– COVID-19 caused companies to shift focus to appointing CEOs with a proven track record and previous CEO experience
– Renewed focus on experience decreased the appointments of women CEOs who remain significantly underrepresented and make up only 5% of CEOs globally in this year’s report
CHICAGO, Nov. 20, 2020 /PRNewswire/ — The COVID-19 pandemic has altered nearly every aspect of the way companies view themselves, from their purpose to their workforce, as well as how they perform under pressure and in the face of uncertainty. With the onset of the pandemic in 2020, companies delayed leadership transitions, appointing CEOs with proven track records and deprioritizing diversity of experience and backgrounds.
The seventh annual Route to the Top 2020 report from Heidrick & Struggles (Nasdaq: HSII) analyzes the backgrounds of the 965 CEOs leading the largest listed companies in 20 markets to understand the skills and experiences that shaped their path to the top role. The report compared CEO appointments made after March 11, 2020, when the World Health Organization (WHO) declared COVID-19 a global pandemic, to those appointed from January 2019 to March 10, 2020.
"There has been a shift in CEO selection during the pandemic as companies seek executives who can help their organizations seamlessly navigate through these unprecedented times," said Jeff Sanders, vice chairman and co-managing Partner of the global CEO & Board of Directors Practice, Heidrick & Struggles. "Companies undertaking such an important appointment over the past year have been putting more importance on previous CEO experience, and also looking externally for their next CEO. While a proven track record is extremely important during periods of uncertainty, we know that broader diversity of experience, sustainability and purpose will be viewed as critical to long-term survival and growth when the global business environment returns to some semblance of normal."
Route to the Top 2020 report: CEOs appointed after the WHO COVID-19 pandemic declaration
Following the WHO’s pandemic declaration, there was a sharp jump in appointing CEOs with previous CEO experience
- Of the 30 CEOs appointed from March 11, 2020, to June 30, 2020, 63% had held the CEO role previously, compared to 44% in the cohort appointed from October 2019 to March 10, 2020.
- In addition, more companies looked outside their organizations for their next CEO, with external appointments jumping to 57% from just 35%, as they may not have had an experienced internal candidate to take over amid the pandemic.
With companies more focused on past CEO experience, diversity in terms of gender, cross-border experience and cross-industry experience decreased significantly
- Women CEO appointments decreased from 12% in the cohort appointed after October 2019 to only 3% after the pandemic announcement.
- Cross-industry experience decreased from 18% to 13%, while cross-border experience decreased from 39% to 30%.
"As companies prepare to emerge from the pandemic, they need to take an in-depth look at their pipeline of future leaders to ensure they are developing a deep and wide bench of diverse executives, providing the experiences and opportunities required for the top job in a challenging future," said Bonnie Gwin, vice chairman and co-managing Partner of the global CEO & Board of Directors Practice, Heidrick & Struggles. "The pandemic has brought into sharp focus that the most critical skills sought after in CEOs include agility, inclusiveness, and the ability to continually learn and adapt, all of which are essential not only during times of crisis, but also as companies look to innovate and transform themselves."
Route to the Top 2020 report: Snapshot of CEOs (through June 2020)
Three-quarters of all CEOs (75%) have previous C-suite experience
- Forty-five percent have previous CEO experience, 18% have COO experience, and 17% have CFO experience.
- Of the markets analyzed, Singapore has the highest preference for previous CEO experience (97%), and China has the lowest (22%); the United States has the highest preference for previous COO experience (48%), and Belgium has the lowest (0%); and Australia has the highest preference for previous CFO experience (24%) and China has the lowest (4%).
Gender diversity, and diversity in cross-border and cross-industry experience has declined due to the pandemic
- Women only make up 5% of CEOs globally in this year’s report; Ireland has the highest percentage of female CEOs (15%), and Brazil has the lowest (0%).
- Thirty-six percent of CEOs have cross-border experience, and 17% have cross-industry experience.
The average age at appointment to CEO is 50, and the average tenure of CEOs globally is 6.2 years
- Globally, only 22% of CEOs were under the age of 45 when appointed.
- The average current age of CEOs is 56; the United States has the highest average age of 60, and Sweden and Ireland have the lowest average age of 53.
About the Route to the Top 2020 report
The Route to the Top 2020 report provides insight into a composite view of the global CEO and looks at some critical differences among the 965 CEOs of the companies listed on the following 20 economy indexes: Australia, ASX 100; Belgium, BEL 20; Brazil, BOVESPA; China, SSE (top 100); Denmark, OMX Copenhagen 20; Finland, OMX Helsinki 25; France, SBF 120; Germany, DAX and MDAX; China Hong Kong, Hang Seng; Ireland, ISEQ 20; Italy, FTSE MIB; Netherlands, AEX; Norway, OBX; Portugal, PSI-20; Singapore, STI 30; Spain, IBEX 35; Sweden, OMX Stockholm 30; Switzerland, SMI Expanded; United Kingdom, FTSE 100; United States, Fortune 100. The analysis has been conducted with data valid as of June 30, 2020.
About Heidrick & Struggles
Heidrick & Struggles (Nasdaq: HSII) serves the senior-level talent and leadership needs of the world’s top organizations as a trusted advisor across executive search, leadership assessment and development, organization and team effectiveness, and culture shaping services. Heidrick & Struggles pioneered the profession of executive search more than 60 years ago. Today, the firm provides integrated leadership solutions to help our clients change the world, one leadership team at a time.® www.heidrick.com
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