Heidrick & Struggles UK (Nasdaq: HSII), the global provider of executive search and leadership advisory services, has found that prior experience at the executive officer level of corporate leadership may not be as fundamental to landing the top executive job as it once was, with 22% of CEO appointments in the UK having no prior C-suite experience. The Route to the Top 2022 report suggests that firms are increasingly willing to look beyond the C-suite when undertaking succession planning. Rather than targeting those in traditional executive officer roles (CFO, COO, etc), the report finds that candidates who offer deep operational experience are preferred, particularly those who previously held the role of such as Business Unit Director or General Manager within a multi-functional organisation.

This year’s primary finding indicates a changing emphasis on the importance of prior experience in the highest executive positions – with 22% of CEO appointments in the UK having no prior C-suite experience, up from 16% in 2021 and 17% in 2020. The upward trend is reflected across Europe, where an average of 27% of CEOs had no prior C-suite experience, and the figure stands even higher, at 30%, for the US.

Moving up the ladder

This year’s report also shows a shift towards appointing CEOs internally. Globally, 64% of appointments have been made internally, compared to 61% in 2021. Comparatively, over the last two years, the UK has scored above average when it comes to internal appointments. This year, the report finds that 69% of UK appointments were internal, above the global average for a second year and up from 68% in 2021, signalling a continued inclination towards internal succession planning and leadership readiness from within the organisation.

Commenting, Claire Skinner, Partner in Heidrick & Struggles’ London office and leader of the Europe region said: “Today’s findings suggest that boards are continuing to broaden their criteria when searching for their new CEO and may be increasingly open to candidates from more diverse professional backgrounds – both within and outside the organisation. Taking the findings around prior C-suite experience and the number of internal appointments together, what we see suggests a growing inclination toward internal succession planning. Companies are investing earlier and reaching deeper to prepare candidates for CEO succession.

This means that effective early talent detection systems and leadership development programmes, closely aligned with succession planning processes, are critical. It’s important to diversify the talent pipeline at various levels of the organisation, as our research shows an uptick among current CEOs who are joining two levels below the CEO. Globally, only 18% of CEOs are long-tenured, showing that boards are looking for fresher perspectives and diversity of experiences. Whether it is internal or external, Heidrick & Struggles are here to support organisations to deliver on effective succession planning.”

DE&I

Finally, the report points to a positive trend that is beginning to emerge in the UK regarding the appointment of women CEOs. In what has been slowly increasing over the past three years, 9% of appointments within the UK were female in 2022.

Sharon Sands, Partner in Heidrick & Struggles’ London office, who leads the Leadership Development, Leadership Assessment, and Executive Coaching practices as part of the consulting global leadership team commented on the emerging trend: “Globally, the findings concerning the appointment of women CEOs highlight the work that remains to be done in achieving greater gender diversity at the highest executive levels. In the UK, we see a continuing upward trend over the last two years, with the percentage of women CEOs increasing year on year from 5% in 2020 to 9% in 2022. This brings the UK above the global average of 7%, but the annual 1% increase in the number of women CEOs marks an imperative that companies must continue to build and sustain momentum across DE&I and ensure the UK C-suite is reflective of wider society. Alongside an incremental increase for women, a more marked shift can be seen in global appointments, speaking to the breadth of experience being valued by the board.”

Route to the Top is an annual demographic analysis of the profiles of 1,169 CEOs around the world. The UK results garnered from the leaders of FTSE-listed companies, provide rich insights into the composition and background of the country’s C-suite, along with an increasing diversity of challenges and experiences that they now face.