Greek for practical wisdom; Shotter and Tsoukas 2014). Trusting them she or he allows discretion for innovative problem-solving (Whitener et al. 1998; Yukl 1999) and encourages dialogic learning and cooperative advancing of goals (Bennis 1989; Guest 1962; Raelin 2013). Then “suggestions and recommendations flow freely from all parts of the organization . . . [so that] the appropriate experts are consulted, [and] their exact location in the hierarchy of authority need not much affect the decision” (Simon 1957:230).

The trusted well-informed leader discerns the competent trustworthy from bluffers, ingratiators, and impostors whom she or he suppresses (Shapira 2017). However, ascending trust spirals need time to create such an effective high-trust culture (Shapira 2012); short terms curb its creation, cooperation, and creativity (Axelrod 1984; Jaques 1990), encouraging conservative dysfunction by weak leaders who self-servingly defend their positions rather than advancing common aims (Shapira 2008, 2017).

The transformation of effective high-moral trustworthy leaders into dysfunctional self-serving conservatives may be a lengthy process. For instance, the leaders of the largest kibbutz federations were effective high-moral democratic from the mid-1920s to 1937–1939; then they became oligarchic dysfunctional within a decade and democratic succession became impossible: egalitarian kibbutzim (pl. of kibbutz) limited officers’ terms to three to four years and, like weak short-term Japanese prime ministers, weak short-term kibbutz officers could not democratically replace the entrenched dysfunctional veteran leaders. Kibbutz canonic research missed this and mistakenly glorified term limits (Shapira 2005, 2008, 2016b).

A better solution for timely succession of leaders will acknowledge the unique life cycle of each leadership, retaining leaders who remain effective, efficient, and high-moral for long periods. This will spare needless costly successions which inevitably often elevate less qualified inexperienced leaders, many of whom remain job-incompetent due to either detachment or autocracy (Marcel et al. 2017; Shapira 2008, 2017).

Proposal for a New Solution

Proposed Using Reelections to Overcome Drawbacks of Term Limits

Latin America’s presidential regimes that barred reelection of presidents were clearly less stable than the United States that allows presidents’ reelections and curbs many of the single-term limit drawbacks; this difference point to the direction for devising a better solution. Second-term U.S. presidents made fewer mistakes due to experience and expertise; trust with role-partners, created throughout longer terms, facilitated collaboration with administrators (Axelrod 1984; Sarbaugh-Thompson et al. 2010); U.S. presidents shirked less than single-term Latin American presidents (Clark and Williams 2013), while a longer time horizon diminished myopic decisions and actions (Cummins 2012) and enhanced creativity (Jaques 1990) for advancing public goals. Reelected presidents could accumulate power and prestige in their jobs to overcome “strongmen” in the congress (Drury 1959) and elsewhere and introducing changes and innovations, while sparing the United States’ many mistakes by less job-qualified greenhorn presidents.

In ancient Athens, the 14 reelections of its greatest leader Pericles brought it the “Golden Age” (444–429 BC). As a strategus, military commander, he was exempt from the no-reelection rule valid for all other one-year officials. Athenians recognized military leadership’s need for expertise acquired on the job, and reelections empowered Pericles’s transformative leadership to build Athens’ greatness despite opposition (Bowra 1971; Fuks 1976). Job-continuity may not breed a Pericles-type leader but toxic, psychopaths, immoral, or other bad leader types (Boddy, Ladyshewsky, and Galvin 2010; Dalton 1959; Linstead, Marechal, and Griffin 2014; Lipman-Blumen 2006; Watola and Woycheshin 2016). However, unlike first election, reelection constitutes experience-based trust in leaders, especially transformational ones who “empower followers and make them partners in the quest to achieve important objectives” (Yukl 1999:301). Reelections further ascending trust spirals (Fox 1974) and boost leaders’ ability to promote controversial radical changes and innovations, turning conflicts regarding changes to a constructive course (Deutsch 1969), while due to first term’s lessons such leaders avoid inefficient/ineffective tactics and strategies, serving common cause more responsively (Chiniara and Bentein 2016; Christensen and Ejdemyr 2017; Greenleaf 1977). Reelection signals trust, furthering collaboration among the ranks and enhancing problem-solving by adding know-how and phronesis contributions that generate creative solutions (Jaques 1990; Norman, Avolio, and Luthans 2010; Obembe 2012; Shapira 2008, 2017). Reelected leaders use ties with powerholders from previous terms to introduce harder-to-introduce solutions, while they often have more incentive to do so (Alt, Mesquita, and Rose 2011; Aruoba, Drazen, and Vlaicu 2015), helped by the positive effects of retaining veteran trusted knowledgeable officials (e.g., Bergh 2001; Dou, Sahgal, and Zhang, 2015).

