Global consumer products that have enjoyed steady and consistent
growth over recent decades are no longer assured of their momentum
and stability. The center of gravity has shifted for major players in the
consumer product sector. They are having to contend with a range of
issues, from globalization and macro-economic upheaval to the impact
of technology on consumer behavior and operations, from changing
consumer preferences and priorities to the rise of the Asian
Almost all of the world’s leading consumer products companies have
their roots in the West, where the most recognizable and profitable
global brands have been nurtured, but this is not a situation that can
last. Indeed, research by McKinsey suggests that by 2025 almost half of
the world’s $1 billion revenue companies will be domiciled in today’s
emerging markets, and a significant proportion of these will be
consumer businesses competing for customers and talent.
For Western companies seeking to stay competitive at home and capitalize
on growth markets, the number one priority is to find leaders who
have the vision, agility, skills, experience and background to navigate the
many disruptions that undoubtedly lie ahead. CEO succession planning
is today recognized to be one of the most critical responsibilities of a
board. We hope that this report will stimulate boards to question what a
successful CEO might look like in the future and encourage them to
remain open to creative options when it comes to appointing the next
generation of leaders.
Internal candidates are preferred
Over two-thirds of CEOs were appointed from within the company, confirming
a trend that we are seeing among many of the world’s largest
companies, particularly those in mature and stable sectors.
Whereas 10 or 20 years ago it was more common for boards to recruit CEOs
with successful track records running other businesses, today they are more
likely to give internal candidates the benefit of the doubt — placing a greater
value on the insider’s intimate knowledge of the business, its culture, products
and customers than on the apparent benefits of a proven, high-profile outsider.
This suggests not only that boards are starting the succession planning
process earlier and taking a longer-term view about executive leadership,
but also that companies are getting even better at developing their own
talent. In our experience, consumer products businesses are highly effective
at constructing talent management regimes, identifying high-potentials early
on, putting them through intensive leadership development programs and
providing opportunities for job rotation and exposure to foreign markets.
The remaining CEOs were either appointed from the board (13.5%) or were
what we call “insider-outsiders” (6%) — executives from outside the business
appointed to a senior role as heir apparent and taking over from the CEO
within 18 months. If CEOs in these two categories are included, then insiders
account for an overwhelming majority of CEOs currently in situ (86.5%).
Perhaps the converse is more notable in that only 13.5% of current CEOs
were external hires.
Among the CEOs in our study, the most common stepping stone (52% of
CEOs) was the role of divisional CEO (or divisional GM), usually involving an international
remit. This position is more akin to the CEO role than a functional head and
carries major P&L and general management responsibility — indeed, some
of these divisions generate revenues the size of very substantial companies
in their own right.
The second most common position held immediately prior to becoming
CEO was chief operating officer (25%), a position often used as a stepping
stone to prepare insiders for the CEO role.
Only two CEOs (6%) were promoted from chief financial officer.
Those CEOs who had run businesses elsewhere were evenly divided
between those who ran public and private companies.
Main board experience
Over half of the CEOs in our research had been on the board of their own
company or as an independent non-executive director of another public
company for at least six months prior to their appointment.
Most boards prefer prospective CEOs to have had prior public company
board experience because it gives the executive a chance to see at close
hand what the CEO role entails. It also helps them understand how a board
works and what is expected of the CEO in the boardroom. From our experience
advising hundreds of boards on their CEO succession planning, we
believe that serving as a board director is one of the most effective ways that
potential leaders can learn what it means to be a high-performing CEO.
Functional route up
Any executive who reaches the top of a major global organization almost
always will have held numerous roles across different parts of the business.
No two career pathways are identical and some executives have been
exposed to a broader set of experiences than others, but our research shows
some clear patterns among the current cohort of CEOs.
The most common functional background found in the resumes of today’s
consumer product CEOs is marketing. Given the brand and consumer focus
of consumer products businesses, it is not particularly surprising that 36%
of CEOs have built their careers through a variety of marketing roles. By
contrast, very few CEOs (5%) have sales as their primary functional background
(although many of them gained sales experience as part of their
The second most common functional background is finance (21% of CEOs).
It is interesting to compare this statistic with the fact that only 6% of CEOs
had been promoted directly from the CFO role. This suggests that having a
finance background is not a barrier to getting the top job, nor is it sufficient.
At some point, in order to position themselves as credible CEOs successors,
senior finance executives have to broaden their management responsibilities
by taking on a senior general management role.
15% of CEOs came up through the strategy route, one had an operations
background and one a legal background.
Six of the CEOs in our sample are members of a family that has full ownership
or a controlling stake in the business. The shape of their careers is very
different from that of their peer group in the sense that that they did not
come up through a particular functional route. Instead, they were given
general management experience at an early stage in their careers, having
been earmarked for leadership of the business. As with family businesses in
other sectors, some of these executives have only ever worked for the family
business, whereas others have spent some time in professional services
firms such as banking or consulting.
Diversity — a mixed picture
Four companies in our sample are led by women: Indra Nooyi at PepsiCo,
Irene Rosenfeld at Mondelez, Allison Cooper at Imperial Tobacco and Sheri
McCoy at Avon. Sadly, this picture is not dissimilar to the situation among
leading businesses across all sectors (for example, in both the US and the
UK, fewer than five percent of CEOs of leading companies are women).
