Research from Robert Half, published in the 2019 CEO Tracker suggests CEO turnover has reached a three year high. According to the data there has been increased movement in the ASX 200, with CEO turnover now standing at 22 per cent. The third iteration of the annual study, which identifies the background and experience of current ASX 200 CEOs, also shows that while these CEOs are still overwhelmingly male (94 per cent), based in Sydney (45 per cent) and post-graduate qualified (59 per cent), the background and capabilities of these leaders are starting to shift.
The business suggests that as businesses navigate mass digital transformation, uncertain economic forces, and broad sweeping demographic shifts across their workforce, Australian companies are seeking to broaden their executive profile beyond traditional leadership models.
Nearly half (48 per cent) of the new CEOs have been selected from outside their company, including all new female appointments. External recruits now comprise 39 per cent of all ASX 200-listed CEOs, a four per cent increase since 2018. However, diversity among CEOs remains stagnant. In the year to July 20, 2019, four of the 43 newly appointed CEOs were female.
Among the ASX 200, the number of CEOs with technology experience has grown three per cent since 2018. Today, more than one in ten CEOs (11 per cent) have a background in technology. Leaders need to navigate digital disruption across all industries, and this increase is reflective of the growing pressure companies are facing to source and hire the right technical expertise and leadership to facilitate digital transformation and remain competitive.
While the number of CEOs who have already served as a CEO before their current role remained stable at 26 per cent, there has also been a three per cent increase in the number of CEOs who served as a CFO prior to taking the top job. Overall, 43 per cent of the ASX 200 CEOs have a background in finance, highlighting the value of financial acumen to business leadership.
As with previous CEO Tracker studies, higher education continues to facilitate faster ascension to the top job. ASX 200 CEOs with a diploma or degree were able to make CEO in their current company on average three years faster than those that did not have a diploma/degree in 2019, compared to 1.2 years faster in 2018 .
Similarly, CEOs with a postgraduate degree were able to make CEO in their current company on average 3.5 years faster than those that did not have a postgraduate in 2019, a significant change from 2018 findings which showed it was 1.1 years faster.
The importance of loyalty and a business acumen also remain central to the profile of Australia’s CEO. On average, ASX 200 CEOs spent 8.5 years with their current company before moving into the top role. International experience also remains high on the agenda for companies looking to fill CEO positions, with almost six out of ten (59 per cent) ASX 200-listed CEOs having worked internationally – showing no change since 2018.
“In our third year of this study we can clearly see that the composition of the ASX 200 CEOs is starting to change. Given the macro-economic challenges facing Australia, the efforts of certain sectors like FSI in rebuilding customer trust and the continued demand for rapid business transformation, our current climate is one in which externally appointed business leaders can really thrive,” noted David Jones, senior managing director of Robert Half. “However, companies need to ensure they are continuing to push for greater diversity and a variety of perspectives at all organisational levels. This is key to building innovative and motivated workforces that attract and retain top talent in a skills-short market. Moving forward, companies must balance hiring for ‘culture fit’ with ‘culture add’, in order to facilitate a diverse cohort that is capable of achieving lasting change.
“Certain skills and experiences are fundamental to what it takes to become a CEO such as proven business acumen, strategic thinking and interpersonal skills,” he added. “Aside from these skills, education, loyalty, cross border experience and financial literacy are consistent features when looking at the background of Australia’s top CEOs. It’s likely that demand for technology expertise will also continue to grow. Leaders who display these skills are not only well positioned to drive bottom line success but can demonstrate they are extremely adaptable and capable of leading diverse teams and innovative strategies during changing times.”