News release
Embargoed until 12 December 2012
Home-grown CEOs are good for business, says new study
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Developing talent from within drives better business performance, as
CEOs in the World’s Most Admired Companies average 25 years of
service at their organisation.
Less successful peer organisations fall behind with CEOs amassing
just 10 years of service.
Warning bells sound for less successful organisations, which lack
succession plans for critical top team roles.
CEOs who have risen through the ranks are good for business, according to
new meta-research from global management consultancy Hay Group.
The study reveals that chief executives at the high-performing 2012 World’s
Most Admired Companies1 (WMAC, published in March 2012) – which have
delivered total shareholder returns of almost three times that of the S&P 500
over the last 10 years – boast an average length of organisational service
throughout their careers of more than 25 years.
Yvonne Sell, head of leadership and talent for the UK at Hay Group,
comments: “A clear focus on leadership development and talent management
has long been a key feature of the WMAC and other high performing
companies. Our research shows that these practices have supported CEOs to
rise to the top and deliver strong organisational performance, suggesting firms
across the world should take a leaf out of the WMACs’ book.”
Current Apple chief executive Tim Cook has worked for the technology
company, which tops the 2012 WMAC overall industry rankings, for 14 years.
McDonald’s and Philip Morris International CEOs follow closely behind (22
and 34 years in organisational service respectively). Please find full rankings
in Table 1.
Meanwhile, leaders at the helm of lower-ranking peer organisations have an
average tenure of just 10 years, indicating that the WMAC’s strong focus on
leadership and talent management sets them apart.
While over 90 per cent of 2012 WMACs have well-defined C-Suite succession
plans, only 65 per cent of peer group companies are making careful plans to
ensure top-team continuity.
Hay Group
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London, SW1X 7HG
www.haygroup.com
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News release
Yvonne Sell comments: “To create the right environment, companies must
look beyond quarterly results and short-term performance, and set their sights
firmly on the future. They need to establish what kind of leaders their business
will need to flourish in future and put in place a robust talent management and
assessment process to identify and enable these employees to develop and
rise to the top.”
The WMAC industry rankings are based on a peer rating, where organisations
across the globe are scored in nine key categories, including the ability to
attract and retain talent and quality of management2.
Yvonne Sell comments: “We are not suggesting that CEOs must always be
hired internally and understand that the circumstances of the firm and
changing requirements of the role may prevent this. However, the advantage
of being able to rely on home-grown talent and the positive impact on
business performance makes the case for effective talent management and
leadership hard to ignore.”
A separate Hay Group study also supports these findings. Now in its seventh
year, the 2011 Best Companies for Leadership (BCL) study3 aims to identify
which organisations have the best leadership practices, and what can be
learnt from them. In these top companies, CEOs have served for an average
of 28 years. For instance, Chairman and Chief Executive of Coca-Cola,
Muhtar Kent, has spent 27 years at the drinks company and CEO Paul
Polman has worked for 22 years at Unilver. Please see Table 2 for full
rankings.
Ends
Please note: this study should be credited to ‘global management consultancy, Hay Group’,
and not ‘Hay’ or ‘Hays’, which are separate and unrelated organisations.
