Elliott Hill’s ascendancy to the top post at Nike last month is reflective of a trend where companies increasingly value long-serving insiders for their top executive roles. “Nike has always formed a crucial part of my identity,” declared Hill, who embarked on his career at the sports apparel establishment as a rookie intern.
This trend of “CEO lifer” is seen across various major companies, with notable examples being Mary Barra at General Motors, RBC’s Dave McKay, and Doug McMillon at Walmart. These executives have demonstrated sustained growth within their respective companies over a significant period of time.
Apart from a brief stint as a coach for the Dallas Cowboys American football team, Hill’s career path has largely been traced within Nike’s corridors. This move to appoint Hill as the successor to former eBay leader, John Donahoe, indicates a refreshed emphasis on core offerings and an assertion of its corporate ethos.
Such in-house leadership appointments can greatly benefit a company, notes Claudius Hildebrand, co-author of The Life Cycle of a CEO. “They nurture stability and bolster morale, as employees are presented with visible career advancement opportunities, hence fostering loyalty.” These executives also have longstanding ties with stakeholders, financiers, and clients.
However, there is a potential downside. Executives whose entire careers are confined to a single company risk suffering from limited perspectives that could potentially hinder innovation, due to their lack of interaction with external concepts and influences.
Senior Partner of PwC UK, Marco Amitrano – a professional services firm alumnus himself – champions industry knowledge as a pivotal asset for leaders. This, he argues, allows an unparallelled comprehension of the “company from the ground up”.
According to Monika Hamori, associate professor of human resource management at IE Business School, there are certain situations when leadership drawn from external experiences can be more advantageous than those nurtured within. These include “companies in need of comprehensive strategic transformations, a complete overhaul, or those within rapidly-changing industries”.
Firms hiring outsider executives lacking knowledge about the company may fail to anticipate the upheaval such a move can cause. Sometimes, such appointments may lead to a restructuring in the senior management team, featuring risks of applying methods and knowledge that previously worked well in different organisations; these might completely fail in the new context, suggests Hamori.
According to Altrata’s data, 25% of current CEOs of FTSE 100 companies were hired externally, in comparison to a mere 15% of the S&P 500 leaders. Altrata reports that the typical tenure for internally appointed CEOs in their respective firms ranges between six and ten years. In the case of the largest US firms, 20% of the CEOs had been with their company for more than 21 years. However, only 7% of UK CEOs boast of similar longevity. Astonishingly, just 1% of S&P 500 CEOs had a tenure exceeding 41 years at the same company.
Altrata’s Maya Imberg comments, “In the US, a considerable pool of CEOs have been associated with their organisation for thirty years prior to rising to their CEO position.”
Numerous individuals would have experienced a variety of roles in their organisation, offering them a range of experience that external appointees might lack. For instance, Hill from Nike has served the company in over twelve different capacities, from specialising in sports graphics sales to being the vice-president of global retail.
Business administration associate professor, Kimberly Whitler, at the University of Virginia’s Darden School of Business, argues, “The world’s leading [companies] are colossal, frequently feature highly diverse products, have a range of brand names, and operate in various nations. To comprehend such a complex organisation, it’s beneficial to be equipped with comprehensive experience across different geographies and functions.”
Such is the case of Duncan Wanblad, CEO of Anglo American, who has lent his services to the mining group for over three decades. Wanblad, acknowledging his tenure that includes an assortment of roles across various nations, shared that his career portfolio has included strategy and business development leadership and roles in South American and South African metals businesses, among other roles related to engineering and projects earlier in his career. His varied experience has given him the privilege to work in collaboration with a diverse set of colleagues, armed with a vast array of skills and experience.
“He argues that while varied experience is essential for a leader, one can indeed accrue it within a single organisation. Many chief executives, like IMI’s Roy Twite, seek external opportunities to broaden their experience. Twite, who started on IMI’s graduate scheme in 1988 and has worked in multiple markets, believes one must actively pursue exposure to different companies. He cites his time as a non-executive director at technology firm Halma and creating professional networks – even engaging in a group of 11 fellow CEOs to discuss investment strategies – as key experiences.
Twite also underlines the role of continued professional development, having pursued further education at Cambridge and Harvard. Another crucial aspect, according to Hamori, is a diverse management team to complement the CEO, especially if the CEO has never ventured out of a single firm. Diversity in management can bring balance and enhance the CEO’s skills.
Employees and customers can also provide fresh views and perspectives. Amitrano has established a shadow leadership team within his company, comprising of 12 internal team members, to incorporate employee insights into decision-making.
However, others, including LinkedIn founder Reid Hoffman, believe building a career involves moving between companies. This provides more opportunities for employee development and can lead to promotions and increased salaries. There is also a risk in staying with one organisation for too long – particularly the possibility of being typecast. Bannister, of Farient Advisors, suggests that long-term employees may need to leave to truly establish their capabilities.
Those who choose to remain with one company throughout their career can argue that this builds social capital and aids in learning organisational navigation skills.
In his earlier years, Twite received the uncomplicated counsel to “forge a profession. To consider a change when you feel you’ve acquired all the knowledge you can”. Over time, he was courted by recruiters, but his belief remained that his good performance would be acknowledged at IMI. He realised that in joining another firm, he would have to rebuild his standing from scratch. Twite cautioned that the circumstances may not always be better elsewhere, debunking the common belief that “the grass is always greener on the other side”.
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