DHR International: Why FTSE 100 Deputy CEOs are sharply declining

Feb 17, 2016 | Executive Grapevine

FTSE 100 companies are ridding themselves of deputy CEOs to ensure more flexible succession planning, according to DHR International.

The executive search firm reveals that the number of FTSE 100 Deputy CEOs has decreased from six to three in the past two years alone.

Frank Smeekes is the Managing Partner for Europe at DHR International. Speaking exclusively to Executive Grapevine, he says the decreasing number of Deputy CEOs could be caused by FTSE 100 companies’ desire to be more flexible. Smeekes explains: “The turnover of executives has become quicker in the past few years. When you have a number two person in place, such as a Deputy CEO, that person will create a glass ceiling. That is bad for a number of reasons. The first is that the outside organisations will have an easier time poaching people from the management team.

“The second reason is that larger organisations in general want there to be a potential to climb the career ladder. That way, companies can improve their retention of executives.”

However, Smeekes believes there are benefits to having a Deputy CEO in place. For instance, it allows the successor to shadow the CEO before he or she leave the company. Nevertheless, Smeekes says that period should be one year long at the maximum.

“You should never have a number two person too long in play,” Smeekes says. “Let’s say that the CEO of a company has announced their retirement in the next one or two years. That is when the succession race should start.

“In the old days, which is only four or five years ago, then you could have a Deputy CEO for up to four years. Nowadays, it should be for just one year.”

Smeekes argues that this way Boards won’t restrict themselves in their succession planning. Instead, companies can hire the best person for the job, whether that candidate is from within or from outside the organisation.

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