Insight from the CEO: Leading from the Top - Navigating CEO Recruitment and Succession Planning in the UK

The Evolving Landscape of CEO Appointments

In 2024, the UK witnessed a notable trend in CEO appointments, with a significant proportion of FTSE 100 companies opting for external candidates. Specifically, 52% of FTSE 100 and 62% of FTSE 250 companies appointed external CEOs during the year ending March 2025. This marks a sharp contrast to markets like the US's S&P 500 (27%) and Germany’s DAX (23%), highlighting a concerning lack of internal succession planning in UK firms.

This inclination towards external appointments is driven by various factors, including the desire for fresh perspectives, expertise in navigating complex challenges, and the need for transformative leadership. However, this approach also raises questions about the effectiveness of internal succession planning and the long-term implications for organisational stability and culture.

The Importance of Succession Planning

Effective succession planning is crucial for ensuring leadership continuity and organisational resilience. Despite its importance, many UK boards fall short in this area. A report by 25x25 reveals that only 28% of UK boards are considered succession strategists, indicating a significant gap in proactive leadership development.

Boards that engage in continuous succession planning report higher confidence in their leadership pipeline and preparedness for CEO transitions. Specifically, 78% of boards that plan continuously express confidence in their leadership pipeline, and 70% feel prepared for a CEO transition. These statistics underscore the value of a strategic approach to leadership development.

CEO Tenure and Its Implications

The average tenure of a UK CEO continues to decline, with a 2024 Index reporting an average tenure of just 5.2 years, down from 5.8 years in 2021. This trend poses challenges for organisations in terms of leadership continuity and the development of internal successors.

Shorter CEO tenures limit the time available for developing and mentoring potential leaders within the organisation. This situation often leads to a reliance on external hires, which, while bringing in new skills and perspectives, can also introduce risks related to cultural fit and integration challenges.

The Cost of External Appointments

Engaging external candidates for CEO positions often comes at a premium. A recent study found that the median salary increase for externally appointed CEOs over the past two years was 7%, indicating a clear premium for external hires. This financial consideration adds another layer of complexity to the decision-making process for boards.

Boards must weigh the benefits of bringing in external talent against the associated costs and potential challenges. While external candidates can offer valuable expertise and a fresh perspective, organisations must ensure that these leaders align with the company’s culture and long-term strategic goals.

Regional Considerations: The Welsh Context

In Wales, the dynamics of CEO recruitment and succession planning present unique challenges. The relatively smaller pool of executive talent and the regional economic landscape can impact the availability of suitable candidates. Additionally, the need for relocation and the potential salary constraints may deter high-calibre candidates from considering opportunities in Wales.

Organisations in Wales must adopt tailored strategies to attract and retain executive talent. This includes offering competitive compensation packages, providing relocation support, and highlighting the unique opportunities and lifestyle benefits that come with living and working in Wales.

Strategic Recommendations for Boards

To navigate the complexities of CEO recruitment and succession planning, boards should consider the following strategies:

• Develop a Robust Succession Plan: Establish a clear and actionable succession plan that identifies potential internal candidates and outlines the development paths for these individuals.
• Invest in Leadership Development: Provide ongoing training and development opportunities for high-potential employees to prepare them for future leadership roles.
• Engage in Strategic Recruitment: When external hires are necessary, engage in a thorough recruitment process to ensure candidates align with the organisation’s culture and strategic objectives.
• Promote a Supportive Environment: Create an organisational culture that supports leadership transitions and facilitates the integration of new leaders.

Recruiting a Chief Executive Officer is one of the most consequential decisions a board can make, whether it is appointing a new CEO or an incumbent CEO identifying a successor. Effective CEO succession requires a disciplined, forward-looking approach that balances internal talent development with rigorous evaluation of external candidates. Boards must ensure that the incoming leader possesses the strategic capability, vision, and cultural alignment necessary to steer the organisation toward long-term objectives, while also maintaining confidence among stakeholders and employees.

For outgoing CEOs considering their replacement, the process demands equal strategic consideration. Identifying a successor who can uphold organisational values, sustain operational performance, and deliver growth is critical to preserving the legacy of leadership. Careful planning, objective assessment, and a structured approach to CEO transition are essential for mitigating risk, ensuring continuity, and maximising the potential for long-term organisational success.

If you require further information or assistance in implementing these strategies, please do not hesitate to contact City Executive Search. Our team of specialists is here to support you in identifying and appointing a Chief Executive Officer equipped to lead with vision, influence, and measurable impact across all areas of the business.