FTSE 100 chief executives are increasingly appointed from outside their new companies, according to fresh research.

But while CEO appointments appear to be changing in nature, the influence of diversity, equity and inclusion is having a minimal effect on filling the top leadership roles.

Research from headhunters Heidrick & Struggles shows that the number FTSE 100 CEO roles filled by candidates from outside a company has risen to more than a third, 36%, up from 32% in 2022 and 29% the year before that.

Diversity at the highest level is showing less change. Heidrick’s figures reveal that just 1% of the top 100 UK companies have leaders who are Black, while women comprised only 10% of new appointments.

Kit Bingham, head of board practice at Heidrick, says external appointments are often designed to communicate to the market, while the UK economy is also influencing appointments.

“Fluctuations within the UK economy have likely played a significant role in these findings. When we look at the complexity and uncertainty of the economic backdrop, including what the Bank of England recently referred to as a ‘mild recession’ in the second half of 2023, more companies need to demonstrate proactivity in their response to the changing external environment.”

‘Fresh perspective’

Bingham adds: “When we look at the UK market’s standout pivot towards external CEO appointments, it’s often the case that these higher-risk strategies are intended to send a clear signal to the market, [that] there’s fresh perspective that will add a new dynamic to the leadership team.”

The limited representation of women and people from ethnic minority groups is a worry. Alice Breeden, co-managing partner of the CEO practice at Heidrick, says more work is needed to “balance the diversity of CEO profiles”. She adds there “must be enhanced efforts to ensure that business leaders can better represent their businesses and communities, which are more diverse than ever”.

Heidrick’s survey reflects findings elsewhere. Data providers MSCI found that only 6.5% of chief executive roles globally are held by women, and 9.1% of board chair jobs.

Academic research, looking at France, recently concluded that mandatory quotas for women were effective in changing attitudes when it comes to appointments.

Further research finds that women in the UK fail to gain access to the right jobs that will prove to be steeping stones to the CEO position.

Another clear trend is CEO background. Heidrick finds that 30% of UK chief executives were formerly finance directors. This preference is way ahead of the global average at 8%, behind divisional heads, 20%, and former chief operating officers, 12%.

Since 2020, the economic landscape has become more complex as the world encountered the pandemic, war in Europe, cost-of-living crisis and high inflation. CEO appointments are bound to reflect these challenging times. There could be more change yet.