"The research centered around a model that probed the selection of 1,345 CEOs from 900 S&P 1500 firms between 1990 and 2020, and found that generally lower CEO performance versus expectations following succession correlated with higher experience among the directors who chose them. But there was a catch - this was the opposite when the CEO involuntarily left (where previous experience led to a better hire). Where the CEO voluntarily left, previous hiring experience meant weaker performance from the candidate appointed."
"Most people improve with practice, but we find that this doesn't hold true when it comes to directors selecting new CEOs, despite the high stakes," said co-author of the new study Rich Gentry, chair and professor of management at the University of Mississippi, in a press release. "We found that directors with more past experience in CEO hiring do not tend to select better-performing CEOs. In fact, there's some evidence they may do slightly worse."
"Conventional wisdom suggests the more experience you have in a field, the more likely you are to improve at whatever it is that you're doing - whether that's gardening or graphic design - but when it comes to choosing a CEO, that might not necessarily be the case. New research published in the journal Strategic Management Society, in fact, suggests the opposite."
Succession planning affects operational continuity at all organizational levels. Analysis of 1,345 CEO selections at 900 S&P 1500 firms from 1990 to 2020 found that greater board experience in CEO hiring generally correlated with lower post-succession performance relative to expectations. An exception occurred when the prior CEO left involuntarily: in those cases boards with hiring experience tended to appoint better-performing successors. When CEOs departed voluntarily, increased board hiring experience associated with weaker subsequent CEO performance. Prior CEO-hiring experience therefore does not uniformly improve selection outcomes and can sometimes produce poorer results.
Read at IT Pro
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