2020 Route To The Top: Previous CEO Experience Reemerges As Top Priority During Pandemic, External Appointments Of CEOs Increase And Gender Diversity Remains Low Among CEOs Globally
COVID-19 caused companies to shift focus to appointing CEOs with a proven track record and previous CEO experience
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.”
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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%.
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