More new CEOs have C-suite experience beyond the traditional CFO and COO roles: Route to the Top 2021

Qinthara Fasya | 6 November 2021

In this year’s Route to the Top study by Heidrick & Struggles, companies were found to return to a more expansive view of CEO succession

Companies are reverting to a more broad perspective of CEO succession as the turbulence of COVID-19 diminishes, according to the current Route to the Top, Heidrick & Struggles’ annual demographic survey of chief executives.

This year, the team wanted to see if the COVID-19 pandemic’s immediate impact on CEO succession planning—in which they saw a significantly slower process and newly appointed CEOs who fit into a traditional comfort zone—persisted, or if earlier trends toward greater diversity among new CEOs were restored.

This year’s Route to the Top draws on an analysis of the profiles of the 1,095 CEOs at the largest publicly listed companies in 24 markets as of July 5, 2021. Australia and New Zealand, Belgium, Brazil, Canada, China, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Mexico, Netherlands, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, the United Arab Emirates, the United Kingdom, and the United States are included in this report.

Some key insights include:

  • The first half of 2021 shows a record number of CEO appointments, the highest since 2018.
  • The share of women CEOs appointed in the same period doubled: 13% of all CEOs appointed in the first half of 2021 were women, compared to 6% in the previous six months—though absolute numbers are still very low.
  • More new CEOs have C-suite experience beyond the traditional CFO and COO roles, including roles such as chief risk officer, chief strategy officer, and chief technology officer.
  • After a period of increased external appointments early last year, the balance shifted toward internal appointments.
  • Compared to their direct predecessors, new CEOs are more likely to be women, to be from countries other than where the company is headquartered, to have cross-border experience, and to have advanced degrees.

New CEO appointments rose dramatically in 2021. After a significant slowdown in appointments in the second half of 2020, companies made a record number of CEO appointments in the first half of 2021, which signals confidence in both their company’s prospects and their ability to find the right leader.

Looking at the 14 countries that were tracked since 2018, the first six months of 2021 had significantly more appointments than any similar period, outstripping the next highest half-year period by 14 placements, or 22.6%, and was very close to the overall number of appointments in 2020 in these 14 countries: 82. (See also chart “CEO appointments by market” on page 6 of the full report.)

Route to the Top 2021 - appointment trends chart

An increasing share of new CEOs have held other roles in the C-suite, signaling that companies are increasingly reaching beyond the traditional ranks of CFOs and COOs. In fact, the proportion of new CEOs who had held other C-suite roles more than doubled from January 2021 to June 2021 compared to the same period in 2020. The number of former CFOs took a notable dip, particularly compared to the previous six months. C-suite roles that are moving up in paving the way to CEO include chief risk officer, chief strategy officer, and chief technology officer. (See charts, “More new CEOs have previous C-suite experience,” on page 8 of the full report.)

Looking Ahead

Looking ahead, as the role of the corporation is reimagined in the wake of COVID-19 and growing societal expectations surrounding climate, equity, cyber concerns, and other external realities, boards are reconsidering the CEO succession planning process itself. We expect to see even more investment in the development of internal candidates and a more continuous review of both internal and external candidates against the backdrop of rapidly evolving geopolitical scenarios and across multiple time horizons. As part of that effort, companies should be preparing for potential emergency CEO succession needs; these emergency plans require much closer scrutiny to make sure boards have in sight the right candidates for the context they would need to step into.

View the full report here.