Top Managers Are Quitting, Without a New Job

When Liam McGee departed as president of Bank of America (BAC) in August, his explanation was surprisingly straight up. Rather than cloak his exit in the usual murky euphemisms, he came right out and said he was leaving "to pursue my goal of running a company." Broadcasting his ambition was "very much my decision," McGee says. Within two weeks, he was talking for the first time with the board of Hartford Financial Services Group (HIG), which named him CEO and chairman on Sept. 29.

Whether or not his candor clinched the job, McGee says leaving without a position lined up gave him time to reflect on what kind of company he wanted to run. It also sent a clear message to the outside world about his aspirations. And McGee isn't alone. In recent weeks the No. 2 executives at Avon (AVP) and American Express (AXP) quit with the explanation that they were looking for a CEO post. On Nov. 3, about six weeks after announcing her exit from Avon, Elizabeth Smith was named CEO of OSI Restaurant Partners, owner of such casual dining chains as Outback Steakhouse and Carrabba's Italian Grill. As boards scrutinize succession plans in response to shareholder pressure, executives who don't get the nod also may wish to move on. A tumultuous business environment also has senior managers wary of letting vague pronouncements cloud their reputations.

As the first signs of recovery begin to take hold, deputy chiefs may be more willing to make the jump without a net. In the third quarter, CEO turnover was down 23% from a year ago as skittish boards stuck with the leaders they had, according to Liberum Research. As the economy picks up, says Russell Reynolds Associates recruiter Anne Lim O'Brien, "opportunities will abound" for aspiring leaders.

The decision to quit a senior position to look for a better one is unconventional, to say the least. For years executives and headhunters have hewed closely to the rule that the most attractive CEO candidates are the ones who must be poached. Says Korn/Ferry (KFY) senior partner Dennis Carey: "I can't think of a single search I've done where a board has not instructed me to look at [sitting CEOs] first."

A FADING STIGMAThose who jumped without a job haven't always landed in top positions quickly. Ellen Marram quit as chief of Tropicana when the business became part of PepsiCo (PEP) a decade ago, saying she wanted to be a CEO. Although Marram says she had "a lot of opportunities presented" to her, it was a year before she became head of a tiny Internet-based commodities exchange, efdex. Robert Willumstad left Citigroup (C) in 2005 with ambitions to be a CEO. He finally took that post at a major financial institution three years later, briefly becoming CEO of American International Group (AIG) three months before its near-collapse.

Many recruiters say the old stigma is fading for top performers. The financial crisis has made it more acceptable to be between jobs or to leave a bad one. "The traditional rule was it's safer to stay where you are, but that's been fundamentally inverted," says one headhunter. "The people who've been hurt the worst are those who've stayed too long."

The question is how quickly these ambitious managers can land on top. Smith's search didn't take long; neither did McGee's. When debating whether to leave, he reached out to colleagues, CEOs, and headhunters. Their advice, he says: "If you're viewed as good, it actually might be a positive thing. It shows you have the independence and self-confidence to go for what you want."

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