CEOs in UK companies are 'more likely' to be external hires
A record 58% of CEO appointments at UK companies in 2015 were external hires, going against the global norm of internal promotion, according to a new survey from Strategy&.
The annual CEO Success Study by PwC's strategy consulting business tracks CEO succession at the world’s largest public companies, including 300 in the UK.
While the research demonstrated an increasing trend of companies looking elsewhere for new CEOs, it also suggested that the UK has the fifth highest turnover rate for CEOs. Over the last four years, nearly three in ten (29%) external CEOs who left the company were 'forced out', compared to only two in ten (19%) of internal CEO hires.
Ashley Unwin, UK consulting leader at PwC, said: “Hiring a CEO from outside the company used to be seen as a last resort. That is not the case anymore, as UK companies are making more external CEO hires than ever before. This strategy seems to be paying off for companies globally as external hire CEOs are delivering higher total shareholder returns over the past three years. The opposite is true in the UK, where external CEO hires are underperforming their internal peers.
“The high proportion of external CEO hires in the UK who are then subsequently pushed out of the company raises concerns that UK companies’ succession planning is falling short.”
According to the study, UK CEOs are the least likely in the world to have stayed at one company for their entire career, but are the most likely to have both worked internationally and to stay in the a role for an average of 5.1 years.
Women are apparently still being passed over at the highest level, with just 4.5% of roles being filled by female candidates. 32% of all incoming and outgoing female CEOs from 2004 to 2015 were outsiders, compared to 23% of male CEOs.
Ashley commented: “Great progress has been made getting more women into board roles in UK companies, but our research reinforces why that momentum needs to be maintained at the executive level.
"Companies should be challenging themselves on why they don’t have more women poised to take on executive level roles. They should work to identify and build their future pipeline of women leaders, and continue to monitor their progress."
Other findings included the average age of newly-appointed CEOs in the UK being on par with the rest of Western Europe at 52.