Only 5% of the chief executives of leading companies in the United States and Western Europe today are female, two-thirds were promoted from within, and almost half were previously in finance or general management roles.
Those are among the findings of Heidrick & Struggles’ Route to the Top 2018 report, a demographic study of 674 CEOs in the United States and 12 Western European countries.
The most common route to the top remains internal promotion, which suggests boardrooms globally have increased focused on sound CEO succession planning. Across the 13 countries in the study, 67% of CEOs were promoted from within their companies. The United States, at 84%, had the highest percentage of internally promoted CEOs, followed by the Netherlands, at 80%, and Sweden, at 70%.
In spite of the growing momentum in recent years for the advancement of women to positions of senior leadership, a significant increase in the number of women appointed as chief executive remains elusive. In the United States, the percentage of female CEOs, at 6.9%, was down from the previous year, continuing the gradual decline of women CEOs in the country since 2015. Denmark and Italy, both at 0%, and Germany, at 1.2% ranked lowest on this front.
With growing pressure and interest from corporations and their boardrooms on diversity, it will be critical for companies to focus on the development of women and diverse leaders and helping them become CEO-ready. To help accelerate that process, Heidrick & Struggles recently pledged to present its clients with diverse board candidates globally, with a goal of delivering a minimum of 50% diverse candidates in total on an annual basis. In the past year, 57% of its board of director placements in North America were diverse, although much more remains to be done globally.
Overall, CEOs in the study averaged 50 years of age at the time of their appointment. In 10 of the 13 countries in the report, the average age between internal and external appointees at the time of their appointment differed by no more than three years.
In the United States, however, external appointees averaged 59 years of age versus 53 years for internal appointees. In Denmark, external appointees averaged 54 years of age versus 49 years for internal appointees. Internally promoted CEOs in the United States and Denmark waited the longest—18 years—to attain the top job, while those in the United Kingdom waited only 11 years.
Interestingly, some 27% of all CEOs have previous experience in the finance function. Of that universe, Germany, at 32%, had the largest proportion of CEOs who previously served as CFOs. Naturally, many leaders also came up to the C-Suite through an operating role. The United States, at 47%, had the largest proportion of CEOs who previously held the COO role. Nearly half of the CEOs in our study previously served in other C-level roles. In the United States, the figure is 63%, followed by Germany, at 54%. Norway, at 28%, had the smallest proportion followed by Sweden, at 30%.
When looking at CEO mobility globally, the vast majority of CEOs are nationals, although almost half have worked outside their home markets in at least two countries. In the Netherlands, 78% have worked across borders, followed by Switzerland, at 74%, and Sweden, at 67%. By far the smallest proportion was found in the United States, where only 23% of CEOs had cross-border experience. In all countries except France, Italy, and Spain, the percentage of external appointees with cross-border experience matched or exceeded the proportion of internal appointees who have such experience.
As far as academic credentials go, overall, fewer than three in ten CEOs hold an MBA degree. The percentage of chief executives with MBA degrees ranges from a high of 47% in Portugal to a low of 13% in Italy. In the United States, the birthplace of the MBA program, 34% of CEOs hold the degree, a figure that is sharply down from 49% seven years ago.
The research for the report encompasses 674 current chief executives of the companies listed on the following country indexes: Denmark, OMX Copenhagen 20; Finland, OMX Helsinki 25; France, SBF 120; Germany, DAX and MDAX; Italy, FTSE MIB; Netherlands, AEX; Norway, OBX; Portugal, PSI-20; Spain, IBEX 35; Sweden, OMX Stockholm 30; Switzerland, SMI Expanded; United Kingdom, FTSE 100; United States, Fortune 100.