Proposed Reelections Subject to Higher Majority Tests Can Bar Oligarchic Entrenchment

All the above show that a better solution must allow trusted effective leaders longer tenures than eight years while barring oligarchic entrenchment if/when they become self-serving dysfunctional self-perpetuating. One reason for using fixed term limits is that it is not that easy to discern when this change happens. In the case of prime kibbutz leaders only one student discerned this change (Shapira 2016a). Likewise, Israeli leader Ben-Gurion’s change from effectiveness to dysfunction was missed for 50 years (Segev 2018; Shitrit 2004; Yatziv 1999). A third case: U.S. President F. D. Roosevelt self-servingly concealed his deteriorating health and growing dysfunction by wartime censorship of the press from early 1944 until his death in April 1945; his biographers missed this change for decades (Sweeney 2001).

Allowing multiple, reelections differ meaningfully from allowing only one reelection: While endangering with a leader’s entrenchment efforts, it promise motivating leaders’ effectiveness to win reelections. A limiting mechanism is required, as history shows that 12 years in office often make a leader democratically irreplaceable; trying to replace her or him may cause worst conflicts and even civil wars. Roosevelt’s successful second reelection in 1940 was seemingly decisive for his abuse of power in 1944 by censorship of the press that earned him a third reelection. He won the second reelection in 1940 by a majority of 55 % knowing the tendency of prestige is to go to those who already have it (Goode 1978), it is safe to assume that this majority included at least 6 percent of voters who did not really trust him and would not have voted for him without the prestige, power, and other intangible capitals he accumulated during eight years in the White House. Thus, to neutralize the power and intangible capital an incumbent accumulates during eight years in office so that only trust in her or him (Hosmer 1995) will decide the second reelection, an accumulation neutralization mechanism is required.

The proposed neutralization mechanism is a higher trust threshold, such as a 66 percent or at least 60 percent majority requirement for a second reelection. The one-third of U.S. presidents who failed reelection suggest that a simple majority is a high enough screening threshold for a first reelection, while a 60 to 66 percent majority can be an effective screening threshold for a second reelection. A higher majority threshold for political decisions of special importance is quite common in democracies, for instance, constitutional changes. Likewise, for deciding legislators’ continuity; for example, in 1977 Israel’s Labor Party demanded that its Knesset (parliament) members, who had served two or more terms and strived for reelection, achieve a minimal 60 percent support in its council; this pruned many veterans (Brichta 1986:23). Labor Party’s predecessor, the Mapai party, lacked such a limit; this made it possible for leader Ben-Gurion to dominate for 36 years, including 15 years of job dysfunction, by amoral means including press censorship justified by the state of belligerence he maintained with Arab states (Segev 2018; Shlaim 2000). Many past and present long-serving democratic leaders who became amoral autocrats suggest the need for a robust screening mechanism, which appears to be a 66 percent majority threshold for second reelection, though future use of a 60 percent threshold may also prove robust enough to screen out past effective high-moral leaders as they become self-serving dysfunctional oligarchic.

The proposed allowing leaders second reelection has many advantages, both those cited for first reelection and others: It rewards leaders emotionally by the prestige of a higher majority support than simple majority support; the proven wide trust in them helps them gain information, know-how, and phronesis that betters decisions, sparing mistakes, failures, and crises, and helping solve difficult problems (Bennis 1989; Shapira 2012). These extra rewards can motivate a leader to function morally and effectively with no need for GPs/other extra remuneration that curb followers’ trust, enlarge their social distance from the leader, diminish upward communication, and encourage its screening, depriving the leader of essential knowledge, including knowing own ignorance (Antonakis and Atwater 2002; Collinson 2005; Kruger and Dunning 1999; Shapira 2017). High-moral leaders nurture high-trust cultures, inter-rank cooperation, and suppress amorality by a free flow of information that fails concealment/camouflaging of failures and immoral deeds, easing detection and punishing perpetrators, and enlightens the leader’s controlling workload (Dore 1973; Fox 1974; Shapira 2012; Weibel 2007). Job continuity empowers leaders vis-à-vis internal and external powerholders; mostly they cope with powerholders whom and their weak spots they already know, and since they are highly trusted they enjoy much help from trusted insider and outsider acquaintances and win major battles.

