A New Generation Of CEOs Is On The Rise.

by Jonathan Hime on 21 July 2014

The business world is changing fast, but one thing seems to have remained constant. Look at the chief executives running major companies today – almost all seem to be cut from the same cloth. 

The average FTSE 350 chief executive is 46 years old. He is 89% likely to have had a university education, most likely from Oxford or Cambridge. Almost a third (28%) studied science, but most will have focused on economics, business or law. 

After graduating, he – and 96% of these CEOs are men – will have spent an average 25 years working his way up to his current job. There is a one-in-five likelihood that he picked up an MBA somewhere along the way. The chance that he was a CFO in his previous job is just over one-in-ten. 

The average Fortune 500 CEO is even older, at 55, but the profile is pretty much the same otherwise. Only 16% have no advanced degree. Two thirds are internal hires who spent an average 12.8 years working their way up the company ladder. 

Not all CEOs follow this route, of course. But the mould breakers – people like Charles Dunstone, Steve Jobs, Andrew Mason and Naruatsu Baba

– tend to be entrepreneurs who have launched and then grown their own businesses.

But the dominance of the old-school CEO is on the wane. Boardrooms will need to look very different in five years’ time, as a number of trends make themselves felt. There are two related ones we want to highlight here.

First, Generation Y is going to enter the boardroom.

The youngest CEO in the FTSE 350 today is 36 – still a child of the 1970s. But by 2016 we will see the first big company appoint its CEO from the generation born in the 1980s – the so-called Generation Y.

This new generation of workers were seen as a human resources nightmare when they started joining companies at the turn of the millennium. Companies complained that they were hard to motivate. They had no respect for hierarchy or process. They didn’t like being told what to do. They had unrealistic ideas about how quickly their careers should move forward. They wanted to give and receive constant feedback. 

Over the years, many of these ‘flaws’ have become assets. The next- generation leaders we have advised recently thrive on building and motivating teams. They are confident and optimistic. They have a remarkable ability to achieve goals in a shifting environment. They want to develop themselves and their colleagues. They respect and value diversity. And they are all digital natives – comfortable with technological change and capable of handling vast amounts of information.

Second, nobody wants an egotistical rock star

Here is a happy coincidence: the new generation leaders are becoming CEO-ready just as a long period of economic downturn comes to an end. Now is the time for companies to find a different kind of leader. The ego-obsessed, hierarchical boards of old are simply not suited to the evolving, post-recession culture of businesses today.

These rising stars have a very different outlook to their predecessors. They still have clear commercial goals and know the importance of building profitability and shareholder returns. But they are far more clearly focused on values, conduct, people and customer experience. They have the perfect balance of what we call the 3Qs –  that is IQ, EQ and CQ (the ‘C’ standing for commercial). 

This change is not confined to any particular industry. We see a tier of new leaders coming to the fore in a wide range of companies. The thread that connects them all is that they are positioning their organisations for sustained transformation and a return to economic growth.

Companies will have to adapt their talent management

The rise of these new CEOs will challenge the management culture in many organisations. These are leaders who will demand that ethics and sound principles guide decision-making. They will expect their organisations to employ people from a wide range of social backgrounds, international experiences, languages, industries and cultures.

Their emergence will challenge organisations’ talent management practices, too. Such individuals are difficult to recruit and retain. They come from a much wider range of educational, social and work backgrounds than their predecessors. They may not have gone to the “right” schools and universities or followed the “normal” career paths. 

Some of them will have a background in traditional areas such as sales, finance, tax and treasury. But they are just as likely to have come from the realms of innovation, digitisation and corporate communications. They may have spent long spells outside of corporate life. They could have unconventional influences, hobbies, interests, working styles and networks.

Organisations need to adapt to the emergence of these new leaders, otherwise they will struggle to pass on the baton. We do see boards that already look and feel completely renewed. Others have recognised the need for change and are taking action. But we see many more that have stood still or have started to wilt. They should wake up; a new generation is on the rise.