Historically, it's been rare to have an external CEO appointment. It pays off when incoming CEOs who are promoted internally have been at the company for an established amount of time, have relationships with their colleagues at the company already, and understand the day-to-day operations from a firsthand perspective.
Executive search company Heidrick & Struggles released data at the end of 2023 examining the new appointment of CEOs throughout the year in some of the world's largest markets. Within major companies in the United States, the findings show 79% of the new CEO appointments internal appointments, while only 17% came externally.
However, the search and leadership advisory giant actually went against the grain with its own top job, selecting an external candidate as its next CEO when Krishnan Rajagopalan retired in January after seven years as CEO and a collective 23 years at the firm. The company searched both internally and externally for who would be the next person to step into the corner office, and one person up for the role was Tom Murray, who has been at Heidrick & Struggles since 2018 and now serves as its president. He had worked in a number of leadership roles throughout the last couple of years, including global managing partner of executive search.
“I came in second place to be the next CEO of Heidrick,” Murray said at the Fortune COO Summit in Middleburg, Va., on Tuesday.
Instead, the executive search firm selected Tom Monahan, a managing partner at Norton Street Capital, as the man for the job. Murray was promoted to president of Heidrick & Struggles.
In hindsight, Murray knows why he wasn't chosen as the next CEO. One of his gaps was in not having a stronger relationship with the board and individual independent directors. Now, during board meetings he tries to be more involved in conversations about business strategy, as opposed to just talking strictly operations.
In addition to building stronger relationships with the full board and participating in strategy discussions, Murray seeks out feedback from board members and senior leaders. He asks the chairman of the board and the current CEO what they think his strengths are, and how he can work on his gaps.
Murray also spoke about some of the key CEO traits Heidrick & Struggles looks for during the executive search process for its clients. One of the major qualities a potential CEO must possess is the ability to pivot into the next generation of technology and artificial intelligence. Heidrick & Struggles tests these candidates for technical competency, empathy, interaction with employees, and being curious about change.
“If people in the room are looking to step up themselves—to take the next CEO role—be honest with who you are and what you need to complement yourself,” Murray said. “We all have strengths and weaknesses, and making sure that you have a leadership team around you—that’s that next-generation leadership team that you have a plan with that will complement your skill set.”