Allowing second reelection can help solve the problem of grooming successors. Such grooming posed a dilemma for leaders throughout history as it still does in the corporate world today: Grooming may encourage a coup d’etat by successors who lose patience in a multiple-year limbo of unknowing whether and when they will succeed and hence taking the opportunity for a coup when it appears, for instance a major crisis, or cross the lines to the competition with privy knowledge acquired during grooming. Thus, leaders mostly defer grooming successors to the undetermined future; over 60 percent of the largest U.S. firms have no CEO succession planning (Bower 2007:14). Allowing a second reelection can curb the menace whereby nurtured successors prematurely attempt to succeed a leader as they know her/his term end and succession criteria, contrary to the current common limbo situation. Ensured of their jobs, CEOs can groom successors for several years as presidents and COOs without prematurely choosing a successor (Bigley and Wiersema 2002; Bower 2007); this enhances followers’ trust, witnessing the leader’s care for the future of the firm/organization.

However, successful leaders may feel, after 12 years on the job that they still have major missions to complete, which no one else wants and is capable of doing, or may believe they must remain for other reasons. For such leaders, I propose a third reelection which endanger with leaders’ using the power and capital accumulated during early years to entrench and overcome legal barriers to continuity. Against the danger of using subterfuges and tricks to overcome constitutional barriers to unlimited continuity, the third reelection will require passing an even higher majority threshold.

Proposed Allowing a Third Reelection for Exceptional Leaders

History, succession studies (Eitzen and Yetman 1972; Wulf et al. 2011), and leadership studies (e.g., Burns 2004; O’Toole 1999; Shapira 2017) tell us that leaders who remained effective and high-moral beyond 12 years on the job are nadir but often have an enormous contribution to the public good, like Pericles and Ben-Gurion; for them, even a 12 year limit is a Procrustean bed. Can a higher majority threshold screen exceptional leaders? If so, how should we decide how higher this threshold must be? Is it right for this higher majority for a third reelection to make it a terminal one and prevent any possibility of oligarchic dysfunctional entrenchment?

An extra high majority threshold for a third reelection may deter entrenchment efforts if a superior majority clause is constitutionally defended and if this threshold is an integral part of a reasonable, consistent, and universally agreed principle for the increase of reelection thresholds from first to third. The proposed principle is to increase thresholds exponentially; this due to the tendency of power and prestige to go to those who already have them (Goode 1978): The power and prestige of successful leaders tend to grow exponentially, thus each majority threshold must be exponentially higher than the previous one. Various polities use the easily understood thresholds of 60, 66, and 75 % thus, for a second reelection either a 60 or 66 percent majority threshold is suggested, and their exponential increase for a third reelection means a 75 or 88 percent majority threshold (respectively). However, only experience can show which alternative is preferable for which type of organization/leadership.

The 75 or 88 percent threshold means that a fourth reelection is impossible or next to impossible: An exponential increase from 88 percent exceeds 100 percent, that is, impossible, while an exponential increase from 75 percent reaches 95 percent, that is, nearly impossible. This raises the question of whether a 16-year maximum tenure is suitable even for the few leaders who are still job-effective and high-moral. Several indications support this:

History suggests that after 16 years or more in the job, both political and business leaders rarely initiated major changes and the few who did often caused horrible atrocities: Mao Zedong had been in power for 22 years when his Great Leap Forward cost the lives of 18 to 45 million people (Chang and Halliday 2005).

Leaders who retired after 20 years rarely left a deputy of their caliber to replace them; such deputies were often “inside outsiders” (Bower 2007), talented critical thinking innovators who already were suppressed, pruned out, or left disenchanted.

Often, after 16 years even high-moral radical leaders became entrenched immoral conservatives, for instance, kibbutz prime leaders (Shapira 2008, 2016b)

After 16 years, one can hardly imagine the organization’s continuity without herself or himself at the helm; projecting a failure, one feels justified to bar such change even by illegal means.

Even if one’s capabilities remain intact after 16 years, those of loyal lieutenants may not but she or he tends to keep them, generating inefficiency and ineffectiveness.

A fast-changing world requires too many strategic changes over two decades for a leader to cope with, as can a fresh-thinking “inside-outsider” (Bower 2007).

