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In the #ftse , an unexpected trend is emerging where companies are appointing non-executive directors from within their #boards as #ceos . Leading companies like Unilever , johnlewis , Hargreaves Lansdown, and BT Group have all recently selected CEOs who were previously non-executive directors on their boards and likely reflects a preference for familiarity in times of geopolitical and economic uncertainty.
Since January 2022, a significant number of FTSE 350 CEOs had already served on their boards before their appointments. In the US, although less common, 17% of S&P 1500 CEOs appointed in the past year were company #directors before taking the top executive job at the company.
Naturally and logically, the advantage of recruiting an existing director as CEO is their established rapport with the company's #chair , board, and #executiveteam . Furthermore, these "insider-outsider" candidates have the not insignificant advantage of understanding the company's #culture , #strategy , and challenges. But that, too, assumes - perhaps erroneously - that those factors are well-aligned and are, therefore, taking the company in the right direction, yet this may not be the case.
However, while this trend may offer stability - at least in the short term - it may also indicate an inadequate ‘outsider’ talent pool and, more worringly, a weaknesses in board decision-making linked to #risk aversion.
In times of crisis, transitioning from the board to the CEO role is likely to continue as chairs prioritise stability and experience in their leadership choices but that may not be the right choice for the company in the long-term.
#boardofdirectors #board #chairman #companydirector #nonexecutivedirector #nonexecutivedirectors #boardmember #boardleadership