If you aspire to join the high-paying and high-profile ranks of Canada's top corporate CEOs, Jeff Hauswirth has two words of advice: plan ahead.
Mr. Hauswirth, who co-heads the Canadian CEO search practice at executive recruiting firm Spencer Stuart, says it has never been harder to be the CEO of a public company, and the qualifications companies want in a new leader have never been more demanding.
“Ten years ago, it didn't have to be planned, but now it does, or much more,” he says.
A new study by Spencer Stuart highlights the challenges: More CEOs have MBAs, more have international work experience, fewer have stayed at the same companies their entire careers, and more are being parachuted in as external hires.
Spencer Stuart looked at the qualifications and experience of the 270 CEOs who comprise the benchmark S&P/TSX index, and compared them to the CEOs who led companies in the old TSE 300 index in 1996.
It found the typical work background for CEOs is still in operations and finance — similar to a decade ago — but more of the work is being done outside of Canada. Almost 40 per cent of today's CEOs have international work experience, up from 29 per cent in 1996.
Mr. Hauswirth says CEOs need a more diverse range of work experiences than even a decade ago because the job is becoming more complex. He says many companies value global experience not only for the exposure to different business experiences, but also because of the broader lessons a candidate learns by succeeding in a different culture.
“It demonstrates a level of versatility and adaptability, which is important for a CEO,” he says.
Andrew MacDougall, who also leads the CEO search team at Spencer Stuart, says the study highlighted the value of getting a business education. While CEOs have diverse backgrounds, the growing trend is to see more with business degrees, and especially with MBAs. More than one-quarter of CEOs have an MBA, up from 17 per cent a decade ago.
But Mr. MacDougall says that in the real world, every MBA does not carry the same weight.
His advice to students is to get a degree from a top-name university if possible, because it matters, especially when companies hire lower-tier executives with less work experience.
“Brand counts for a lot when I'm talking to a committee of a board. Brands have an impact, and they tend often to go along with reality.”
This is not a new trend. Among Canada's CEOs with MBAs, the study found almost one-third were from the University of Western Ontario or Harvard Business School — a reflection of the dominance of both institutions in the era in which today's CEOs were studying business.
In the same vein, Mr. MacDougall recommends getting work experience at a leading global company — many of which are not Canadian companies. Not only is the experience working for a “brand” company respected by prospective employers, he says, but such companies also provide a common stepping stone for top executives to leap into CEO positions.
That's because global companies often put emphasis on carefully grooming future leaders, then end up with more talent than can possibly fill the single job at the top.
However, Mr. MacDougall also cautions executives not to hunker down too long in any organization. He says many companies are not keen to hire a CEO candidate who has spent his or her entire career at the same organization. Indeed, the study found only 16 per cent of current CEOs have stayed their whole career at the same company.
“It's a significant transition for somebody to move into a new culture and operating environment, and if they haven't already had that experience, there's skepticism,” he says.
There is also good news in the Spencer Stuart study for wannabe CEOs. It shows newly appointed CEOs have gotten younger over the past decade, with the average age of new appointees now 50, down from 54 in 1996.
Mr. MacDougall believes that trend is directly linked to the shrinking pool of experienced CEOs willing to take another top job when they leave a company. He says CEOs who have “been through the wars” are hard to recruit again, even though most companies would prefer to hire a veteran with CEO experience.
This leaves more room for younger candidates to leap ahead.
“It's a really tiring job because of what's required,” he said. “We see it all the time where a search committee believes looking at the outside makes great sense, but getting someone who meets their dream background, that's hard to do.”
WANT THE JOB? HERE'S HOW
Get an education
Ninety-nine per cent of CEOs have a university degree, and two-thirds have an advanced degree such as a masters degree, PhD, CA,or law degree.
Study business
More than one-third of CEOs studied business administration, and 26 per cent have an MBA, making business the most common educational background by a wide margin.
Don't get stuck
Only 16 per cent of CEOs have spent their entire careers at the same company.
Recognize the right fit when you find it, and be patient CEOs typically spend 15 years at their companies before being appointed to the top job.
Take an operations job
Almost half of CEOs have a background in operations, while 26 per cent have a finance background. Other career paths like marketing and sales fall far behind these top two functions.
Get international work experience, especially in the U.S.
Nearly 40 per cent of CEOs today have worked outside of Canada, up from 29 per cent 10 years ago.
It helps to be a man - Only 2 per cent of CEOs at public companies are women.