International diversity is a different picture. We looked at companies where
the CEO is a different nationality from the nationality of the company (based
on its historical roots and headquarters as opposed to its corporate domicile).
36% of executives fall into the category of non-nationals, which reflects two
things: first, all the companies in our sample have a truly global footprint
and a distributed, international workforce; second, companies in the
consumer products sector are among the best at identifying and developing
executives with senior leadership potential, regardless of their nationality or
where in the world they entered the business. That said, out of the 19 CEOs
who are non-nationals of the companies they lead, 13 are Europeans. Two are
American, two are Brazilian, one is South African and none are from Asia.
The average age of CEOs is 56. The youngest CEO is Pedro de Andrada Faria
of BRF, aged 42, while the oldest is Michael Dolan of Bacardi at 70.
Recruiting the CEO of the future
Global consumer products companies planning the succession of their
CEOs are having to think carefully about the profile of their next leader.
There are multiple factors shaping what is required of future leaders, including
globalization; macro-economic upheaval; a shifting global political
landscape; a growing lack of trust between elites and the populace; disruptive
technologies; and changing consumer preferences and demographics.
The CEO of tomorrow will need an international mindset, the right temperament
and experience to open up new and emerging markets, and a
background in more than one function. He or she should be agile enough to
deal with the constant pace of change and be comfortable adjusting to the
shifting technology landscape in order to lead the digitalization of the enterprise
and connect more effectively with consumers.
Future leaders will need to be deeply passionate about how consumers
think and behave — and respond to what they learn in a strategic way.
Where growth in global categories is stagnant, the CEO of the future will
need to create new businesses and income streams unencumbered by the
existing corporate culture. The growing trend towards health, clean food
labels and sustainability is evidence of more open-minded thinking at the
top. As one CEO put it: “The best people I have seen running consumer
businesses are relentless in their quest for deeper understanding; they are
always willing to challenge their own assumptions about consumers, always
wanting to understand the core reasons for today’s behavior and anticipating
the behavior of tomorrow.”
There are, of course, other dimensions to being a successful CEO in the
consumer products sector. The fragility of corporate and brand reputation
means that the CEO has to be able to steer the organizational culture in the
right direction and put in place systems and processes to ensure a strong
reputation for the business over the long term.
An analytical mind combined with strong conceptual thinking is a necessary
basis for developing a strategic vision — which then needs to be accompanied
by an ability to create engagement and build alignment throughout
What’s more, in an era of slow organic growth CEOs will need to have M&A
experience; a high level of financial dexterity; and an ability to foster partnerships
with other companies in the supply chain as well as outside the sector.
The key question that boards must continually ask themselves is: where does
the company want to be in 5-10 years’ time, and do we have the best, most
diverse talent to take us there? To answer that question properly, companies
must invest in a high-quality assessment program that can accurately predict
which executives will succeed in a senior leadership role and which will not.
Equally important is the development program arising from such assessments,
which should include mentoring, coaching and stretch assignments.
(See page 6: “Assessment — a critical factor in CEO succession”.)
When it comes to CEO succession, statistics can help boards improve their
chances of success by informing their judgments about potential leaders.
Ultimately, however, it is all about one board choosing one CEO for one
company at a time. The same person could be a success in one context and
a failure in another. We hope that this study will give boards the courage to
make the best decisions they can, taking into account the current and
desired culture of the organization and focusing on the leadership requirements
of the changing business and its competitive landscape.
Assessment — a critical factor in CEO succession
The foundation of an effective assessment is a
comprehensive view of the role of executive leadership
in an organization, and the factors that
shape specific leadership requirements.
As executive search and leadership advisers for
60 years, we have observed and studied leadership
in different contexts and have developed a
view on how to help clients think about the role
of leadership in their organizations and how to
select and develop the senior executives able to
make a lasting positive impact on the business.
Spencer Stuart’s model for CEO assessment
- The organizational context: the near-term and
long-term critical demands and constraints
from the team, organization and business
environment to which a leader must respond
- Character and interpersonal style: the kind
of person he or she is; the nature of the person,
his or her emotional drives, values and
leadership style, all of which are important
when considering alignment with an organization’s
- Current and potential capability: the knowledge,
skills and deeper characteristics that
make up the overall competence of a leader
relative to a role
- Leadership outcomes: the various outcomes
expected of a leader based on the intersection of
the person’s character and capability in context
Our Leadership Capabilities Framework provides
an objective set of scaled business leadership
capabilities with which we can compare any one
executive to any other. The average of this scale is
the average executive; the top levels are calibrated
to surface distinctions even among outstanding
top leaders of the largest global companies.
We look not only at past experience and current
capability, but also future potential. A core tool
we use to get at an individual’s potential is our
Executive Intelligence (ExI®) assessment, which
targets the characteristics that specifically predict
executive capability and business impact.
We also consider a leader’s character and personal
style and how they fit with the needs of the business
and the organizational culture. Our approach
to assessing culture enables us to measure executives’
cultural impact and alignment and provide
practical insights on specific leadership and
cultural development opportunities.
To understand more about the background, skills
and experience of CEOs in the sector, we analyzed
the profiles of the CEOs who run 52 of the world’s
leading consumer products companies, both public
Drawing on a combination of proprietary knowledge
and public domain information we examined the career
path of each CEO. This study highlights what we believe
to be the key data that shed light on the leadership decisions
boards have been making in recent years.