The paper’s authors looked at a sample of more than 50,000 U.S. CEOs and put forward several explanations for why new chief executives are tending older, including that companies are increasingly looking to cut back on risk. They might opt to trade the potential dynamism of a younger CEO with more experienced and stable guidance an older leader can offer.
But in corporate America’s search for expertise in top roles, boards are now valuing candidates who have worked in different roles across multiple companies, potentially even in unrelated sectors. For the company stalwart employee eager to climb to the very top, the reality of corporate America today means their loyalty is unlikely to go rewarded.
The study’s authors found that, compared to in 2000, people who go on to become CEOs spend around 10 more years of their careers working outside of the companies they will eventually lead. Meanwhile, the number of years employees spend at their firms before becoming CEOs has remained roughly the same over the past few decades.
“We interpret these patterns as evidence in favor of the idea that prospective CEOs transition across different positions, firms, and sectors to gather a broader skill set—pointing to a shift toward a boundaryless career in this segment of the labor market,” the authors wrote.
This might be a good thing, according to the recent NBER study. The authors note that one of the flashiest qualifications a modern-day CEO can have is “generalist human capital,” prioritizing knowledge gleaned from years of diverse work experiences rather than raw leadership skills. This type of experience is much harder to achieve within a single company or industry, pushing more firms to look at candidates with external experience to match.
That executive boards value diverse experience is fitting for corporate America today. While job-hopping early in one’s career has always been part of the working world, what has changed is how companies have approached the topic of loyalty.
