Are Asian CEOs built to last?

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Are Asian CEOs built to last?

CEOs of large Asian companies face many of the same challenges of their counterparts from other parts of the world – but on steroids. They have to capture the growth wave in emerging economies, which also happen to be their home market. They have to constantly cultivate and add new talent able to lead fast-growing and increasingly complex corporations. They need to leverage technology in much more fundamental ways with a very limited capability set in the organization. Given these often more extreme challenges, I took a look at where Asia’s CEOs come from, and how long they stay in the role.

Where do they come from?

We analyzed the 3,000 largest listed companies in the world. A sixth (465 companies) are from Asia. The most material factor differentiating Asia is the significantly larger proportion of externally hired CEOs. In Greater China and South Korea, they are even in the majority.

asian-ceos-exhibit1

 

Digging further, we found that Asian CEOs that are hired into the role are younger – by almost 0.5 and 3 years compared to their European and North American counterparts, respectively. But Asian CEOs that are promoted to the role are 1.5 and 4 years older than their North American and European counterparts, respectively. They have also spent 11 years in the company, more than promoted CEOs in any other region.

 

asian-ceos-exhibit2

 

How long do they last?

Much is written about the short time the average CEO of Western companies remain in their role. For hired CEOs in our sample, those in Asia average about half a year longer in their role than those from other parts of the world. For promoted CEOs though, those in Asia average almost a year and a half less1. In other words, Asia sees more CEOs hired from outside than other regions, and they seem to survive in the role longer.

 

asian-ceos-exhibit3

 

Why might that be? I believe that in some cases it is because the rapid growth of the company has outstripped the ability of the internal candidate to grow at the same pace. In others, it is because the basis of success (perhaps previously a “land grab” of unaddressed market potential) has shifted to a radically different skill set (perhaps operational excellence) that no one in the leadership team possesses.

1: Tenure of current CEOs in the role as of August 14, 2013

By |October 25, 2013|Categories: Gordon's View|0 Comments

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