Snagging an open CEO seat these days is tough: Today’s departing CEOs cling to their jobs for an average of 10 years (up from 7 years a decade ago), and a stunning 9 out of 10 CEO hirings come from internal candidates (just two years ago, 40% of new CEO hires were external). “Boards are sticking with the status quo and not seeking significant strategic shifts,” write the authors of a new report by the Conference Board and executive search firm Heidrick & Struggles.
If you are aiming for the C-suite’s top seat, here’s what to do:
- Gun for a role held by an older CEO. CEOs over age 64 logged a 23% transition rate last year, as opposed to 10% for CEOs under 64. There are currently more CEOs over age 75 than there are under age 45.
- Start looking now. “The average tenure and age of departing CEOs might decline over the next 2-3 years, particularly if the economic weakness both expands and deepens around the globe,” write the researchers.
- Get on the list. Financial companies keep a list of potential CEO candidates, and 91% of nonfinancial and manufacturing companies with revenues over $20 billion also keep a list. If you’re not on the list, you’re not gonna be the next CEO.
- Pitch yourself as the cleanup guy. Companies commonly look for a new chief following subpar financial performance: In 2017, 22% of companies in the bottom quartile hired new CEOs and only 6.8% of companies in the upper three quartiles. Signs of upcoming turnover to look for: a recent IPO (a third of companies hire a new CEO within 4 years) or CEOs less than five years into their roles while facing poor stock returns.
- Skip interim CEO gigs if you want to be CEO. Just one S&P 500 interim CEO last year was offered a full CEO role, at Intel.
- Hold on for dear life. This is your only shot. Only 5.5% of CEOs who leave their jobs under age 60 are hired as CEOs elsewhere—and even then, their compensation dips by a quarter. That said, economics are on your side: New CEOs cost companies a whopping 5% of annual revenues, mostly from search costs, reduced productivity during the turnover, and severance pay.
- Don’t have sexual interactions of any sort with anyone from work. Not now. Not as CEO. Not ever. Really. Forty percent of nonvoluntary CEO departures last year were for personal conduct, including Les Moonves at CBS, Brian Krzanich at Intel, and Steve Wynn at Wynn Resorts. Last year had the highest nonvoluntary CEO departure rate in almost 20 years, at 31%.
That’s it. Good luck.