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The St. Paul Pioneer Press had a piece last week titled "The downside of CEO turnover." Here are a couple of core quotes.

"More CEOs are bailing earlier. In the Twin Cities, five public companies have announced CEO changes just since the start of the year. Circumstances differ in these moves, but the trend surfaced in a high-profile way earlier this month when Tom Tiller, the 46-year-old chief executive at Polaris Industries, announced he would leave his "dream job" at the end of the year."

And

"[Bill] George worries that increasingly, impatient shareholders are too quick to blame the CEO for short-term dips in a company's stock prices. This puts more pressure on corporate directors and top executives to shift their focus away from the company's long-term interests, he says. "I'm worried that in many cases, we're booting out CEOs too soon because boards are overreacting to the stock market," George says."

I'm with Bill. As the former CEO of Medtronics and the author of business best sellers like True North, he's got a keen appreciation for the issues. He knows about studies by Booz Allen that CEO turnover rose by almost 60 percent from 1995 to 2006. And he knows that more and more CEOs are being forced from office.

But he and the article leave out some important things. They leave out, for example, a Booz Allen study from a couple of years ago that made two important points. Outsider CEOs excel at increasing stock price in the short term, but insiders perform better over the long term. And the key indicator of CEO success is longevity in office.

That clearly argues for developing a leadership development program that can result in many qualified candidates for leadership positions throughout the company, including the CEO position. It also argues for a somewhat tolerant attitude toward short term fluctuations in the stock market price.

Those are important things, to be sure, but the debate about them masks a much more important issue: how we measure CEO performance. The classical answer is "increasing shareholder value."

That is an unquestioned assumption. Hardly anyone disputes it. Even those who prefer some form of "stakeholder capitalism" include "increasing shareholder value" as one of the key components.

But while you were doing other things, the definitions of "shareholder" and "value" have changed. "Shareholders" are no longer individual investors who feel like they truly own part of the company.

The important shareholders today are institutions, like labor unions, retirement plans, and mutual funds. These aren't investors, they're traders, swinging billions of dollars around and they don't give a damn about where the company will be in ten years.

The institutional fund managers, because that's who makes the decisions about investments, get their salary and bonuses based on the stock price. And in a kind of attention deficit disorder, they can only focus on the short term. That's their job.

"Value" has changed, too. The value of a company that matters is not tied to long term competitive advantage and profitability. It is uncoupled from the balance sheet. "Value" means total capitalization now, this instant.

Today, when we speak of "shareholder value" we really mean "short term shareholder value." That may not seem like a big change, just the addition of an adjectival phrase, but the implications are powerful.

The reason is that you can increase "short term shareholder value" by doing the very things that decrease long term shareholder value. Cut costs by laying off a bunch of people and those costs drop straight to the bottom line, increasing earnings per share. Put off some development costs for a new product or market development and hardly anyone will notice right away.

The result is that the things that build long term competitive advantage and profitability are seen as expenses. Perceived value in the target market is a driver of long term profitability. Relationships and people are the drivers of long term competitive advantage.

Cut them and you increase the short term profit, which is all that matters if you're a trader and not an investor. Cut them and you increase short term shareholder value even while you gut the company's true strength. It looks good on paper and no one will come back to you ten years later and call you to account.

There is a time to concentrate on the short term. But it should be by conscious choice and not by default.

More importantly, you cannot build a great company if you must satisfy fund mangers with constant quarter-by-quarter growth and your reward is based on the short term share price. It's bad management and it leads to temptation to fudge the numbers.

It we want to build great companies, we will not build them this way. We must lift our eyes to the horizon, strap on our gear, and start walking in the right direction.

Wally's Working Supervisor's Support Kit is a collection of information and tools to help working supervisors do a better job. It's based on what Wally's learned in over twenty years of supervisory skills training. Click here to check it out.

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Wally Bock has helped people learn to be great bosses for more than a quarter century. His latest book, Performance Talk: The One-on-One Part of Leadership, makes learning key leadership principles almost effortless by teaching through a story and providing lists of resources for further growth.

Click here to find out more about Wally's coaching services.

For weekly tips and resources pointers, check our Wally Bock's Three Star Leadership Letter.

Click here to find out more about having Wally speak to your company or convention.