A background in finance is the most common route to the top for CEO’s in the UK, according to a new study.
Financial background comes top in the UK, US and Germany and in the UK, where London’s financial hub generates one-third of the country’s tax revenue, 36% of CEOs have finance backgrounds, a higher proportion than in any of the other three countries included in the study.
The research also found that CEOs in the UK are both younger and much more likely to be international than their counterparts in the United States, France and Germany.
According to the Route to the Top study from Heidrick & Struggles, FTSE 100 CEOs are on average five years younger than their counterparts in America, with over half (53%) under 55 years old, compared to 17% in the U.S.
Four out of 10 (42 percent) U.S. CEOs are aged 60 or older, compared to just 13% in the UK, further highlighting the age gap. UK CEOs were also considerably younger when they were first appointed, with more than half (54%) of FTSE 100 bosses promoted to the top job under the age of 50.
In contrast, just a quarter (25%) of U.S. CEOs were under 50 when appointed and the number of U.S. CEOs who were over the age of 55 when first appointed (36%) was more than double that of the UK (16%).
Luis Urbano, Managing Partner at Heidrick & Struggles, said: “The average tenure for a CEO in the UK is around six years, which indicates that a significant proportion of FTSE CEOs will not continue in their current roles much beyond the age of 60.
“This means there will be exciting career opportunities for young and up-and-coming CEOs, but also that their careers as CEOs are likely to end earlier.
“Likewise, while companies are able to tap into younger, dynamic talent, there is much to be gained from the grey hair of a seasoned CEO.
“It also poses the question as to what these older CEOs go on to do and whether or not they will be able to find roles that are intellectually stimulating and take full advantage of their particular skills and expertise.”
The study also found that CEOs with MBAs on the decline, with only 35% of U.S. CEOs in the study holding an MBA degree, down from 42% in 2015 and 49% five years ago. In France, 26% of CEOs have an MBA, down 11% from five years ago.
Germany, where advanced technical degrees are more common, CEOs with MBAs have declined to just 10% from 16% five years ago. In the UK, however, the figure is unchanged from five years ago, with 30% of CEOs still with MBAs.
An issue highlighted by the study is female CEOs remain rare. While the U.S. had the most female CEOs – 8% of the companies studied – this figure is down by one percentage point compared to 2015.
In the UK, women account for just 6% of CEOs, up one percent from 2015. Women CEOs remain significantly rarer in France and Germany at only 2% and 1% respectively, unchanged from 2015.
The findings also pointed to the route to CEO being not about what you know, but who you know, as internal promotions remain the most common route to the top. In the U.S., Germany and the UK, 85%, 67% and 61% of CEOs, respectively, were promoted from within. By contrast, only 48% of CEOs in France rose to the top from an internal promotion.
The firm’s Route to the Top study explores the backgrounds of CEOs at the top 100 companies from the FTSE 100 in the United Kingdom, the Fortune 500 companies in the United States, the DAX 30 and MDAX 50 in Germany, and the SBF 120 in France.