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The Middle East’s CEO talent roundabout

 

Strategy&, part of PwC, has released the latest edition of its CEO Success Study, revealing some interesting statistics about the rate or CEO turnover in the region and around the world. The research raised discussion points on both the general topic of attrition rates of those in the CEO office, as well as the idea of whether CEO succession best comes from within or outside an organisation.

 

Surveying some 2,500 of the largest companies around the world, the research showed that, globally, 17 per cent of companies changed their CEO in 2015 – the largest percentage of any year in the past 16. Moreover, the results showed that in 2012 – 2015, there was a marked rise in external CEO hires over the period 2004 – 2007 – up from 14 to 22 per cent. In just 2015, the global ratio stood at 77 per cent internal hires versus 23 per cent drawn in from outside.

 

More interestingly still, the results in the Middle East showed record high CEO succession rates across the region. Of the 62 largest listed regional companies, 21 per cent recruited a new individual to the top job during 2015. The majority of these – a huge 84 per cent - came from outside the company. Even over the last four years, the ratio of internal to external hires is striking: 58 per cent of all Middle East CEO hires were from outside, compared with 33 per cent in the previous four-year period.

 

One other especially striking statistic was the level of CEO succession in Saudi Arabia, where 38.5 per cent of companies replaced their CEO during last year.

 

Why might this be and what might it mean?

 

Of course, one might immediately look at the changing economic conditions of the past year to explain part of the reason for such a dramatic reshuffle of top talent. As markets fluctuate and re-align to new directions, leadership may, necessarily, need to change to better suit a new course of action.

 

Regionally, CEO succession rates are also often impacted by the relatively high transient nature of the job market, with expatriate workers, in particular, moving on after a few years in a particular place.

 

Strategy& partner, Per-Ola Karlsson, suggested that the “…high succession rates, coupled with a need to improve regional corporates’ leadership development practices, limit companies’ ability to full develop internal leaders to their full potential, enabling them to effectively take on the CEO role”.

 

Leadership development should, of course, be a priority for every organisation. Succession planning should not, as is sometimes the case, be viewed as a knee-jerk reaction to a sudden CEO departure, but instead be a continuous process of developing the skills and experience of internal talent so that a ready successor is always on-hand.
 
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