Swiss bosses change less often
Swiss CEOs are significantly more secure in the executive chair than their global colleagues. This is shown by the "CEO Success" study conducted by the strategy consulting firm PwC.
In Switzerland, 10.4 percent of the 116 companies surveyed had fewer CEO changes in 2018 than in 2014, with the average tenure of a Swiss CEO being 6.9 years (global: 6.4 years). As part of the "CEO Success" study by Strategy&, the strategy consultancy of PwC, changes at the top of the 2500 largest listed companies in the world were analyzed. In Germany, Austria and Switzerland (DACH region), the change rate in 2018 was 16 percent, in Germany even more than 20 percent.
On a global average, 17.5 percent of chief executives vacated their posts, the highest figure since the study series began in 2000.
Corporate governance becomes more central
Corporate governance is becoming increasingly important. In terms of forced CEO changes, for the first time more company bosses worldwide had to leave due to ethical misconduct (39 percent) than due to poor financial results (35 percent). In an international comparison, the CEOs who succeeded each other in the DACH region in 2018 are the youngest company leaders, with an average age of 50 (global: 53).
At 35 percent, DACH companies have the largest proportion of CEOs from outside the company worldwide (global: 17%), whereas in Switzerland only one of the twelve successors is a company outsider. "With internal promotions, Swiss companies deliberately reduce the risks associated with a change in leadership. An internal succession has the advantage that the new CEO already knows the company and its culture and can take over the reins without a lengthy induction period," comments Dr. Peter Gassmann, Strategy&'s European head.
"Nonetheless, the newly appointed CEOs face big tasks across all industries. In particular, against the backdrop of a deteriorating economic outlook, the ongoing evolution of the business model towards digital future issues must be a priority."
International experience predominates
International experience is also increasingly in demand on managers' CVs: 60 percent of new CEOs in German-speaking countries have previously worked in other regions of the world, which is significantly higher than the global average of 33 percent. In addition, more than twice as many of the newly appointed CEOs in the DACH region come from abroad (32%) than the global average (15%).
"Due to the high density of internationally active companies, Switzerland has a particularly large proportion of CEOs with experience abroad or other nationalities. The strong global networking of local companies requires intercultural competencies, especially at the management level," says Dr. Daniel Diemers, Partner at Strategy& Switzerland. When it comes to gender diversity, companies in German-speaking countries showed no will to progress. As in 2015 to 2017, only one woman was appointed CEO in 2018 in the 300 DACH companies surveyed. The female quota thus fell for the fourth time in a row to just 2.1 percent, while the proportion of female CEOs globally declined from 6.0 (2017) to 4.9 percent (2018).
Are long-term CEOs more successful?
Despite the many changes in the global average, a special analysis of the years 2004 to 2018 shows that 19 per cent of the departing company bosses worldwide were so-called long-term CEOs: They held office for ten years or more. In addition to their long tenure at the top, these CEOs also differed significantly from their peers in terms of performance. With a median stock return of 5.7 percent, they achieved significantly better financial results than the average (3.3%).
The successors to these high performers, on the other hand, had a rather difficult time at the top of the company. They were usually only able to achieve poorer financial results and had to vacate their posts after an average of just 5.3 years, which also happened much more frequently in an unplanned manner: 35 percent of the successor CEOs were forced to leave, while only 19 percent of the long-term CEOs had to leave prematurely.
"Given the ever-increasing global CEO turnover rates, a look at long-term CEOs is particularly interesting. The outstanding financial results they have achieved on average raise the question of how long a manager needs at the top of the company to be able to successfully implement his or her plans. Sometimes the current average length of stay of 6.4 years globally is not enough to successfully implement long-term strategic decisions ", explains Dr. Peter Gassmann.
At 35 percent, DACH companies have the largest proportion of CEOs from outside the company worldwide (global: 17 percent), whereas in Switzerland only one in twelve successors is a company outsider. (Source: PwC)f
