The rise of the outsider CEO

Viewed in The Wall Street Journal

There are many things about business and recruiting that do not change year to year.

But Wall Street Journal business columnist John D. Stoll writes in this column about one clearly demonstrable and important change: More and more companies are turning to the world outside of their respective companies to find their CEOs. And this isn’t the only change.

The number of changes at the top job is also increasing.

According to data from employment consultant Challenger, Gray & Christmas, “chief-executive departures took place at a rate of about 114 a month, a 25% increase over the typical yearly rate for the last decade.”

While companies historically have largely hired from within for their top jobs, several factors are driving the trend of hiring outside of it.

One of the most significant factor is a fairly logical one: When a company’s board of directors concludes that the company is headed in a negative direction, it makes little sense to promote the very executives who have been affiliated with and implicitly responsible for the downturn.

“When the business model is shifting and the internal skills may not be able to keep up with the rate of innovation and change, I think that’s when companies look for an outside CEO,” Stoll quotes Betsy Atkins, a director at Wynn Resorts Ltd., Volvo AB and SL Green Realty as saying. 

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