This year, their research identified a number of interesting trends.
More women are entering the C-suite
Though men still vastly outnumber women in leadership roles, there was a small increase in the number of female CEOs in the ASX 200 in 2018. Inclusion and diversity has been shown to play a role in improving firm performance, significantly increasing profitability, respectability, innovation, and producing more patents. This is a growing body of evidence, and it continues to suggest that there are numerous benefits to increasing the percentage of women in executive leadership roles.
However, despite the recorded benefits, there are still a number of barriers that make senior leadership a challenge for women. According to a report by Bloomberg, and quoting a survey by Australian lobby group Chief Executive Women, one way to increase the likelihood of women being nominated for the top job is to increase gender balance across all levels of leadership. Middle management, like the C-suite, is still overwhelmingly male, and placing women into these ‘line roles’ are critical training for the role of CEO.
Postgraduate degrees are increasing
Continuing from the previous year, the MBA was the most popular choice among executive leadership, as was the Harvard Advancement Management Program. However, Robert Half’s research saw a drop in popularity for a Masters of Science, and interestingly, an increase in the number of CEOs who were Chartered Accountants and Certified Practicing Accountants.
There are many obvious benefits for an education in finance and accountancy: an understanding of the bottom line, analysing risk, and reporting on the organisational health of a company. However, and perhaps reflecting the rise of the tech sector, engineering – and STEM degrees in general – have much to offer for those considering entering into management: strong analytical skills, an understanding of complex systems and relationships within them, and a very structural method of thinking are all highly relevant in business.
More likely to be promoted internally…
Regardless of educational background, it’s more likely that CEOs will be recruited into the top job from within the company, than without. In 2018, 60% of ASX 200-listed CEOs were promoted from within the company, though this number has decreased from 2017’s 62%.
It’s too early to know if this is a trend within the Australian business landscape, however this is in line with known global trends. An oft-quoted study by the University of Pennsylvania has long established the increasing costs of hiring external candidates, both financially and in reported performance measures over the first two years – though importantly, the study did not focus exclusively on CEOs. Internal promotions, on the other hand, benefit from exposure to company culture, and thorough knowledge of the products and services on offer, and the customer.
…though the number of external hires are increasing
Despite this, the number of external hires is increasing, though at a much lower rate. External candidates are also important to consider, as new perspectives and ideas can be just as valuable at the top.
Which benefits outweigh the disadvantages seems to come down to the circumstances surrounding the hire. What does seem to matter is that companies begin planning the CEOs succession ahead of time in order to minimise disruption, allow time for strategy and planning, and in order to determine just what it needs of their next leader.