For further information: For further information on this story or to interview Yvonne Sell
please contact:
T: 01273 716 820; E: teamhaygroupuk@manbitesdog.com
Hay Group
33 Grosvenor Place
London, SW1X 7HG
www.haygroup.com
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News release
Table 1: CEO length of organisational service at the 2012 WMAC Top 20
companies by overall industry ranking
Organisation
Apple
McDonald's
Philip Morris
International
Koç Holding
Walt Disney
Procter & Gamble
Nestlé
Chevron
Caterpillar
Exxon Mobil
Starbucks
Sistema
Intel
IBM
Ralph Lauren
Wyndham Worldwide
British American
Tobacco
Google
Qualcomm
Wynn Resorts
CEO
Tim Cook
Don Thompson
Service (years)
14
22
Louis Camilleri
34
Bülent Bulgurlu
Robert Iger
Robert McDonald
Paul Bulcke
John Watson
Douglas
Oberhelman
Rex Tillerson
Howard Schultz
Mikhail Shamolin
Paul Otellini
Ginni Rometty
Ralph Lauren
Stephen Holmes
16
16
27
33
22
Nicandro Durante
31
Larry Page
Paul Jacobs
Stephen Wynn
Average
37
37
30
1
38
31
45
6
14
22
31
25.4
Table 2: 2011 Best Companies for Leadership Top 20 by CEO length of
organisational service
Organisation
General Electric
Procter & Gamble
IBM
Microsoft
Coca-Cola
McDonald's
Accenture
Wal-Mart Stores
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CEO
Jeffrey Immelt
Robert McDonald
Ginni Rometty
Steve Ballmer
Muhtar Kent
Don Thompson
Pierre Nanterme
Michael Duke
Service (years)
29
27
31
32
27
22
29
17
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News release
Johnson & Johnson
Unilever
Toyota
Nestlé
3M
Southwest Airlines
Exxon Mobil
PepsiCo
Siemens
Shell
Dow Chemicals
FedEx
William Weldon
Paul Polman
Akio Toyoda
Paul Bulcke
Inge Thulin
Gary Kelly
Rex Tillerson
Indra Nooyi
Peter Löscher
Peter Voser
Andrew Liveris
Frederick Smith
Average
31
33
28
33
33
26
37
18
5
30
36
41
28.3
About the study
The research combines data from Hay Group’s World’s Most Admired Companies and Best
Companies for Leadership studies, which benchmark organisations across the world, and
desk research.
About Hay Group
Hay Group is a global consulting firm that works with leaders to turn strategies into reality. We
develop talent, organise people to be more effective, and motivate them to perform at their
best. With 84offices in 48countries, we work with over 7,000 clients across the world. Our
clients are from the public and private sector, across every major industry, and represent
diverse business challenges. Our focus is on making change happen and helping
organisations realise their potential.
For more information, please visit www.haygroup.com
Notes to editors
1
Hay Group’s 2012 WMAC research (compiled for FORTUNE magazine) is a study of
approximately 700 companies across 32 countries worldwide. Candidate companies include
FORTUNE 1,000 companies, Non-US Global 500 companies with revenues of $10 billion or
more, and top foreign companies operating in the US. The latest ranking results was released
in March, 2012.
Hay Group has collaborated with FORTUNE magazine annually since 1997 to identify, select
and rank the World’s Most Admired Companies and uncover the business practices that
make these companies both highly regarded and successful. For more information on how
both the industry and ‘Top 50 All Stars’ rankings are determined, please view the full
methodology on Hay Group’s website, or find FORTUNE’s full list of the World’s Most
Admired Companies here: http://www.fortune.com/mostadmired.
Alongside this study, each year Hay Group carries out additional research to uncover what
makes these companies so successful. The firm surveys senior executives in a sample of the
organisations that participated in each year’s Most Admired Companies rankings. The
questions cover a wide range of business priorities and practices. Hay Group then compares
Hay Group
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News release
the results for World’s Most Admired Companies with other participating companies. During
the past 15 years, Hay Group has looked at topics including leadership development,
innovation and talent management, and how companies to sustain performance.
2
Companies in the WMAC are rated based on the following categories:
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Ability to attract and retain talented people
Quality of management
Quality of products or services
Innovativeness
Long-term investment value
Financial soundness
Wise use of corporate assets
Social responsibility
Effectiveness in conducting business globally
3
Hay Group has researched the Best Companies for Leadership since 2005. The 2011
survey included responses from 2,300 organisations worldwide. The survey was based on the
organisation’s response to an online questionnaire and peer nominations. Respondents
include 11 per cent from North America, 35 per cent from Europe, two per cent from the
Middle East, 21 per cent from Asia/Pacific/Africa and 31 per cent from Latin America. To see
the Top 20 list from 2005 through 2011, please visit the Best Companies for Leadership
microsite at http://www.haygroup.com/bestcompaniesforleadership/.
Hay Group
33 Grosvenor Place
London, SW1X 7HG
www.haygroup.com
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