All these indications set 16 years as the maximal period for leading large polities, firms, and organizations, supporting the proposed use of a 60 to 66 percent and 75 to 88 percent majority thresholds for second and third reelections, to set a gradient that would make fourth a reelection practically impossible. However, the athletic coaches who succeeded for much longer periods (Oxley 2017) indicate the possibility of different leadership life cycles for leaders in other fields than those dealt with here, which enable longer effectiveness periods and which may be explained by anthropologists (Yanow 2004).

The Necessity and Potential of the Proposed Possible Multiple Terms

The proliferation of term limits and GPs around the world indicates a belief in the need to prevent oligarchic dysfunctional leadership by timely succession, but although the research has found many drawbacks of current solutions, neither students nor leaders and ex-leaders attempted to implement better solutions ever since GPs were initiated four decades ago and since 15 U.S. State Legislatures adopted term limits three decades ago. Succession by either GPs or term limits has many drawbacks; the Washington-Jefferson solution is a step forward, but its eight year maximum is too short for many effective innovative leaders. Lacking a solution to this defect, only polities adopted this solution; other organizations did not as many successful leaders remained effective, efficient, innovative, and high-moral beyond eight years and they saw no reason for premature succession against which studies warned (Eitzen and Yetman 1972; Gabriel and Savage 1981; Grusky 1963; Henderson 1990; Shapira 2008, 2017; Vald 1987).

In contrast to the Washington-Jefferson solution, the proposed solution does not replace leaders who are still effective after 8 or 12 years and by sparing successions it spares bad ones, greenhorn mistakes, and plausible immoral mismanagement in cases of outsider successions (Gouldner 1954; Shapira 2017); it encourages an incumbent major initiatives born from years of leadership, which an innovative successor may attempt but fail without the experience, know-how, phronesis, and accumulated power and capitals of a veteran leader (e.g., Ben-Gurion). The proposed solution can prevent leaders’ aversion of term limits by offering them prospects for generating ascending trust spirals: Instead of terminal second terms and either being “lame ducks” or self-perpetuators by tricks and/or autocratic evasion of democracy, the possibility of a second reelection encourages innovation to prove effectiveness and efficiency, as well as high-moral trust-enhancing benevolent decision-making that can lead to a third reelection. This proposal encourages better leadership as neither GPs nor term limits do. It also encourages the nurturing of successors: Higher majorities for second and third reelection enhance leaders’ prestige and power, which diminish the threat of a coup d’etat by groomed potential successors; as the latter know how, when, who, and what will decide succession, they don’t face the current situation of years in an unknown limbo, which encourage such coups. In addition, the proposal

Spares the heavy costs of GPs,

Prevents harm to employees’ moral commitment due to witnessing unfair remuneration of failed leaders (e.g., Johnson 2008),

Avoids adding a CEO’s loyalists to the Board to gain a generous “parachute” (Davis 1994:220) and thus helps retain a qualified Board and trust in its decisions,

Discourages ignorance-concealing detachment of leaders, encouraging their vulnerable involvement in trustful learning and deliberations with practitioners,

Facilitates communication with leaders, who then are more inclined to consider employees’ interests and views, furthering trust and dialogue among the ranks,

Improves decisions by involved leaders who learn phronesis from uncertified experts/“Rudies” who know who holds which knowledge (Stewart 1997:99),

Minimizes instability caused by contextual impacts on succession that helps the success of an outsider-led turnaround effort (Karaevli and Zajac 2013).

The proposed solution helps solve the problem of whether to opt for insider or outsider successors, a problem that succession studies did not solve for decades until recent studies found clear insider superiority (Bower 2007; Collins 2001; Fairholm 2004; Heskett 2011; Santora 2004). Insiders’ superiority explains their readiness to jeopardize their authority by vulnerable involvement, which exposes their knowledge gaps of subordinates’ know-how and phronesis; due to much local knowledge insiders enjoy psychological safety for such exposure (Edmondson 1999), creating virtuous ascending trust and learning spirals, and function effectively (Shapira 2017).

Applying the Proposal in Large Organizations

Political leaders and legislatures can apply the proposal by extending the Washington-Jefferson norm, allowing second and third reelection, provided the above specified higher majority thresholds are achieved for each additional reelection.

