THE STATIC WORLD OF THE FTSE CEO – HOW THE GAME HASN’T CHANGED
Sean Farrington, RVP Northern Europe & MD UKI, Qlik, discusses the reasons and implications behind the average CEO remaining remarkably the same in spite of a constantly-changing business landscape.
It almost goes without saying that the world of business is in constant flux. We’re always reading about the changing face of organisations, whether how they are gradually changing their working processes through remote connectivity to internal systems, or using data to highlight how they can better be streamlining fundamental operations, from HR to finance and even customer service. One thing is undeniable, as we move deeper into a digital age; the business landscape has changed considerably across all businesses – even from as little as five years ago. But what’s happened to the people at the helm of these organisations?
We all have our ideas of what makes up the average CEO, and these notions tend to be based upon the people running our companies decades ago – boardrooms akin to those that go back almost a century-ago, such as the famous Board at the bank in Mary Poppins, through a couple of decades to eighties-set American Psycho or Wall Street – still dominated by men of a certain background and around middle age.
The CEOs we tend to read about the most – those in charge of some of our largest, multi-million pound organisations – are actually challenging this convention. Think about Facebook’s Mark Zuckerberg or Yahoo’s Marissa Mayer, who are consistently in the press. Both actually challenge our notions of the aforementioned ‘traditional’ CEO. But how well do these personalities represent the average C-level executives within our largest companies? With these examples, you’d be forgiven for assuming that the ordinary person heading up our most successful organisations has altered to coincide with the ever-changing business landscape.
Yet, this is far from the case. Recent research we conducted into the backgrounds of FTSE 100 and 250 CEOs showed it’s remarkably surprising how conventional the majority of these business leaders are. The typical CEO of a UK-listed company in 2013 is essentially very similar to the average CEO from around fifty years ago that we see in the Mad Men landscape of the sixties. In fact, we found that 96% of the FTSE 100 and 250 CEOs are male, with an average age of 46, and that Oxford or Cambridge were the most popular universities to attend en route to the chief executive spot. Further to this, Domo used data from Harvard Business Review earlier this year to conduct research looking into the attributes of those heading up the 100 most successful companies across the globe. Again, the overwhelming majority (98%) was male, had a university education and was middle-aged.
So, what does this tell us about the world of business? The way we carry out our work has changed, the ultimate organisational landscape has changed, but why exactly hasn’t business leadership changed? Is there a reason why this traditional form of a CEO has stubbornly remained the same for decades – centuries even? As I mentioned above, the most notorious CEOs in our society could lead us to believe that our top companies are actually being led by very different personas to what we expect from the conventional C-suite, but this is far from the case. Why hasn’t the view from the top generally progressed – and why hasn’t a move towards convention-defying CEOs been embraced across UK business as a whole?
Here we get ourselves into a ‘chicken and egg’ causality. Is the reason for the average CEO not changing due to a choice from certain individuals to not push for a top-level position, or is it perhaps that companies still expect only a certain type of employee to head up their organisation? Which is the cause and which is the effect?
When it comes to the issue of there not being more female CEOs, there have been many discussions pertaining to the reason why. Although the overall business landscape is one of equality, this just doesn’t seem to have seeded itself at the top. After all, our research showed only 4% of FTSE 100 and 250 CEOs are women, while a study by BoardEx showed this figure to be even lower among our top private companies. Some people argue that a lack of women CEOs comes down to a choice from women themselves not to pursue the very top level positions, and many still think this comes down to putting family ahead of a career or simply women not being as competitive as their male counterparts.
On the other hand, a lot of people think that business ‘at the top’ just hasn’t moved forward as much as we would like to think. It’s thought that women in business still have more social pressure on them than men in the boardroom. A recent poll by LinkedIn saw 46% of women cite ‘institutional barriers’ as the main reason for their not being able to break through to CEO roles. Here, it’s been strongly argued that traditional ‘old boy’ networks stand in the way of women getting the support they need in business to be able to progress in the same way that men can. Even if there’s no conscious decision or motive behind it, existing business networks, and even traditions themselves, come from a ‘like for like’ approach that result in a lack of diversity and could also explain the prominence of highly educated Oxford and Cambridge graduates in our current list of FTSE 100 and 250 CEOs.
Whatever the reason is for the staid CEO, a lack of diversity among board groups is likely to hold businesses back from reaching their full potential. As a matter of fact, research from the UK’s Department for Business last year showed male-dominated boards will fall behind their rivals and will fail to progress at the same rate as they miss out on fresh, creative ideas from women, while hiring people from across different backgrounds and of varied educations can help bring new perspectives to a number of situations and debates.
Clearly change is needed where it just hasn’t happened. We’re being drawn into a false sense of the business world having taken on a completely different shape, where everyone has the same opportunities to reach their goals, but it’s overwhelmingly evident that there’s still some form of glass ceiling in place that’s hindering true diversity at the top and organisations could be suffering from stilted evolution, or even regression as a result. Ultimately, the business landscape on a whole may be evolving at a phenomenal pace, but boardrooms really need to hurry up and follow suit. Technology can take you so far. It’s then down to the individuals and the company culture to encourage change.