This is progress? The newest CEOs are less worldly and more male than ever

Casting a long shadow.
Casting a long shadow.
Image: Reuters/Kevin Coombs
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Last year was a good one for CEOs looking for new jobs. Nearly 17% of the world’s largest 2,500 public companies changed their CEOs, the highest figure since Strategy&, a unit of PricewaterhouseCoopers, began tracking these numbers for 16 years. It’s also a good time for job-hoppers—outside hires accounted for 22% of all new CEOs in the four years to 2015, which was also a record.

But the latest batch of CEOs hardly fit the profile you might think of when you consider a corporate leader in 2015. For starters, almost all of them are men. Globally, the share of new CEO positions that were filled by women fell to a pitiful 3% in 2015, down from a pathetic 5% in 2014:

Spencer Herbst, a senior associate at Strategy&, says that the industries with the highest CEO turnover recently—energy, materials, and industrials—aren’t exactly known for attracting and grooming women leaders. “If we look over the past 12 years, these are the three industries least likely to hire women CEOs,” he notes.

Breaking it down by region, the US and Canada dragged the average down. Of the 87 incoming CEOs in at big listed companies in North America last year, only one was a woman:

That said, over the past 12 years the US and Canada have hired a larger share of women CEOs than other regions, on average: a whopping 4%.

These are strange trends considering the evidence that female leadership has been shown to boost a company’s bottom line. A recent study by the Peterson Institute for International Economics and EY concluded that having at least 30% of women in leadership positions added 6% to net profit margins.

It gets worse.

Not only have the world’s newest CEOs become more male, but they also have less international work experience than before. This seems weird, too: the world of business is more global than ever, so you would think that experience beyond one’s own borders would be a prerequisite for becoming the boss. But here we are. “The global CEO is a myth,” the study says.

And finally, isn’t it usually better to hire internally rather than gamble on an outsider? Normally, yes, but Strategy& says that the performance gap between CEOs who were groomed inside a company and those brought in from the outside closed three years ago.

Indeed, for the third year in a row, outsider CEOs delivered higher average total shareholder returns than insiders, according to the study. Herbst puts this down to more outsiders coming in via planned successions rather than forced turnovers. “They are picking them more strategically,” he says.

Companies often pick leaders from the outside to bring in new thinking. News flash: two great ways to bring a fresh perspective to the boardroom are to hire people who have worked abroad and to tap that other 50% of the population called women.