In other large organizations application is more complex. As mentioned, leaders may become oligarchic dysfunctional gradually, adding autocratic means one by one and the change is not easily discerned. Second, after a decade on the job CEOs have already nominated and retained loyalist directors and deputies who often became uncritical yes-men, either ignore or miss signs of oligarchic dysfunction, and are thus largely unqualified to decide whether sufficient negative leadership changes justify succession. Third, directors often lack intimate knowledge of a leader’s functioning in various capacities, as executives’ information presented to the Board is often screened and/or biased, and/or executives are not aware of their own ignorance (Kruger and Dunning 1999). As against this the managerial and professional staff often discerns early signs of a CEO’s dysfunction, for instance promoting and retaining dysfunctional managers (Dalton 1959). Such senior staff members are essential in a constituency that shall be devised to decide succession together with directors and executives. Cooperative students and advocators of workplace democracy prefer decisions made by all employees (Cloke and Goldsmith 2002; Erdal 2011; Gollan and Xu 2015; Semler 1993; Shapira 2008). Business firms can profit from inclusion of knowledgeable senior staff members in the succession constituency. They are equipped with much local knowledge for choosing between reelection of an incumbent and replacing her or him. Boards, especially those consisting of many outsiders, often prefer outsiders (Khurana 2002; Shapira 2017); the proposed constituency gives a fair chance of promoting qualified insiders and generating effective high-trust cultures in which main rewards are received in the long run, while importing leaders denies talented high-moral insiders the long-awaited reward of promotion (Fox 1974; Shapira 2013). Often causes such an import “the neighbor’s grass is greener” phenomenon, as outsiders more easily camouflage/conceal their failures by resume frauds (Dalton 1959:149; Wexler 2006). The proposed constituency can mitigate this problem by including insiders knowledgeable of inside candidates’ advantages and can intelligently question outsiders’ capabilities and proof of trustworthiness.

However, what about the participation of other stakeholders? Instrumental stakeholder theory studies propose a positive relationship between fairness toward stakeholders and firm performance (Bridoux & Stoelhorst 2014). Disregard of such fairness often accompanies the dysfunction phase of veteran leaders; inclusion of veteran stakeholders in the constituency that decides succession could have a positive effect, provided they are involved and learn enough to assess a leader’s functioning and not just the firm’s financial performance, which the leader may manipulate to conceal dysfunction. Hence, stakeholder inclusion requires measures encouraging their involvement and learning problems from staff, which makes them well-informed (Shapira 2017).

Conclusions, Discussion, and Further Research

A true solution for the timely succession of leaders must use another mechanism instead of one- to two-term limits or GPs, both of which don’t replace leaders based on the timing of their change to dysfunctional conservatism and amorality; nor do they solve the problem of oligarchic prolonged dysfunction. A real solution must replace dysfunctional leaders much earlier than the 10 to 12 years that it often takes GPs to generate succession, while rewarding leaders who remain effective, innovative, and high-moral by prestige-enhancing higher majority reelections and longer tenures for more innovation. No such symbolic rewards endow term limits, while a huge GP is often grasped negatively as excessive remuneration of undeserved leaders (e.g., Johnson 2008).

Term limits have ample drawbacks even in the better Washington-Jefferson version; it is a Procrustean bed for high-moral effective innovative leaders, who may remain efficient, effective, trusted, and trusting transformational leaders more than eight years. This limit needlessly elevates greenhorns and lesser caliber leaders rather than letting the former continue to lead effectively, wasting their potential contribution to the common good, which history proves can be enormous after the eighth year. Term limits don’t prevent oligarchization; they move the locus of power to unaccountable, democratically irreplaceable, dysfunctional, and amoral oligarchic “strongmen” who weaken formal leaders, bar their change and innovation efforts, self-servingly manipulate them and the rank-and-file, and engender superfluous costly leader successions that empower them.

A true solution must effectively use the entire spectrum, from replacing early failing/immoral leaders to allowing 16 years for exceptionally effective transformational ones; as simple majority reelections often maintain leaders who became dysfunctional oligarchic after initial effectiveness periods, exponentially ascending majority thresholds for each additional reelection are proposed: a simple majority for first reelection, a 60 to 66 percent majority for second reelection, and 75 to 88 percent for a third, which is practically terminal as a 95 percent threshold for fourth reelection would be required if a 75 percent threshold is used for third reelection, and over 100 percent, that is, impossible, if an 88 percent threshold is used for third reelection. These higher majorities must be achieved in pertinent constituencies, that is, all voters in both polities and cooperatives and specially devised multirank constituencies in other large organizations: These should include directors, executives, managers, senior experts, and other stakeholders, to overcome the problem of directors’ and executives’ unawareness of their own ignorance (Kruger and Dunning 1999). Such a composite multi-expertise constituency can better discern leaders’ reparable mistakes from those indicating a dysfunction phase: camouflaged mistakes and failures, self-serving information screening which employees retaliate and generate mistaken failed decisions, evasion of practitioners’ problem-solving and innovation efforts, loss of trust by key figures due to immoral self-perpetuation efforts, a lack of promising strategies, missing betterment opportunities, and more. Such a composition can better predict an incumbent’s prospects for effectiveness, consider them against the costs of succession disruption and the insider/outsider successor question, as well as other questions.

