Finance still best route to the top

May 12 2008 by Nic Paton Print This Article

Britain's top companies still prefer their chief executives to come from conventional, finance-based backgrounds, despite the emphasis in recent years on managers needing to be touchy-feely "people" people.

An analysis by recruitment firm Robert Half of chief executives in the UK FTSE-100 and Standard & Poor's Global 100 has found that UK CEOs are more likely to come from a financial background than their global rivals, are often younger but, more positively, tend to serve in one post for longer.

Nearly four out of 10 UK CEOs had taken some sort of finance-based career path to the top, against slightly more than a quarter of S&P CEOs.

The average time in office for current S&P CEOs was four years and years months, compared with five years and five months for FTSE-100 CEOs, it added.

Phil Sheridan, managing director of Robert Half, said, "Understanding the financial aspects of the company is one of the most important competencies of a chief executive.

"Our analysis shows the world's leading companies continue to put a high significance on financial skills when choosing their boardroom leaders, and in the current economic environment this is unlikely to change as business leaders face a period of uncertainty in the global financial marketplace," he added.

From a UK perspective, the analysis showed that the careers of some of the UK's most senior business people began with a foundation in finance, including British Airways Chief Executive Willie Walsh, who held the position of group finance director prior to his appointment and BP's Tony Hayward, a former group treasurer.

The second most common career path was through marketing, with nine CEOs, including Tesco's Sir Terry Leahy and GlaxoSmithKline's JP Garnier with this background.

This compared with the S&P CEOs, where engineering backgrounds proved popular (a tenth).

They were also more likely to have worked their way up the corporate ladder, with a number of CEOs having joined early in their careers, including Coca-Cola Company CEO E. Neville Isdell, who joined in 1966 and Toyota Motor's Fujio Cho who joined the company in 1960. When it came to tenure, despite UK CEOs having spent longer in office, the analysis highlighted that there was a steady turnover of CEOs year-on-year with 12 per cent of FTSE CEOs and 17 per cent of global CEOs having fewer than 12 months under their belts.

The longest-serving FTSE CEO was WPP's Sir Martin Sorrell, who has served 22 years as the company's boss.

On age demographics, Bill Coley, chief executive of British Energy Group was the oldest FTSE-100 boss at 65, while Oleg Novachuk, CEO of mining firm Kazakhmys, was the youngest at 36 years old.

The eldest global CEO was Toshifumi Suzuki of Japan's Seven & I Holdings who is 76 and the joint youngest at 43 were UBS CEO Marcel Rohner and Carrefour CEO Jose Luis Duran.

Female businesswomen, added Robert Half, were underrepresented in both the FTSE-100 and the S&P Global 100, with just three female CEOs in the former and three in the latter.

Of these high-flying women, a finance background was also the clearly preferred way to the top.

London Stock Exchange CEO Clara Furse was one of the longer serving of her peers, appointed in 2001, and having been global head of futures at Phillips & Drew (now UBS) earlier in her career.

"The ability to analyse figures, handle the investment and shareholder community as well as demonstrate business acumen to all sides of a company's stakeholders is a vital part of the CEO role," said Sheridan.

"This is why so many companies look no further than their finance department for their CEO succession," he added.