13.11.2021 – 09:00
Egon Zehnder
Berlin (ots)
Many large companies in Germany are finding it increasingly difficult to optimally regulate CEO succession. This is the result of a study by the leadership advisory company Egon Zehnder, which analyzed the filling of CEO positions between 2010 and 2020. Accordingly, in the past decade, 43 percent of the 229 companies examined suddenly separated from their CEO at least once. In addition, the length of stay of the CEOs has decreased significantly over the same period. CEOs who took office in 2010, 86 percent of them stayed in office for at least five years. In contrast, of the occupations in 2015, only 50 percent retained their position until 2020. Regardless of when they joined, the average term of office for all active CEOs is 7.2 years.
“Those who were appointed CEO in the last decade often had to vacate their post early,” says Thorsten Gerhard, Co-Head of Egon Zehnder’s CEO & Board Advisory practice group in Germany. “This suggests deficiencies in the follow-up process,” continues the expert. Apparently, many companies and CEOs only realized afterwards that they did not fit together. The figures suggest that the pandemic has not changed this development either. His advice: “Good succession processes begin today with the assumption of office – not just before the gate closes. You include internal candidates as well as external solutions.”
The fluctuation is particularly high in companies in the tech and communications sectors. Almost half occupied the executive chair at least three times between 2010 and 2020. With the financial service providers, the switching rate is not quite as high. However, all companies in this industry have replaced the CEO at least once since 2010. Egon Zehnder found the greatest continuity in the consumer sector. A third of the companies stayed with one: r CEO during the decade of study. Half of them have filled the post once.
Egon Zehnder observed a significant increase in CEO changes in 2018 and 2019. In these years, 39 and 41 new CEOs took office. The development in 2020 was dampened by Covid-19. “During the pandemic, most companies opted for continuity and only dared to make a total of 21 changes,” says Elke Hofmann, also co-head of the German practice group CEO & Board Advisory. “In our estimation, however, the trend will soon continue to implement the corporate strategy with new heads.” The leadership advisory company Egon Zehnder suspects that the reason for this is that the type of self-sufficient, iron doer has had its day. “The world that has become hyper-complex demands team players who listen to all stakeholders, who remain curious and who adapt themselves and the business rapidly. The new generation of CEOs has recognized that modern leadership means teamwork. It is more reflective, more humble and usually something younger than the generations before, “says Hofmann – results from another global Egon Zehnder study [1] can confirm impressively. In order to master the challenges of their time, say 97 percent of all CEOs surveyed, they not only have to change their company, but also themselves.
Gerhard believes that these changes in leadership will encourage bolder personnel decisions in the future. Only one in five CEOs is still from abroad. Only three percent of all CEOs are women. And for every fourth CEO position that becomes vacant, a previous board member moves up. “This automatism often stands in the way of renewal and shows the first cracks in the study,” says Gerhard. Companies increasingly tended to look for the right personality externally, although insider appointments are still the rule. However, the length of stay of external CEOs underpins the thesis that the large German companies need to sharpen their succession processes. As of December 2020, external CEOs were on average around 2.8 years shorter in office than their own – a development that has tended to increase in recent years. The age difference between internal and external successors has also risen: if external CEOs were one year older than Insiders when they were appointed in 2017, the age difference when appointing them has increased to 4.3 years by 2020. “Homegrown people usually start with a leap of faith in the CEO position – the bar is usually higher for external people,” says Hofmann, interpreting the figures. “A breath of fresh air is essential for survival. The analysis shows that companies have not always known how to use it sensibly.”
About the study
Egon Zehnder looked at the 30 DAX and 60 MDAX companies. There were also 32 SDAX representatives and 107 family-run companies. The study of a total of 229 companies refers to observations from January 1, 2010 to December 31, 2020.
About Egon Zehnder
Egon Zehnder is the leading consulting company for executive search and leadership advisory in the German-speaking area. Filling CEO and top positions for corporations and family businesses, start-ups and public institutions is just as much a part of the service portfolio as long-term succession planning and the development of leaders, teams, organizations and corporate cultures.
[1] Egon Zehnder 2021, It starts with the CEO, unter: https://www.egonzehnder.com/it-starts-with-the-ceo
Press contact:
Martin Klusmann
Egon Zehnder
Global Marketing Co-Leader and Head of Corporate Communications Germany
[email protected]
Phone: +49 170 2360101
Original content by: Egon Zehnder, transmitted by news aktuell
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