Suggestions for Further Research

Bower (2007) found the best successors to be “inside outsiders,” insiders who perceive the firm as do outsiders. Thus, a major question for both practitioners and future students is which constituencies will prefer capable trustworthy “inside-outsider” successors, without excluding possible infusion of “fresh blood” from the outside while cognizing its many dangers (Johnson 2008; Shapira 2017; Wexler 2006). The answer is probably constituencies of trustworthy high-moral expert practitioners, each the best in her or his job, whom peers and superiors turn to when facing a recalcitrant problem. Such talents are best qualified for ignoring irrelevant considerations, personal relations, prejudices, and the like, in order to choose the successor with the best chances of succeeding.

However, the proposed solution is more democratic than succession decided by a few directors and it requires openness of information; leaders in a dysfunction phase, lacking a record of successes to their credit, avoid such openness and meetings with followers in which they must answer hard questions. How to overcome this problem, achieving information openness when leaders are in dysfunction phase and use their power to conceal dysfunction signs, is a major question requiring research.

A major question is the inclusion of outside stakeholders in the succession-deciding constituency. Their outside gaze may help insiders discern early signs of a leader’s change to conservative dysfunction, provided they are knowledgeable due to prolonged relations with the firm (e.g., Karaevli 2007). However, lacking insiders’ involvement they may be deluded by dysfunctional leaders’ presentations of seemingly effectiveness. The openness of information of high-trust cultures (Ouchi 1981; Semler 1993) may prevent such delusion, but organizational success, growth, technological sophistication, and market competition suppress information openness and such cultures (Feenberg 1995; Shapira 2013). A major solution suggested by kibbutzim and cooperatives’ experience is nurturing creativity among all ranks to elevate creative high-moral leaders who may remain so for dozens of years (Jaques 1990; Shapira 2008:chapter 16–17).

Another remedy for openness of information and high-trust cultures is nurturing organizational democracy (Erdal 2011; McLagan and Nel 1997), but once again growth, technological sophistication, and market competition tend to curb/diminish this democracy (Shapira 2017; Stryjan 1989). Future research should study how to mitigate/overcome this tendency and related questions, such as how to choose a proper constituency that best decides succession in various large organizations.

Related Resources

https://wikipedia.org/wiki/Golden_parachute

https://www.investopedia.com/terms/g/goldenparachute.asp

Maremont, Mark. 2013. “For McKesson’s CEO, A Pension of $159 Million.” Wall Street Journal, July 24.

Management entrenchment. https://en.wikipedia.org/wiki/Management_entrenchment

List of political term limits. https://en.wikipedia.org/wiki/list_of_political_term_limits

Graham, David A. 2019. “Beto’s Term-limits Plan is Just What Democrats Need.” The Atlantic, July 6.

Rosenthal, J. et al. 2018. “The Holy Grail of Succession Planning.” Deloitte Insights, September 27. Retrieved August 30, 2019 (https://www2deloitte.com).

Footnotes

Acknowledgements

I wish to thank Barbara Doron, Rachel Kessel, Martin Kett, and the many social scientists, too many to mention here, whose helpful comments on earlier articles and books helped develop this article.

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Reuven Shapira

Author Biography

Reuven Shapira is a retired senior lecturer in anthropology and sociology at the Western Galilee College in Acre, Israel. He held various executive positions in Kibbutz Gan Shmuel and its industrial plant; acquired managerial, sociological, anthropological, and psychological education; received his PhD from Tel Aviv University in 1984; and has lectured at universities and academic colleges for 31 years. He studied problems involving leaders’ succession in the kibbutz movement that used term limits and authored four books, booklets for managers, and many scholarly articles in both Hebrew and English, which appeared in journals such as Sociological Inquiry, Management Decision, Journal of Anthropological Research, and in collections. His latest book, published by Routledge, is “Mismanagement, ‘Jumpers,’ and Morality.”

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