Over the past year, the CEO practice at Spencer Stuart has been undertaking a research project on CEO succession and performance. They looked at every CEO who served an S&P Company between 2004-2016 (that's 689 CEOs, if you are wondering) and they are drip releasing the results.
The first set of data looks at succession. According to the research, an average of 11% of S&P 500 firms hire a new CEO in the average year. What's interesting, however, is how more and more of those firms are recruiting from within; In 2004, 25% of CEOs were recruited from outside; by 2015, the figure was down to 10%. In 2016, the figure dropped to 7%. Recruiting from within, but it tends to imply a lot of "first time CEOs".
In his LinkedIn blog on the topic, James Citrin, Leader of the CEO practice at Spencer Stuart puts this down to several factors, highlighting the ongoing focus of boards on succession planning. However, he also argues that - in some cases - Boards believe that they have "failed" if they have to hire from outside.
Citrin goes on to talk about the ramifications of this trend for both Board Directors and aspiring CEOs. It's a good read and will, no doubt, be the first of an interesting series of articles on the topic.
In 2004, 59% of the S&P 500 CEO appointments were internal promotes and 25% were recruited from the outside. The rest of the CEOs appointed in 2004 were from the Board of Directors (10%), former executives brought back into the company, usually in a time of crisis (5%), and executives recruited as a #2 with the intention to be promoted to CEO within 18 months; also known as “insider-outsiders” (2%). In 2015, 82% of the S&P 500 CEO appointments were internal promotes and only 10% were recruited from the outside. And in 2016, this trend was even more pronounced, as 88% of appointments were internal successions and only 7% were recruited from the outside.