Jessica O'ConnorUK businesses risk a shortage of transformative leadership talent, as research revealed that the majority of FTSE 350 chief executives were recruited externally rather than developed in-house.
Analysis from 25×25 revealed that 58% of FTSE 350 CEOs were externally appointed, compared with just 27% in the US S&P 500, 23% in Germany’s DAX 40, and 30% in France’s CAC 40.
The findings suggested that UK companies are significantly more dependent on hiring CEOs from outside than their international counterparts, raising concerns over long-term growth and stability.
The report warned that most UK CEOs are “operator” leaders, focused on restructuring, cutting costs and improving margins, while too few “transformative” CEOs – capable of driving innovation, mergers, acquisitions and growth – are being developed internally.
With leadership cycles becoming shorter, the demand for transformative CEOs is rising, but short tenure in the UK limits the ability of incumbents to prepare suitable successors.
The study concluded that unless more is done to cultivate future leaders from within, UK plc’s reliance on external appointments at high cost and high risk may undermine efforts to deliver sustainable growth.
Tara Cemlyn-Jones, CEO of 25×25, said: “The problem we are observing is that each board regards its CEO succession as unique and therefore the data it tracks is for their specific company or sector.
“This limits the talent pools being benchmarked. By covering the whole market, we have a good view of the structural trends on critical skills, and we work with members to help them develop forward-looking and transformative talent plans.”
