Share of Incoming Women CEOs Drops Significantly

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Globally, the share of incoming women CEOs fell to less than 3 percent in 2015, the lowest percentage since 2011, according to the CEO Success Study from Strategy&, PwC’s strategy consulting business. Just 10 of 359 incoming CEOs in the class of 2015 were women. The news was even worse in the United States 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 United States 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.

“That women CEOs are more often hired from the outside may be an indication that companies have not been cultivating enough female senior executives in-house,” says DeAnne Aguirre, an advisor to executives on talent and culture with Strategy& and a principal with PwC U.S. “One of the reasons why women may be more likely to be outsiders is that their development is not being recognized within their own organization, and therefore they may be more likely to be attracted away. The fact that more companies are considering outsiders might improve the chances for women CEOs in the future.”

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)

“Boards of directors following well thought-through succession plans should have a deep bench of strong, internal candidates. However when the company needs to make transformational changes away from their former strategic and operating plans, boards should factor the outsider option into their succession planning,” says Gary Neilson, thought leader on organizational design and leadership with Strategy&, and a principal with PwC U.S. “Outsiders don’t have biases and commitments built up over the years, and can make changes more objectively. They also may be able to look at the organization from a broader perspective based on an understanding of what the world will require in the future.”

“Whether the new leader comes from inside or outside the organization, companies that plan for CEO succession more carefully are more likely to be better performing companies in general.”

Strategy& identified the world’s 2,500 largest public companies, defined by their market capitalization (from Bloomberg) on January 1, 2015. We then identified the companies among the top 2,500 that had experienced a chief executive succession event in 2015 and cross-checked data using a wide variety of printed and electronic sources in many languages. For a listing of companies that had been acquired or merged in 2015, we used Bloomberg. In this year’s report, we also look at the circumstances in which outsider CEOs are being hired, and the data on the characteristics of the companies that are hiring them.

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