The COVID-19 pandemic put a near-complete stop to C-suite hiring. In some economies, CEO appointments dropped to a quarter of what they had been last year, according to the latest "Route to the Top" report from executive search firm Heidrick & Struggles. And the profile of CEOs hired has changed, with companies now placing a priority on experienced leaders who can lead through the disruption and the following economic recession.
The report compares CEO appointments from January 2019 to March 11, 2020—the date COVID-19 was formally declared a global pandemic—with appointments made after that date. It shows that 63 percent of CEOs appointed after the pandemic started had prior experience as CEO, as compared to 44 percent before.
Furthermore, companies made more external hires—57 percent after the pandemic announcement, compared to 35 percent before, which the report attributes to being unable to find an internal candidate with the experience they needed. When internal appointments were made, they were fast-tracked, with the average time a new CEO had spent in the company falling to 10.3 years from15.6 years—possibly a response to the urgency of the situation.
The result of this trend, however, is that diversity among CEO appointments has decreased. In the five months immediately preceding the pandemic, 12 percent of appointments were women; in the months after, only 5 percent were women. And the report also found that appointments with cross-border and cross-industry experience have decreased.
Jeff Sanders, vice chairman and co-managing partner of Heidrick & Struggles' global CEO & Board Practice, cautioned companies not to forget about diversity altogether.
"While a proven track record is extremely important during periods of uncertainty, we know that broader diversity ofexperience, sustainability and purpose will be viewed as critical to long-term survival and growth when the global business environment returns to some semblance of normal," he said.
For companies planning their post-pandemic leadership succession, the report encourages a broader view of the criteria for appointing a CEO. It found, for example, that within the more than 900 CEOs analyzed, there were 117 unique paths to reach that position, ranging from being CEO at another company, to different C-suite roles at the same or different levels within the company, to being a regional leader, or even a board member. It states: "The myriad routes to the top should encourage boards to cast a wider net when they set the criteria for their next CEOs."
Furthermore, the report also suggests that the shift away from diversity is simply a short-term response to the extremely challenging environment presented by the pandemic. In time to come, diversity of background and experience, among other forms of diversity, will re-emerge as critical factors in long-term business growth.