The Changing Nature of a CEO

  • Phil Sheridan, Senior Managing Director at Robert Half

  • 02.06.2017 12:45 pm
  • Organisations

We are entering an era where the pace of change is accelerating. Organisations are having to fight to retain relevance either among their target audiences, against their traditional competitors or new market entrants that are reshaping market dynamics. As a result, the average lifespan of a FTSE listed company is decreasing.A study has revealed that of the 100 companies in the FTSE 100 in 1984, only 24 were still breathing in 2012. The survival factor for today’s companies relies on having an established leadership that can combine a working knowledge of the company or industry with the commercial acumen needed to operate in a globalised market experiencing a fast pace of change.

A digital savvy leader

As the pace of change continues to accelerate so does the profile of a CEO. While a financial background was once a pre-requisite for a CEO role, we are now seeing the emergence of a greater variety of industry backgrounds among the top FTSE leaders. For example, despite the absence of technology companies on the FTSE 100, the role of the CEO in guiding companies towards profitability and growth means more than one in 10 CEOs now has a background in technology. With technology constantly evolving and disrupting industries, companies simply can’t keep still. Organisations are grasping at the opportunities digital transformation presents and need leaders that can embrace this mind-set and use it to create new growth opportunities or protect competitive advantage.

A generational shift

With lifespans increasing and the age of retirement going-up, there has been a generational shift occur in the FTSE 100 over the last decade. There are now just eight CEOs aged under 50 on the FTSE 100, a decline of 16% since the turn of the decade highlighting the importance of experience at the top level.

CEOs of the FTSE 100 have responsibility for guiding some of Britain’s largest and most successful businesses which contribute to the country’s prosperity. As a result, it’s imperative that they have the credentials and experience to direct the vision, confidence and economic wellbeing of a company. In any industry, it can take time for talented staff to develop into self-assured and well prepared business leaders so it’s no surprise that the average age of a CEO now stands at 55.

Loyalty is rewarded

The importance of continuity and succession planning has also been highlighted by the latest annual Robert Half FTSE 100 CEO Tracker. A staggering 41 per cent of FTSE 100 CEOs have been promoted to the top position from within, a number that has almost doubled in the last three years. We have also seen a rise in the number of CEOs that have spent their whole career with the company – one in 10 CEOs of a FTSE listed company have worked through the ranks showing that loyalty pays.

In the face of political uncertainty and a globalised, homogenised market then organisations are increasingly looking internally to find leaders that can combine a working knowledge of the company with the commercial acumen needed to navigate a complex and fast changing business environment. Ultimately, finding a promising target takes time, there’s no quick fix and the process should be constantly evolving. After all, the average tenure of a CEO has consistently been just over five years since 2015 so organisations need to think ahead. However, the effectiveness of a succession planning programme depends largely on active and visible support by top management. Their engagement sends a powerful message throughout the organisation that such efforts are essential to the firm’s long-term vitality.

Ultimately, the primary goal of every business is to achieve commercial goals, deliver growth and protect the longevity of the company. However, this relies onbuilding an executive team that has the skills and resource to enable profitability and create a sustainable competitive advantage. For talented professionals aiming for the top, this means maintaining a commitment to lifelong learning with a strong focus on building the management skills and commercial curiosity that will allow them to compete in an increasingly complex world. In this homogenised global environment, leaders who can combine their experience within industries with a working knowledge of the company and strong fiscal responsibility will be relied on to steer the course of a company.

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