CEOs get abroad to get ahead

2006

Despite all the talk of boardroom diversity, the typical CEO of a FTSE100 company is still likely to be a male in his 50s with an accountancy background. But in one respect, at least, there has been a major shift in the career patterns of Britain's top CEOs.

International experience has become much more of a "must have" for aspiring chief executives, according to new research.

The "Route to the Top" study by Dr Elisabeth Marx, a partner with executive recruitment firm Heidrick & Struggles, found that by and large, the profile of the average FTSE100 CEO has changed little over the past decade. They are still likely to be male, 52 years old and have a background in finance.

But scratch the surface and some interesting changes emerge, most clearly around the growing trend for CEOs to have international experience.

In 1996 just four out of 10 chief executives had completed an overseas assignment. But by 2002 this had risen to six out of 10 and last year it nearly eight out of 10 had spent time working abroad.

However the majority of this experience was gained in North America and Europe, with much less in the new economic growth regions of Asia and South America.

Another big change over the past decade is in the educational qualifications of CEOs. In 1996 more than a third of FTSE 100 chief executives did not have a university degree. But by 2002 this pattern had changed dramatically, with just over one in 10 not having a degree.

Last year the figure was little changed at 12 per cent, meaning that CEOs of UK companies are now closer to their European counterparts in terms of academic qualifications.

Dr Marx also found that the prevalence of degrees from the universities of Oxford and Cambridge actually rose slightly during the same period from one in five (19 per cent) in 1996 to almost a quarter (22 per cent) in 2005.

If the U.S equivalent, Harvard, was added to the mix, given the high number of foreign CEOs, this figure rose to almost one in three (28 per cent), she said.

Another area in which boardroom diversity has narrowed is in the backgrounds of those making it to the top. A quarter of CEOs came from finance or accounting backgrounds in 1996, rising to almost four out of 10 (38 per cent) last year.

Meanwhile, fewer than a quarter (23 per cent) of CEOs had a sales and marketing background and less than one in five (18 per cent) a background in general management..

The age profile of CEOs has also remained deeply conservative, with only 10 FTSE bosses aged less than 45 and the average remaining at 52 – the same as 2002 and only three years younger than 1996.

What's more, few companies were prepared to bring in new blood when looking for a CEO, with nearly seven out of 10 stepping up to the top spot via an internal promotion.

These internally promoted CEOs were even more likely to come from an accountancy or finance background than external appointees, Dr Marx found, as well as holding more non-executive directorships and having less international experience.

"In terms of succession planning and the motivation of high potentials, this pattern suggests that UK companies need to ensure that executives with a non-finance background have equal chances to progress to the top position through targeted leadership development," Elisabeth Marx said.

"Our original hypothesis that moving abroad means moving ahead is fully supported by the high international experience of the top CEOs in this country," she added.

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