CEO fluctuation on the rise in the DACH region
One in ten DACH CEOs has to leave because of poor financial results, says a study by PwC. Other findings: 4.9% of CEOs in the five-year period are female, but DACH companies are failing to attract women to executive suites.
Staff turnover in executive suites is on the rise again: After a more stable phase in the last two years, significantly more CEOs of the 300 largest listed companies in the DACH region had to vacate their posts again last year. While the number of resignations remained constant on an international average at 370 cases, the Swiss companies surveyed were again more willing to make changes: 19 CEO positions were filled in 2017 (2016: 15). The turnover rate rose to 15.3% in Germany, Austria and Switzerland last year (2016: 12.7%), above the global average of 14.5%, according to the key findings of the "CEO Success Study 2017" by Strategy&, PwC's strategy consultancy. The study examines changes at the top of the 2,500 largest listed companies worldwide. For the German-speaking region, the 300 largest companies in this region were additionally analyzed. Similar to previous years, most (65%) CEO departures in the DACH region were planned changes, with 15% of the cases being early departures.
Ever shorter half-life
"The half-life of CEOs in German-speaking countries is falling drastically and is converging with the international average of seven years. The regular armchairing is also due to increasingly short-term goals to be achieved as well as a lower tolerance for mistakes on the part of supervisory bodies and owners. Whereas in the past CEOs often held office for more than a decade, the chairmanship of a management board is increasingly becoming a manageable episode in a manager's career. Last but not least, industries in transition and disruptive technologies require new competencies at the top more often," comments Dr. Peter Gassmann, Head of Europe at Strategy&.
The rate of merger- or acquisition-related replacements rose in the German-speaking region for the second year in a row to 15.2% (2015: 10.2%; 2016: 13.4%). One in ten (10.2%) CEO changes in the DACH region was due to poor financial results. Ethical misconduct (ethical misconduct includes inappropriate or criminal behavior by the CEO or employees, including, for example, fraud, bribery, insider trading, falsified resumes, or sexual indiscretions) as a reason for a CEO demission is at the same level as in the previous year, at 5% worldwide; in the German-speaking region, it is even only 2%.
Despite CEO fluctuation, no higher proportion of women in executive positions
When it comes to new CEO appointments, the DACH region continues to fail to increase the proportion of women in executive suites. In 2017, only one woman was appointed as a new CEO in Germany, Austria and Switzerland, Angela Titzrath from Hamburger Hafen und Logistik AG. The five-year trend is thus clearly downward: While in 2013 and 2014 the proportion of women in new appointments in German-speaking groups was 9.1% and 10.3%, respectively, the DACH figure has fluctuated between two and three percent for the past three years (2015: 2.2%; 2016: 3.0%; 2017: 2.3%). Since 2013, 9 women and 176 men have thus been appointed as new CEOs in the German-speaking region. Globally, the proportion of women in newly appointed positions was significantly higher last year at 6%. International leaders continue to include the U.S. and Canada, where the proportion of CEO positions filled by women increased to 9.2% last year (up from a five-year average of 4.9% since 2013), with China also reaching a higher figure than the DACH region at 4.1%. "It is shameful how little Female Leadership is practiced in German-speaking boardrooms. While a change in thinking is evident in the North American region, we are even observing a regression in Germany, Austria and Switzerland. Companies should anchor diversity and female leadership in their corporate culture and strengthen them across all career levels," says Peter Gassmann.
Top in terms of internationality
Nevertheless, in terms of the internationality of newly appointed CEOs, companies in the DACH region are succeeding in bringing diversity to the boardroom. 32% of the new CEOs in 2017 came from a different country than the company they head. This makes DACH CEOs global leaders in terms of internationality; on average globally, only 16% of new company leaders came from other countries or regions. International work experience on a resume is also most sought-after in Germany, Austria and Switzerland: 56% of the new CEOs appointed in 2017 have already worked in other regions, and in Switzerland as much as 69% - the global average is 30%. On the way to the top, however, experience in one's own company still pays off: 78% of the vacant CEO positions in the DACH region were filled with internal candidates in 2017 (global average: 80%). In Switzerland, 85% of the new top executives came from within the companies' own ranks. In terms of academic background, the MBA played a conspicuously large role in Switzerland: 38% of the new CEOs brought this qualification with them - in contrast to only 15% in 2016.
More information: www.strategyand.pwc.com
