Out with the old and in with the young. Top FTSE companies are hiring chief executives who are not only younger than ever, but much younger than the rest of their boards.
New research into the top FTSE-100 and -250 companies demonstrates that twice as many chief executives are reaching the dizzy heights in their forties compared with more than a decade ago. More than 40 per cent of today's FTSE-100 chief executives are in their thirties or forties; 56 per cent are in their fifties and only 3 per cent in their sixties or more.
The change has been dramatic, and swift. In 1997, only 20 per cent of the FTSE 100 had bosses in their forties ,while the balance – 70 per cent – were in their fifties and 10 per cent in their sixties.
A similar trend has been spotted across the FTSE-250 companies, where 3 per cent of bosses are in their thirties – compared with none 14 years ago – and 40 per cent are in their forties compared with 20 per cent before. By far the biggest change is among chief executives in their fifties: 45 per cent today 45 compared with 70 per cent in 1997.
According to a study published this week by the search firm Egon Zehnder International, our leaders are not only younger but also more of the hired-gun type, often with overseas experience, who don't tend to hang around in any one job for too long.
It's the most astonishing change in the age and profile of the UK's leading businessmen and women, and you only have to scroll down the list of FTSE-100 companies to see how much the type of leader, as well as age of the chief executive, has altered in just under two decades. American Angela Ahrendts, 49, has been running Burberry for five years, turning the fashion retailer into a £2.6bn company; Katherine "the Great" Garrett-Cox became boss of the £2.3bn Alliance Trust when she was 39 and is now 40; Dalton Philips, 42, is the Irish chief executive of Morrisons supermarkets group after a spell with Canada's Loblaw; Portuguese Antonio Mota Horta-Osorio, fresh from running Spain's Santander UK, is the new chief of Lloyds Banking Group aged 46, and the Italian Vittorio Amedeo Colao is the 46-year-old head of Vodafone.
Jill Ader, the head of chief executive succession at Egon Zehnder, says the rise of the forty-something chief executive has come about partly because companies want leaders who are in touch with new issues – whether it is the digital world, global and emerging markets or corporate social responsibility and diversity. "One of the reasons is that the board is not always connected to these new worlds and new experiences so they reach out to the young candidate who has proven ability. It's also true that companies are flatter, less hierarchical and less interested in people proving themselves through time-serving. The day of the long apprenticeship is long gone."
And companies are more willing to take a punt – albeit a considered one – on the talented outsider who has often followed a clear path to achieve their ambition of being a chief executive. Examples of this younger breed include Morrisons's Dalton Philips but also Marc Bolland, the Dutchman flown into M&S after surprising everyone with his success at Morrisons. Headhunted by Egon for Morrisons, Bolland was, says Ader, the perfect example of someone who had international experience, was not known in the sector but showed intellectual and emotional agility. Another is Paul Pohlman, parachuted in as chief executive of Unilever, who chose to work at Nestle to get board experience after leaving Procter & Gamble. Others include Alison Cooper, now chief executive of Imperial Tobacco, who took on a non-executive directorship at Inchcape to get the requisite board experience.
"Being a chief executive takes careful planning by the person too. He or she needs to get the right experience before they stand a chance of being selected. There's another reason: many companies find it easier to find an outsider than appoint an internal candidate because of problems with "followship", says Ader. "Often you will find that there may be two or three internal candidates but within the company there are arguments about who should get the top job with key players not wanting to back them. So it's easier to go outside."
Many of this new breed can be dubbed the career chief executive who move from one company to another: more than half of FTSE-100 bosses were appointed in the past four years and stay on average six, reflecting the more dynamic flavour of corporate life. And many don't see being boss as the pinnacle of their careers any more. Some of the UK's most successful businessmen – men like Sir Terry Leahy of Tesco and Sir John Rose of Rolls-Royce – have left their jobs in their mid-fifties and in their prime of life. Ten years ago they would have stayed for the gold watch but now people like Leahy and Rose want to do other things with their time.
While the executives are getting younger, the rest of the board is ageing. Over the past few years, the average age of all directors has risen, mainly because of the need for men and women with more rounded experience. It's not by coincidence that the compulsory retirement age of 65 is being scrapped this week to reflect the contribution that older people make in the workplace.
But is callow youth good for business? Do men, or women, in their thirties or forties have the experience to be thoughtful leaders? As Oscar Wilde said: "I am not young enough to know everything". Or is the fire in the belly the more important driver? Ader reckons that drive is perhaps the most crucial characteristic as long as there is the willingness to learn. "They also need to be mature. There's a toughness which chief executives need to have to be able to deal with investors, the media, and not seeing your family for 24 hours of the day at times."
Youth certainly worked for some of the world's most successful entrepreneurs; people such as Mark Zuckerberg at Facebook, Bill Gates of Microsoft or Sir Richard Branson of Virgin all started out young – and Zuckerberg still is – and are staying the course.
Time will tell whether youth will endure. As fashion designer Coco Chanel said decades ago: "Youth is something very new: twenty years ago no one mentioned it."
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