UK Companies Increasingly Looking External for the Top Role
UK companies are more likely to choose a new CEO from outside of the company than ever before, but also more likely to force them out in times of difficulty, according to the annual CEO Success Study from Strategy&, PwC’s strategy consulting business.
The research, which tracks CEO succession at the world’s largest public companies (2,500 globally, 300 in the UK), shows that more than half of all CEO appointments to UK companies in 2015 were external hires – a record high for the UK and against the global norm.
However, the research indicates the decision isn’t necessarily paying off. Over the last 4 years, nearly 3 in 10 (29%) external CEO’s who left the company were forced out, compared to only 2 in 10 (19%) of internal CEO hires.
Gordon Colburn, Partner and Regional Consulting Leader Scotland, said: “Hiring a CEO from outside the company is no longer seen as a last resort but the 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.”
The research also reveals that women are still underrepresented at the highest level in UK companies, with only 2 women appointed to the CEO position in the past year out of a potential of 44 roles (4.5%) – down from 5 out of 47 CEO appointments in 2014 f/s.
Gordon Colburn continued: “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. The executive level is where women and diverse leadership teams can make a tangible difference.”