Less than 3% of the 2015 incoming class of CEOs were women according to PwC’s Strategy&
In 2015, 17 percent of the largest 2500 public companies in the world changed their CEO, more than in any of the previous 16 years of the CEO Success Study fromStrategy&, PwC’s strategy consulting business. Over the past several years more big companies have been deliberately choosing their new CEO from outside of the company as part of a planned succession, an indication that hiring an outsider has become more of an intentional leadership choice than a necessity.
- Outsiders accounted for 22 percent of all CEOs brought in via a planned succession between 2012-2015, up from 14 percent in 2004-2007
- Almost three-quarters of all outsider CEOs were brought in during planned successions during that same period, up from 43 percent in 2004-2007
The majority of companies have continued to promote insiders to the CEO position and the study authors think this will remain the preferred succession-planning practice (77 percent insiders vs. 23 percent outsiders in 2015). Outsider CEOs have caught up and closed a performance gap that the study previously found between outsider and insider CEOs, possibly strengthening the case for considering a new leader from outside the company.
“Hiring an executive from outside a company to serve as chief executive officer used to be seen as a last resort. That is not the case anymore with the disruptive market-related changes that companies are facing today. While an internal CEO candidate may have an excellent record of achieving the business goals the company has pursued in the past, boards are recognizing that this candidate may lack the skills needed to lead the company through the changes necessary to win in the future,” says Per-Ola Karlsson, partner and leader of Strategy&’s organization and leadership practice for PwC Middle East.
2015: Not the Year of the Woman CEO
Globally, the share of incoming women CEOs fell to less than 3 percent in 2015, the lowest percentage since 2011. Just 10 of 359 incoming CEOs in the class of 2015 were women.
The news was even worse in the U.S. and Canada where the share of incoming women CEOs fell for the third year to the lowest in the study’s history. Surprisingly, there was just one woman among the total 87 incoming CEOs in the U.S. and Canada last year (1 percent, compared to 4 percent in 2014 and over 7 percent in 2012).
Female CEOs are more often hired from outside the company than male CEOs are. Thirty two percent of all incoming and outgoing female CEOs from 2004-2015 were outsiders compared to just 23 percent of males CEOs.
More Facts on the Rise of Outsider CEOs:
- Some of the industries that have been experiencing the most disruption are also the ones that have brought in higher-than-average shares of outsiders over the last several years. This includes telecommunications (38% of incoming CEOs from 2012-2015 were outsiders), utilities (32%), healthcare (29%), and energy (28%)
- On the other hand, IT (15%), materials (19%), retail and consumer (19%), and industrials (21%) hired the lowest share of outsiders from 2012-2015.
- From a regional perspective, from 2012-2015, companies headquartered in Western Europe hired outsider CEOs almost twice as frequently as companies headquartered in U.S./Canada (30% vs. 18%, respectively)
