Among the companies listed on the S&P 1500 today, 31 are led by GE alumni. That makes them the biggest contributor to the group’s CEOs. This isn't due to good luck. Having such an impressive representation is a direct result of the commitment that GE makes to identify and develop tomorrow’s leaders. This commitment to development is shared by other high-performing organisations worldwide - an elite group which are called CEO Academies.
So what exactly are they doing?
In this blog, we'll delve into research conducted by PJ Neal and Todd Safferstone at Russel Reynolds, that uncovers how organisations build a CEO Academy and their substantial reach and impact in the marketplace.
Where do CEO’s come from?
Well, the fact is, most large companies do an excellent job of finding their CEO’s from their internal talent. In the research conducted by Russel Reynolds, 81 per cent of current CEOs were promoted into the role from within the organisation. Internal candidates are the preferred choice of boards for one simple fact: they have the most in-depth knowledge of the organisation and therefore have a better understanding of how the business can grow and develop.
What does a CEO's prior experience look like?
Internally appointed CEO’s can be placed into one of four categories based on their prior experience:
- Medium Timer: 4-10 years at a company – These are executives who were hired into mid-senior levels and are appointed to the CEO role after approximately 4-10 years.
- Heir Apparent: < 3 years at a company – These are executives who were likely brought into the organisation specifically to fulfil a future CEO need.
- Company Veteran: 11-20 years at a company - These are your executives who have dedicated a substantial portion of their career to the organisation before earning the CEO title.
- Lifer: 20+ years at a company – As the name suggests, these are your long timers, who have been working in that business their whole life.
In the research, the majority of the current CEO’s fall into the Company Veteran category with an average tenure of 15 years before assuming the top spot.
But how do you get people to the Company Veteran stage? These is where businesses tend to struggle.
Many organisations lose their promising talent prematurely because they fail to offer the right development opportunities. With many fast-moving industries, individuals with a high potential look for faster career growth and leave their employer for brighter and greener pastures - and it's not just for a better pay packet.
In many cases, individuals make moves for a bigger challenge and to build their work experience. So what can a company do to stop this from happening? Neal and Safferstone's research found that seven major lessons emerged that help CEO Academies grow their CEO’s.
Part 1: The Value of People
- Find Everyone’s Value: This includes embracing diversity and inclusion and avoiding a clone of the current executives.
- Make development democratic: CEO Academy companies look at their whole workforce and try to grow and develop them. Not just a small subset of individuals identified as high performing.
- Seek out the Best: CEO Academy companies look for best practices in leadership development outside their business and then apply their learnings to their own organisation.
- Seek the whole to know the parts: These CEO Academy companies give their employees a range of experiences, this helps them retain their up and comers and gives them the development they seek.
- Establish a leadership language: Developing a mission statement is necessary in order to create a shared understanding of what it means to be a successful leader in the organisation.
- Don’t just plan for the future – create it: CEO Academy companies use succession planning to identify up and coming future leaders.
- Leaders develop leaders: People development is a core priority for the leaders of a CEO Academy company – and they put their own time into it because they see the value in it.
To summarise...
CEO Academy companies have developed a way to best grow and develop their internal talent into potential CEO successors. The model they use is one that benefits the company as a whole, and sets these companies and their people up for success for generations to come.