Some of the longest-serving CEOs like Warren Buffett – whose tenure with Berkshire Hathaway spans almost 52 years – have remained in their roles for an average of 33 years. A handful of these CEOs are also recognised as some of the most influential leaders.
In the financial sector, where duration is linked to greater stock returns, CEOs generally remain in their roles for longer. However, does the same hold true for other sectors? And when are the best value-creating years for a CEO?
One of the difficulties in determining this is that no journey is ever straightforward. Performance can fluctuate over time, making it even harder for boards to determine at what point it’s necessary for a leader to step back.
Research undertaken by consulting firm Spencer Stuart and published in Harvard Business Review suggests that some of the most fruitful years for CEOs is between 10–15 years, otherwise known as the Golden Years.
This was a key finding in Brand Finance’s ‘Brand Guardianship Index 2022’, where the average duration for the top 10 CEOs was 15.9 years.
The recent report reflects the work of more than 1,000 market analysts and journalists, who analysed the abilities of CEOs to build sustainable business value and their performance during their tenure. The Index lists the top 250 leaders, where the average duration is 7.6 years – half that of the top 10 cohort.
Why longevity matters
A ‘collaborative diplomat’ is a term that describes the purpose of a CEO as someone who balances the needs of multiple parties: stakeholders, employees, investors and greater society.
David Haigh, CEO and Chair at UK-based Brand Finance, explains how the CEO is ultimately responsible for “creating consensus and winning hearts and minds to achieve the impossible”.
And while CEOs who have plenty of industry experience in various roles may contribute a lot of value, it doesn’t always mean they’ll be accepted by the organisation.
“CEOs that have moved within an industry can bring lots of relevant experience and ideas, but need to be particularly careful to win hearts and minds,” Haigh says. “Footballers that play for Manchester United one day and Chelsea or Spurs the next are sometimes rejected by the other players and the fans. So they have to be particularly adept at ‘collaborative diplomacy’.”
In contrast, a CEO who has moved up the ranks or has founded the business is often in a better position to lead, as they are intimately familiar with the inner workings of the organisation and the relationships with stakeholders.
“Many CEOs worked for many years or even decades within the business before being elevated to the CEO role,” Haigh explains.
This was true for all top 10 CEOs in the Index.
“To be able to build long-term business value, you need to balance the needs of different stakeholders. It is clear, from our Index, that that takes time,” asserts Annie Brown, Associate at Brand Finance.
Microsoft’s Satya Nadella was named the world’s top CEO. When asked what qualities could be attributed to his success, Haigh points out that he is “well liked, modest and has a relatively low profile, but has executed a clear and different strategy without losing his audience in the company”.
Top 10 CEOs
Tenure: 7.9 years
Overall score: 88.3
Tenure: 10.4 years
Overall score: 87.6
Company: Great Wall Motor
Tenure: 16.4 years
Overall score: 85.9
Tenure: 24 years
Overall score: 85
Tenure: 7 years
Overall score: 83.3
Tenure: 14.1 years
Overall score: 82.5
Tenure: 23.3 years
Overall score: 82.1
Tenure: 28.8 years
Overall score: 81.1
Tenure: 20.2 years
Overall score: 80.2
Tenure: 7.3 years
Overall score: 79.3