Just over 30 years ago, the CEO may have been something of a mythical figure tucked away in the corner office. CEOs now are expected to be more approachable, be confident enough to show vulnerability but also resilient, engage with the organisation at all levels, and manage, at least partly, by walking around.
In other words, today’s CEOs still have to accomplish everything their predecessors did—but in a more complex environment. How they're doing so and the profile of this new type of CEO are the focus of the Route to the Top 2019 report from Heidrick & Struggles.
The global analysis of newly appointed CEOs in 2019 shows that 78% have previous C-suite experience, 73% are appointed to the role internally, they are 52 years old at the time of their appointment to CEO, and 64% hold advanced degrees.
In comparison, among their veteran counterparts (CEOs with 15+ years in the role), 51% have previous C-suite experience, 47% were appointed internally, they were 39 years old at the time of their appointment to CEO, and 46% hold an advanced degree.
The findings are based on the analysis of 906 CEOs from 16 countries, including Australia, China, France, Germany, United Kingdom, and United States. These are the key findings:
- More than three quarters of all CEOs (76%) had previous C-suite experience.
- 39% have previous CEO experience, 21% have COO experience, and 18% have CFO experience.
- Some countries have a strong preference for CEOs with previous CFO experience, including Germany (29%), Norway (28%) and Sweden (28%).
- Previous COO experience is strongly preferred in the United States (52%), France (29%) and the Netherlands (28%).
- Only 5% of all CEOs globally have an entrepreneurial background.
- About a quarter (24%) of all CEOs included in the report had no previous C-suite experience before being appointed to the CEO role.
- Among the 24% with no previous C-suite experience, 30% held global head of division or business unit roles, 13% were VPs or senior VPs, 12% had global functional roles, other than finance or operations, and 10% were presidents or deputy CEOs.
- The average tenure of CEOs globally is six years, and the average age at appointment is 50.
- Globally, 54% of CEOS have been in the role for less than 5 years, and 33% for less than 2 years.
- Less than a quarter (19%) of CEOs have a tenure over 10 years, and only 8% have 15 years or more.
- The lowest average age at appointment to the CEO role is 46 in Norway. The highest average age of appointment is in the United States at age 53.
- There is a 59-year difference between the youngest and oldest CEOs in the report.
- The average age of the CEO is 56.
- The youngest CEO can be found in Germany at age 30, and the oldest in the United States at age 89.
The right CEO at the right time: Profile of today's CEOInsights on the composite view of the CEO reveals the following components that go in the making of today's global CEO:
1. C-suite experience on the rise
There is far greater demand for C-suite experience across the board. Nearly half of veteran CEOs had no C-suite experience prior to being appointed CEO, but that figure falls to 22% of newly appointed CEOs.
2. CFO background in demand
The idea that CFO and COO experience, along with prior CEO experience, are frequent routes to the top does indeed hold. Of the 78% of new CEOs with C-suite experience, 54% had prior CEO experience, 29% CFO experience, and 24% COO experience.
3. Older at appointment
2019's new CEOs were older at their appointment, for both internal and external appointments: 52-years-old for the new class versus 39-years-old for the veterans still in the top role. It seems that experience counts more in an unpredictable global economic and business context.
4. Internally appointed
Newly-appointed CEOs were far more likely to have worked their way to the top internally, 73% of them compared to 47% of veterans. Evidently, in challenging times, boards often consider it wiser to retain the CEO they know—assuming that CEO has been performing well and the business is relatively stable.
5. Diversity: A mixed picture
Only moderate improvements in gender diversity have been seen, with women comprising 9% of new CEOs versus 4% of veterans. On the bright side, more new CEOs are non-nationals (20%) compared to veterans (15%), 44% of new CEOs now have cross-border experience, compared with 30% of veterans.
6. More advanced degrees
An advanced degree is an increasingly frequent characteristic of CEOs, with 64% of new CEOs possessing an advanced degree, including 27% who have MBAs, compared with 46% of veteran CEOs with some advanced degree, 16% of them MBAs.
7. Far fewer entrepreneurs
New CEOs are much more likely to have general management backgrounds (43%) compared with veteran CEOs (26%), as well as finance experience (27% versus 11%). And whereas 35% of veteran CEOs had a background as entrepreneurs, virtually none of the new CEOs have had this experience.
Jeff Sanders, Vice Chairman and Co-Managing Partner of the global CEO & Board Practice, Heidrick & Struggles, noted that CEOs today continue to execute the managerial role of yesterday, maintaining day-to-day operations and obligations to shareholders.
At the same time, "they have to lead through constant digital and business disruption, serve as inspirational leaders, foster a diverse and inclusive workplace culture, maintain good relationships with multiple stakeholder groups and, increasingly, focus on long-term sustainability."
Bonnie Gwin, Vice Chairman and Co-Managing Partner of the global CEO & Board Practice, Heidrick & Struggles focused on diversity of CEOs in positions globally.
"As the CEO profile changes, and more is expected from the role to meet future demands, so too must the face of the CEO. The pool for diverse CEO candidates – women, people of color and individuals from underrepresented backgrounds – remains small, and more needs to be done to develop the pipeline of the future generation of CEOs."
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