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CEO Turnover in Decline as Internal Candidates Rise to the Top

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Turnover among CEOs is in decline, leading to the first rise in average tenure amongst FTSE 100 CEOs in three years, according to the annual Robert Half FTSE 100 CEO Tracker.

The findings reveal that in the past year, CEO turnover was just 10%, down from 14% in the previous year. As a result, the average tenure among FTSE100 CEOs has risen to five years and six months, up from five years and two months in 2018. This trend presents a reverse of previous years, which saw average CEO tenure stagnant at five years and two months in 2018 and 2017, and falling from five years and three months in 2016.

Charlie Grubb, UK Managing Director, Robert Half Executive Search commented:

“Following a long period of decline we have reached an inflexion point in the average tenure of today’s CEOs, driven by lower rates of turnover.

“While workplaces are undoubtedly going through a period of substantial change and demanding new skillsets, it is encouraging that this isn’t resulting in knee-jerk changes of leadership. In times of change, continuity and consistency can be vital, and it is important for companies, stakeholders and shareholders to give CEOs the freedom to take a longer-term view of company strategy and results without fearing for their jobs.”

For the FTSE100 companies that did go through a CEO change, in-company experience was highly valued. Seventy per cent of new CEOs were a result of internal promotions, bringing the total across the FTSE 100 to 46%, up from 40% last year.

Furthermore, 15% of FTSE100 CEOs have spent their whole careers with the same company. This has been rising year-on-year since 2015 when it stood at just 7%.

In contrast, the number of ‘career CEOs’, with experience at the top of multiple corporates, has remained stagnant at 13% following a steady decline since 2015 when this figure stood at 18%.

Charlie Grubb commented:

“The CEO merry-go-round is slowing in favour of candidates with a long track record at the companies they are to lead.”

“Getting the leadership right throughout all levels of the organisations is something we are seeing becoming more important. With the next CEO likely to come from internal promotion, having a strong succession plan in place is vital to help ensure a smooth transition process and prevent unwanted hiccups. Training and support must be provided throughout the talent pipeline to ensure that candidates have the necessary skills to step up when necessary.”

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