Boards have changed what they want in their chief executives, according to new research.
Over the past year recruitment has seen the profile of CEOs appointed transform markedly with the background of new CEOs changing with it.
According to a survey from recruitment firm Heidrick and Struggles, more women have been appointed to the top job; more boards have chosen “non-nationals”; new CEOs have greater cross-border experience; and they are more likely to either have an advanced degree or an MBA.
That all said, boards have also played it safe in one sense by picking more internal appointments than before.
Kit Bingham, head of the UK board practice at Heidrick, says the changes in appointments reflect the extent to which the chief executive’s role has changed with the times to encompass finance, operations, strategy, technology, the adoption of corporate purpose, investor engagement and, of course ESG (environmental, social and governance) issues.
“It’s become a multi-dimensional role and boards are open to considering a wide range of those aspects.”
CEO appointments amid Covid-19
Heidrick looked at 1,095 CEO appointments across 24 markets. A hefty 62% were internal appointments from January to July 2021, compared with 53% for the first six months of 2020.
The number of women appointed has grown from 3% to 11%; non-nationals account for 30% instead of 20% last year; while those appointees with cross-border experience has gone from 38% to 46%. The number with MBAs has risen from one fifth to 35%.
Of course, the appointments have taken place against the backdrop of Covid-19. According to Bingham: “Every board director or executive leader I speak to is worried about the cultural impact of the pandemic.”
That concern is mostly born out of the move to working from home, a phenomenon causing the greatest difficulty for younger recruits who are denied the informal contact with colleagues and managers that enables skills and knowledge to develop fast. It may be happening, but it’s happening “virtually” says Bingham, “which isn’t the same from a human point of view.”
And though the number of women appointed has risen, Bingham calls the figure “disappointing”. However, the focus of the most recent Hampton-Alexander report was talent development just below board level. “That’s where the action is,” adds Bingham.
Broader C-suite experience
The survey revealed too that many companies played it safe by appointing chief executives with previous CEO experience—around 56% compared with 53% last year. But CEOs were also more likely to come with a broader range of C-suite experience, according to the Heidrick report.
“C-suite roles that are moving up in paving the way to CEO include chief risk officer, chief strategy officer and chief technology officer.”
Bingham says: “I think the research does reveal a greater breadth in recruitment—in terms of gender, experience and nationality. This does suggest greater diversity of thought and outlook. There are more varied, twisting paths to the top and that is a positive in terms of cultural and experiential breadth.
“I think boards are both actively seeking that breadth and, if the trend persists and these execs naturally make their way to the boardroom, it’s a good signal for cultural breadth on boards in future.”